Back in December Christopher Michaelson, Ph.D., assistant professor of Ethics and Business Law at the University of St. Thomas, Opus College of Business posted a commentary here on Opus Magnum, “‘Tis Better to Give than to Give Back.” This post sparked a conversation between Michaelson and Michael A. Pink, Chairman and Executive Director of Investing In Communities, a nonprofit social enterprise that enables individuals and businesses to fund nonprofits for free through brokered real estate transactions. Below are excerpts from that conversation – we encourage you to chime in with your thoughts in the comments.
Michaelson’s basic argument:
The very phrase, “giving back” implies a degree of culpability for having taken away, in contrast to simply “giving,” which one can do selflessly, without transactional motivation… None of this is to discourage or embarrass those who give back, which is a far better thing to do than to do nothing at all… this culture of giving back only partially remedies market imperfections and luck that allocate excessive rewards to be given back by a relatively small class of superstar executives and entertainers and superpower corporations and countries. Perhaps the greatest gift that the fortunate few and tomorrow’s entrepreneurs can offer to improve our shared future is social enterprise that – by inventing and promulgating products and services that make the world better – generates a surplus of well-being rather than a surplus that has subsequently to be given back.
Pink: The model we are building, which we call Investing In Communities, occurs outside the typical context of social enterprise and is independent of personal wealth. I would like to know where you think we are located on the continuum. It links a market “inefficiency” in the practice of real estate with the passion of those who support an organization. It’s a way for commerce itself, as it occurs, to benefit the client, the professional, and society. By facilitating the acquisition of business opportunity at below typical business development costs, a fraction of the “surplus profit” is made available to fund philanthropy. As the model scales, it will prove fundamentally sustainable, being self-propelled by two things that will never go out of fashion – profit motive and compassion. As we are able, we’ll work to expand this model beyond real estate, into the rest of commercial/consumer life.
Michaelson: I infer that you are positing that there may be a continuum between giving (best) and giving back (good but not as good as plain old giving)? I hadn’t precisely thought of it in those terms, but I think I seewhere you are going with this if I am interpreting correctly.
My gut reaction to your question is that if an organization is providing a valuable service by executing its core competency well, then that is a form of giving. If, on top of that, it is giving away surplus profit, then that is a form of giving back. You could make an argument that giving plus giving some more back is better than either giving alone or giving back alone!
However, there are two key points that come to mind as also worth thinking about: First, if this kind of organization is not as good at its core competency as are its traditional competitors, will the “giving back” advantage be enough to drive comparative advantage? My sense is that the organization needs also to be the best (or near the best) at its core competency. Second, how much of profit is “surplus”? Some organizations give away 10%, some 5%, some 3%, and so on. What is the “right” amount that is both meaningful and does not detract from the organization’s ability to use the profit motive as an incentive?
Pink: First, I acknowledge that the baseline requirement is for the caliber of service or product to be exemplary, if not simply at par with the competition.
Second, in the case of our enterprise, Investing In Communities®, the gauge by which we measure “surplus profit” is the conventional cost spectrum for acquiring new business opportunity. So, the magnitude of the enabled philanthropy is naturally suggested.
As for giving vs. giving back, for me as for so many of for those of us “born in this country”, etc. giving really is giving back – to a world into which we luckily arrived, compared to most on the planet. But I believe you’re using “back” more in the context of, for example cause-related marketing.
However, what Investing In Communities seeks to establish is a world in which consumerism and commercialism, generally and not in their pejorative senses, would benefit not only the Buyer and the Seller of the product or service, but also one of the organizations most often referred to as a charity, and most likely in the same city where the transaction occurred. This goes, we think, way beyond simple cause marketing. The philanthropy would be integral to the transaction. So, even though it would not cause the transaction to occur, in absolute terms because the Buyer will transact this piece of commerce with some Seller, it would surely cause the transaction to occur to the benefit of that particular Seller, the one chosen by the Buyer.
Michaelson: There is a lot in your message with which I agree. For example, I agree that many (though not all, as I think you acknowledge) “born in this country” have been born with a surplus of good fortune. The core message of my post was to distinguish between giving by doing something useful for the world through one’s commercial activity and giving back as a sort of by-product of commercial activity.
Pink: Here’s a slightly different articulation of Investing In Communities®, which was suggested to me yesterday, as perhaps broadening the perspective from which it would be regarded/understood by corporations. Rather than put IIC under the heading of Social Responsibility, it might instead go under Sustainability. The difference, if there is one, would tend to more clearly associate a corporation’s embracing of IIC with corporate programs intended to foster employee engagement around the company’s overall commitment to sustainability. Clearly, we want IIC to be used as a tool by both corporations for their own commercial real estate transactions, as well as by the employees for their personal ones. The employees, each time they use IIC, would get to engage on a deeply personal level by selecting the cause and the organization to receive the IIC-facilitated funding.
Michaelson: As for your point regarding Social Responsibility and Sustainability, each term is “contested” and unsettled — i.e., they mean different things to different people, expert and non-expert alike. For me, a more meaningful factor in how a CR (or Sustainability) strategy is communicated involves whether it is evidently aligned with the core competencies of the organization or peripheral to them. In other words, a good question to answer to any stakeholder is, “Why does it make sense for activity to be pursued by this organization at this time?”