Let’s Prove Howard Buffet Wrong!

Here’s what Buffet believes:

“Charity doesn’t solve a long-term problem. It addresses an immediate situation, but it won’t solve anything.”

He still gives money philanthropically, but prefers to be part of the movement to achieve impact through entrepreneurial solutions.

Yet, we in the nonprofit world, certainly up to our eyeballs in immediate situations, also know a considerable amount about longer-term solutions.

Take homelessness. Much of the resources that are available are spent in the day-to-day task of sheltering and feeding those experiencing homelessness.

Yes, true, although we do know that first obtaining secure, long-term, safe housing in an environment where physical and mental health and addition counseling are on site as part of the more comprehensive solution works very well and produces significantly better outcomes.

Why don’t we do it for all the people wanting to do something about their situation? We simply do not have the resources. Solution is expensive.

Impact Investment as an Answer

Perhaps, however, this new impact movement may be the answer, given the resources now flowing to find solutions to civil problems. Select foundations and some individual philanthropists are directing billions of Foundation corpus and personal funds to double bottom line companies, B Corps and other such for-profit ventures.

As non-profits, we qualify for program related loans and we should pursue more of these with those foundations, such as Rockefeller, F.B. Heron, McKnight and Northwest Area, among others, that are devoting portions of their endowments to these type investments.

In the area of homelessness, a survey of where these investments are made show a sizable portion going into housing, banking and community development.

Moreover, under certain conditions, we should investigate forming for-profit subsidiaries. Realistic pro formas will tell this tale.

The difference, obviously, is that what we take on must have a return to pay the interest or the dividend.

This may not be as difficult as it appears, although nonprofit purists may think this idea incompatible with mission. Nevertheless, as in housing, government subsidies do allow for payment of rent, medical and counseling bills and a variety of other support functions. So there is income.

We are in the era of overlapping functions, sector shift and hybridization among and between nonprofits, for-profits and government. We need to give an opening to the entrepreneurial

instincts in the nonprofit sector and take advantage of these new opportunities to “solve” societal problems and contribute to civil benefit.

 

 

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