Vegas Seven: “Pact With an Angel”

Rebecca Tekula, PhD, Executive Director of Pace’s Helene & Grant Wilson Center for Social Entrepreneurship, on whether one of the most recession-damaged cities in the nation can benefit from community stewardship.

Ward 5 in downtown Las Vegas, has been hit hard by foreclosures and has many abandoned homes — the kind of problems that can tear down an entire community.

To kick-start community change, The Partnerships for Community Health (PACT) has given grants to grassroots Vegas groups like Power of One, co-founded by Earnest James (pictured), which mentors at-risk kids in West Las Vegas.  The model is called community stewardship, and both the promise and risk of it is that the impact of the funding will ultimately depend on the grassroots organizations themselves.

“You want to make sure your stakeholders have some say in how you’re spending the money,” says Rebecca Tekula, PhD, executive director for the Wilson Center for Social Entrepreneurship, which researches and advises nonprofits. “Eventually the full governance will belong to the community,” she told Vegas Seven writer Heidi Kyser.

In other words, whether PACT succeeds in the long run will be up to people such as Earnest James.

Interest.com: “6 ways to make giving to charity work for you”

Your mother always taught you to share with others. Yet, it’s often difficult to choose a charity and to know when to give, how much to give and when to move on to another cause. Pace’s Dr. Rebecca Tekula advises why it is important to “do your research” before giving back.

Interest.com, a Bankrate website which claims a readership of 500,000 monthly, helps consumers make smart decisions about almost every aspect of their financial lives, including donating to a cause they care about.

Rebecca Tekula, executive director of the Helene and Grant Wilson Center for Social Entrepreneurship at Pace University in New York, advocates using online resources to determine which charities really deserve your money.

Tip 5. Do your research.

Tekula suggests that people look at their philanthropic investments in the same way they’d view other investments.

You’re not only investing your funds, you also need to consider long-term expectations.

In addition to investigating a cause’s website, Tekula shares some of her favorite online resources for researching charities:

Guidestar — This is a great starting-off point and fundamental resource for analyzing facts, including tax returns and salaries.
Charity Navigator — This website uses a star system based on evolving and sophisticated fundamentals of the organizations. A great resource for the financially savvy reader that looks at the charities the way you look at a business, based on return on philanthropic investment, return on social investment.
GiveWell — The next step in evaluating a charity, according to Tekula, the top-rated charities it recommends are proven, cost effective, underfunded and outstanding.

To read all “6 ways to make giving to charity work for you” – click here 

Wall Street Journal and Fast Company: “Report Faults Nonprofits on Service”

Hundreds of New York’s social-service organizations are short-changing the people they are supposed to serve by focusing on money-making schemes, according to a report released Wednesday by Pace. The report triggered a media flurry.

Rebecca Tekula

 

A media flurry was triggered by this morning’s story in the “Greater New York” section of the Wall Street Journal on a report from the Wilson Center for Social Entrepreneurship by its director, Rebecca Tekula. The report was implicitly critical of agencies that have money-making side businesses, mentioning Covenant House, the American Foundation for the Blind, the Boy Scouts of America, the Doe Fund, and God’s Love We Deliver.

The website of the Nonprofit Quarterly picked up the story, and it was tweeted by us and them. Other media have said they are likely to be doing stories of their own in the future

Editor in Chief of The Nonprofit Quarterly, Ruth McCambridge, added an editorial comment: “NPQ appreciates Tekula’s willingness to ask hard questions about this practice which is so widely promoted. And we absolutely agree that it needs further study.”

Update:

Additional coverage of the Wilson Center study of nonprofit organizations’ side businesses include a Fast Company write-up.

NEWS RELEASE: Doing good badly? Pace University study finds nonprofits may bleed their services by trying to earn money

A new Pace University study of 700 tax returns from nonprofit organizations providing human services in Manhattan has found that their efforts to raise money from profit-making activities may be bleeding the very programs they are trying to fund. The study raises questions about a significant trend in nonprofit work.

NEWS RELEASE: Doing good badly? Pace University study finds nonprofits may bleed their services by trying to earn money

“Unproven benefits” of major trend

NEW YORK, NY, November 3, 2010 – A new Pace University study of 700 tax returns from nonprofit organizations providing human services in Manhattan has found that their efforts to raise money from profit-making activities may be bleeding the very programs they are trying to fund. The study raises questions about a significant trend in nonprofit work.

The organizations included well-known institutions like the Boy Scouts of America, the American Foundation for the Blind, Covenant House, God’s Love We Deliver, the Federation of Protestant Welfare Agencies, and the Doe Fund, with services ranging from homeless shelters to food banks and victim services.

The study, by Pace University’s Helene and Grant Wilson Center on Social Entrepreneurship, was conducted by the Center’s director, economist Rebecca Tekula, PhD. Tekula presented her findings Wednesday afternoon, November 3, at the Satter Conference on Social Entrepreneurs at New York University.

The findings are timely, coming after the recent collapse or reorganization of several institutions explicitly founded in recent years to combine profit-making and philanthropic activities, including Global Giving and World of Good.

