Deep Currents

The Times’ Nick Kristof asks:

If a businessman rakes in a hefty profit while doing good works, is that charity or greed? Do we applaud or hiss?

Applaud, of course. They’re helping. But call them by a different name if you’re finding it confusing to put profit-takers and donation-takers in the same bucket. In his column, Kristof goes on to describe a number of profit-driven organizations whose operations help social causes. One example is the Starbucks Corporation which has shaped its business operations in a way that creates great benefit for African coffee-growers. Others are the organizations that put on the AIDS Ride and the Breast Cancer Three-Day, which are profit-driven companies whose market niche is events that provide social benefit. The CEO has been pilloried by some for his near-$400K salary, which is low by corporate standards but astronomical for the social sector. Does he deserve to be? After all, isn’t he doing much the same thing as the pittance-paid heads of major nonprofits who run based on foundation grants and individual donations? Shouldn’t his organizations be plowing most of that $400K a year into doing more good?

I tend to think not. I think it’s ingenious that he’s found a way to provide social benefit through the pursuit of profit. That sounds like an oxymoron, or at least a corruption of social benefit. One might wonder what kind of social benefit we’re likely to get when the people going after it are motivated by money rather than morals. But I think we’ve seen a credible answer in his organizations and others like them: sometimes people will pay money for services that give social benefit, and a commercial firm has the advantage of bringing the quick-footed responsiveness and risk-hungry mindset of business to bear on the problem. It’s hard to find those rare opportunities — we should encourage entrepreneurs to find them, and give them their own term to honor the effort. Perhaps “conscious capitalist” would do.

Written: December 25th, 2008