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March 15, 2006


[Rachel's introduction: The secret to being as radical as we want to
be is to finance the revolution ourselves.]

By Michael Shuman and Merrian Fuller**

If Mohandas Gandhi were a typical North American activist these days,
he would probably be wearing a three-piece suit and working in a plush
office with his law degree prominently displayed. He would have little
time to lead protests, since every other week would be spent meeting
with donors -- and those power lunches would hardly go well with
fasting. He would be careful to avoid salt marches or cotton boycotts,
so as not to offend key donors. To sharpen his annual pitch to
foundations, he would be constantly dreaming up new one-year projects
on narrowly focused topics, perhaps a one-time conference on English
human-rights abuses, or a documentary on anti-colonial activities in
New Delhi. To ensure that various allies didn't steal away core
funders, he would keep his distance and be inclined to trash talk
behind their backs. In short, there's little doubt that the British
would still be running India.

The problem with activism today is that it is largely funded by grants
and gifts from rich foundations and individuals. The long-standing
assumption that you can take the money with few strings attached, and
then run, needs to be fundamentally reexamined.

Building a philanthropic base of support can cripple an organization's
mission and wreck it altogether when the well runs dry. Most
nonprofits have engaged in a kind of fundraising arms race in which
our best leaders focus more time, energy and resources, not on
changing the world, but on improving their panhandling prowess to
capture just a little more of a philanthropic pie that actually
expands very little from year to year. Armies of "development" staff
spend as much as a third of an organization's resources, not to
advance the poor, but to cultivate wealthy donors. Significant numbers
of our colleagues create campaigns, direct-mail pitches, telemarketing
scripts, newsletters and other products exclusively to "care and feed"
prospects and to frame positions that will not offend the rich.

Nonprofit structures dictated by this mode of funding also burden
organizers with the heavy regulatory hand of the state. To qualify for
tax-deductible contributions, for example, US nonprofits must agree to
limit lobbying and not to campaign for political causes of candidates.

We believe it's time for North American progressives to break free
from the philanthropic plantation. Those of us serious about social
change increasingly must get down to business, figuratively and
literally. Every social change group may not be able to generate all
its funding through revenue-generation, but every nonprofit certainly
can generate a greater percentage than it is doing now. In other
words, we should become our own funders. Once we start generating our
own resources, we can invest them politically -- as corporations do
- largely without limitation, without wasting our time on fundraising
appeals, without worrying about that next grant, without apologies.

To get a sense of the possibilities, check out Cabbages & Condoms, a
popular restaurant in Bangkok. As your senses become intoxicated by
the aromas of garlic, ginger, basil, galangal and lemongrass, you
cannot avoid noticing the origins of the name. On top of each heavy
wooden table is a slab of glass, under which are neatly arranged rows
of colorful prophylactics. Posters and paintings adorn the half-dozen
large rooms, all communicating the restaurant's central message: the
AIDS epidemic afflicting Thailand can be checked only through the
unabashed promotion and use of male contraception. With balloon
animals made from carefully inflated and twisted condoms and the
after-dinner candies replaced with your own take-home "condom-mints,"
even teens cannot escape the message prominently framed on the wall:
"Sex is fun but don't be stupid -- use protection."

What makes the five "C&C" restaurants unique, along with an affiliated
beach-front resort and numerous gift shops, is that they are all owned
by the Population and Community Development Association (PDA), a rural
development organization that has been a leader in promoting family
planning and fighting aids in Thailand. Seven out of every ten dollars
spent by the PDA on such activities as free vasectomies and mobile
health clinics are covered by the net revenues from its 16 subsidiary
for-profits. Were the PDA dependent on funding from the Thai
government, the World Bank or even the Rockefeller Foundation, it no
doubt would be told to tone down the message. Jokes on its website -
like "the Cabbages and Condoms Restaurants in Thailand don't only
present excellent Thai food, the food is guaranteed not to get you
pregnant" -- would certainly be discouraged.

The cash flow gives the PDA a measure of confidence and boldness. The
founder, Mechai Viravaidya, has no qualms about his decision to employ
for-profits: "Unlimited demand is chasing limited supply [of
charitable donations]. No longer are gifts, grants or begging enough.
From day one, thirty years ago, we have been acutely aware of
sustainability and cost-recovery."

Consider some US examples of social entrepreneurship:

* Housing Works in New York uses its Used Book Cafe to generate more
than $2 million annually for its work, which prioritizes advocacy for
homeless people with HIV. The organization runs clinics, conducts
public policy research, lobbies federal and state officials, even
leads sit-ins. It is fearless, aggressive and stunningly effective -
and its $30 million of annual work would be impossible were it not for
its vast range of real estate, food service, retail and rental
companies that help pay the bills.