The Pace study is the first to systematically analyze data on a large number of such organizations. Without question, the author says, the organizations are “important service providers for society’s neediest individuals.”

Nonprofits’ “unrelated” business activities to raise money are part of the “social enterprise” movement.

“Myriad philanthropists, associations, and now federal and local governments are supporting the social enterprise movement with growing fervor — [but] without the benefit of an in-depth analysis,” says Tekula. She adds: “Caution must be exercised in popularizing and glorifying the unproven benefits.”

Sales up, services down

As early as 1908, the Metropolitan Museum of Art operated a sales shop, and by 1982 the Girl Scouts were selling 124 million boxes of cookies for gross revenues of over $200 million, Tekula reports, quoting the 1988 book, “The Nonprofit Economy,” by the economist Burton Weisbrod.

By the mid 1970s, more and more nonprofits had developed a “substantial dependence” on non-donated revenues including membership dues and “some form of sales.”

Tekula examined the US tax returns for the years 2000 to 2005 of a large sample of organizations randomly chosen from all the Manhattan organizations meeting the federal definition for providing human services.

The organizations raised an average of more than $1 million in “unrelated business income,” putting it toward expense budgets that averaged over $19 million. The average organization spent an average of 82.2 percent of its total expenses on program services, or over $16 million.

But Tekula found that the more they brought in from their businesses, the smaller were their proportion of total expenses spent on programs.

In other words, as income from side businesses went up, the share of a contributed dollar that went to actual services went down.

Why? Tekula speculates that many organizations with unrelated businesses were not really investing profits in their mission-related services. Instead, profits were reinvested in the business, and losses were subsidized with funds that might have gone to clients.

“The same thing happens in diversified corporations,” she says. “When a division is losing money, there’s a tendency to throw good money after bad.” In the nonprofits whose returns she studied, the odds were low that their business divisions were start-ups operating at a loss enroute to profitability – all had been in business at least a year previous to the years her survey scrutinized.

“Running a gift shop or anything that isn’t an integrated part of your program may be bringing in money – gross revenues — but if it’s not making a profit, you’re keeping it going with funds that you could have spent on counseling and food for your clients,” Tekula says.

No substitute for asking

Though Weisbrod’s prophecy was not tested with data at the time, Tekula credits him for sounding the first, largely-unheeded, warning with his 1988 hypothesis that says, as she paraphrases, “as nonprofits branch out from their central mission, the quality of their principal tax-exempt activities would decline.”

Social enterprise may be an innovation, she says, but one that can tempt nonprofits into a substantial “mission distraction.”

Tekula points out that her results represent a large random sample of organizations – and that not every organization in the sample is guilty of this inefficiency. She has not analyzed data from other areas of the fast-growing nonprofit world like museums, orchestras, and hospitals, though she feels their business activities must also be examined.

For human services nonprofits, however, she suggests that tough as it is, they might be better off with old-fashioned fundraising.

About the Wilson Center

The paper, “Social Enterprise: Innovation or Mission Distraction,” is available at http://web.pace.edu/page.cfm?doc_id=35460 .

The Helene and Grant Wilson Center for Social Entrepreneurship is an institute of Pace University aiming to serve students and nonprofit organizations by encouraging more effective and efficient nonprofit management practices through research, colloquia and continuing education programs. The Center was launched with a $5 million gift from Helene and Grant Wilson, entrepreneurs and philanthropists whose involvement with nonprofits has convinced them that entrepreneurial management can help these organizations increase their impact.

Contact
Bill Caldwell, Pace Public Information, 212-346-1597, wcaldwell@pace.edu

Bruce Bachenheimer Speaks on “Social Entrepreneurship” at 2009 GCEC Conference, Houston, Oct 16

Bruce Bachenheimer, director of entrepreneurship studies at Pace University’s Lubin School of Business and a faculty fellow at Pace’s Wilson Center for Social Entrepreneurship, will discuss current social entrepreneurship initiatives as a panelist at the 2009 Global Consortium of Entrepreneurs Centers Conference.

FOR IMMEDIATE RELEASE

Media Contact Samuella Becker Pace University/Public Information 212-346-1637 or 917-734-5172 sbecker2@pace.edu

“Social Entrepreneurship – In-house and Out in the Desert” To be discussed at Global Consortium of Entrepreneurship Centers Conference, Houston, October 16, by Bruce Bachenheimer, Director of Entrepreneurship at Pace University

NEW YORK, NY, October 15, 2009 – Bruce Bachenheimer, director of entrepreneurship studies at Pace University’s Lubin School of Business and a faculty fellow at Pace’s Wilson Center for Social Entrepreneurship, will discuss current social entrepreneurship initiatives as a panelist at the 2009 Global Consortium of Entrepreneurs Centers Conference.