* Pioneer Human Services is a community development corporation based
in Seattle that assists a wide range of at-risk populations, including
the unemployed, the homeless, ex-convicts, alcoholics and addicts. The
organization serves 6,500 people a year and generates nearly all its
$55 million budget through a web of ambitious subsidiary nonprofit
businesses: cafes and a central kitchen facility for institutional
customers, aerospace and sheet-metal industries, a construction
company, food warehouses, a real-estate management group and
consulting services for other nonprofits. Most of the jobs in these
businesses are awarded to its at-risk clients, allowing it to further
its mission to integrate clients back into society.

* The Rocky Mountain Institute, a leading promoter of alternative
energy technology in Snowmass, Colorado, created E-Source in 1986 to
provide in-depth analysis of services, markets, and technologies
relating to energy efficiency and renewable energy production. In 1992
RMI secured a program-related investment from the MacArthur Foundation
to move the work into a for-profit subsidiary. By 1998 it was
generating about $400,000 for the parent nonprofit, but rmi decided it
could do even better under new management, so it sold the company to
Pearson plc in Britain for $8 million. Today, RMI assists and benefits
from other for-profit spinoffs, such as Hypercar, Inc., which aims to
create a lightweight body architecture to improve the efficiency of
the entire US automobile fleet.

* Judy Wicks' White Dog Cafe in Philadelphia is as much a community
organizing center as a restaurant. Radical speakers from around the
country provide a steady stream of public lectures. An adjacent store
sells fair trade products and will soon be introducing a line of
locally made clothing. The White Dog itself embodies principles of
social justice and environmental stewardship by paying all employees a
living wage, insisting on humanely raised meats and eggs, using
locally grown ingredients and running on wind electricity. Twenty
percent of profits from the restaurant go to the White Dog Cafe
Foundation, carrying on the cafe's mission through nonprofit

These examples embody many possible models. A for-profit subsidiary
can generate money for a parent nonprofit. Or, better still, a for-
profit can become the change it seeks, by producing and selling
socially important goods and services.

While we reject the libertarian argument that every human problem has
an economic solution, many social-change issues clearly have economic
dimensions that are susceptible to creative business plans. Hate
nuclear power? Launch energy-service companies to spread conservation
measures, or build local wind farms to take control of your own
electricity future. Concerned about the poor, minorities and women
having equal access to credit? Create more community banks, credit
unions and micro-enterprise funds. Troubled by pharmaceutical prices
that make life-saving drugs unattainable for impoverished people
across the globe? Start, as several companies based in the developing
world did, companies that mass-produce affordable generic versions of
high-priced American drugs.

Socially responsible business should be not just a boutique sector of
the private economy, but its mainstream. We have been impressed in
recent years by the growing number of local businesspeople who not
only "walk the walk" of social justice in the small details of their
operations and products but also tout the virtues of local ownership.
This third generation of entrepreneur-organizers is being led by
groups like the Business Alliance for Local Living Economies (BALLE)
and by the American Independent Business Alliance (AMIBA). Each
promotes local ownership of business, champions social justice and
neighborhood revitalization, and pushes for new public policies that
remove the tilts in a playing field that favors badly behaved big

Sooner or later, the concepts of social-change organization and of
social-responsibility business should become indistinguishable. Truly
responsible businesses would be owned by all members of a community
(rich and poor), hire locally, expand local skills, comport with local
labor and environmental standards, produce goods and services that
meet urgent local needs and become allies of social justice movements.
What better way to help the poor than to transform them into the
captains, worker-bees, shareholders and customers of community-
friendly business?

If foundations and donors had never existed and professional
panhandling had been outlawed, social-change groups would have been
forced to turn to creating and running new enterprises or new networks
of local businesses, and our movement would be considerably healthier
than it is today. Progressives have become the classic 20-something
kid still living at home, expecting an allowance from deep-pocket
parents for a few basic chores, while agreeing, as a condition for the
chump change, to obey someone else's rules on social change. It's time
to grow up and strike out on our own.

Here's a challenge to activists (one we take seriously ourselves):
let's try to wean ourselves from the charity habit, say by three
percent per year. Think about just one piece of your agenda that could
be framed as a revenue generator, dream about it a little, develop a
business plan and give it a try. If you lack the skills, skip your
next fundraising class and instead attend one of thousands upon
thousands of entrepreneurship programs around the world. Or hire
someone who might start the entrepreneurial subsidiary of your

Gandhi understood that the key to freeing India was to transform his
fellow citizens into economically productive agents by spinning their
own cloth and taking their own salt from the sea. Martin Luther King
Jr. implored African Americans to form their own credit unions and
community development corporations. The secret to being as radical as
we want to be -- and as radical as we need to be -- is to finance the
revolution ourselves.

** Michael Shuman is the vice president for enterprise development for
the Training and Development Corporation in Bucksport, Maine.
Merrian Fuller is a managing director of the Business Alliance for
Local Living Economies. This article was adapted from "Profits for
Justice," which first appeared in The Nation.