With 200 university-based entrepreneurship centers as members, the consortium is one of the best-respected forums in the growing field of teaching entrepreneurship. This year’s gathering, at Rice University, Houston, will discuss ways “entrepreneurship and innovation are “Driving the Global Economy.” Pace University is one of the first colleges to offer courses in entrepreneurship and is celebrating its 30th anniversary in this field of study this year.

Bachenheimer, a Clinical Professor of Management at the Lubin School of Business, will join faculty members from Purdue University, Drake University and Washington University, St. Louis, in a panel discussion Friday, October 16 titled: “Social Entrepreneurship – In-House and Out in the Desert.”

His talk will specifically address building effective social entrepreneurship programs to benefit society and underdeveloped countries.

Hands-on in Tanzania

Peter Drucker, in his 1985 book, “Innovation and Entrepreneurship,” cited Pace University as one of two “entrepreneurial universities” steeped in entrepreneurial instinct and focused on seizing opportunities for educational excellence in a manner reflecting societal and market needs.

Bachenheimer is the mastermind behind the annual Pace Pitch Contest, now in its sixth year and offering a $25,000 cash prize for the winning social venture presentation on December 3. He also spearheads the Pace Business Plan Competition, which is also in its sixth year and features a “best social venture” category. He serves on the Advisory Board of Pace’s Wilson Center for Social Entrepreneurship; organizes speakers/panel discussions on social entrepreneurship initiatives like IBM’s Corporate Service Corps initiative, and speaks at external events on social entrepreneurship like the Annual Youth Assembly at the United Nations.

“For me, it is really about providing students with “hands-on” opportunities to deepen their understanding of the power of social entrepreneurship and encourage the creation of ventures to help solve world problems such as poverty, pollution and poor nutrition,” said Bachenheimer, who led a 10-day International Field Study course during Spring Break 2008 to Tanzania. He and his 15 MBA candidates came away inspired by their meetings with important figures including:

• David Robinson, the son of U.S. baseball legend and civil-rights hero Jackie Robinson, who is using the coffee grown on his 280-acre farmers’ cooperative Sweet Unity Farms to encourage social change;

• Reginald Mengi, an industrialist and media tycoon. The former Chairman and Managing Partner of Coopers & Lybrand (now PricewaterhouseCoopers) in Tanzania, Mengi is the founder and Executive Chairman of the IPP business conglomerate; and

• Alex Mkindi, Deputy Country Director of TechnoServe, one of the world’s most successful social entrepreneurial organizations. TechnoServe received a $46.9 million grant from the Bill & Melinda Gates Foundation to help small-scale farmers in East Africa improve coffee quality, increase production and link to markets.

Rooted in entrepreneurship

Pace University was founded by two entrepreneurial brothers, Homer and Charles Pace, who in 1906 borrowed $600 to rent a classroom in lower Manhattan to teach ten men and three women the principles of business. The undergraduate concentration in Entrepreneurship was established in 1979, formally offered as one of five concentrations in the Management major.

Centers and activities that support Pace’s entrepreneurship program include:

• The Small Business Development Center (established 1986) • The Entrepreneur in Residence Program (established 1998) • The “SCI2” Business Incubator (established 2003) • The Pace Business Plan Competition (established 2004) • The Pace Pitch Contest (established 2004) • The Wilson Center for Social Entrepreneurship (established 2005)

About Pace University For 103 years Pace University has produced thinking professionals by providing high quality education for the professions on a firm base of liberal learning amid the advantages of the New York metropolitan area. A private university, Pace has campuses in New York City and Westchester County, New York, enrolling nearly 13,000 students in bachelor’s, master’s, and doctoral programs in its Lubin School of Business, Dyson College of Arts and Sciences, Lienhard School of Nursing, School of Education, School of Law, and Seidenberg School of Computer Science and Information Systems. Visit Pace on the web at www.pace.edu| Facebook | Twitter (@PaceUNews) | Flickr | YouTube

Pace University appoints Jeff Trexler, J.D., PhD, as Wilson Professor of Social Entrepreneurship

Pace University has appointed Jeff Trexler, J.D., PhD, as the new Helene and Grant Wilson Professor of Social Entrepreneurship. Funded through Pace’s Wilson Center for Social Entrepreneurship, the professorship is a joint appointment with the University’s Lubin School of Business and Dyson College of Arts and Sciences.

FOR IMMEDIATE RELEASE

Contact: Bill Caldwell, Office of Public Information, Pace University, 212-346-1597, wcaldwell@pace.edu

Pace University appoints Jeff Trexler, J.D., PhD,
as Wilson Professor of Social Entrepreneurship

Entrepreneurial lawyer and researcher has expertise in China and Russia, will expand Pace academic programs encouraging risk-taking spirit in nonprofits

New York, NY – September 19, 2006 – Pace University has appointed Jeff Trexler, J.D., PhD, as the new Helene and Grant Wilson Professor of Social Entrepreneurship. Funded through Pace’s Wilson Center for Social Entrepreneurship, the professorship is a joint appointment with the University’s Lubin School of Business and Dyson College of Arts and Sciences.

“Jeff Trexler is developing an academic program for the Wilson Center that integrates cutting-edge theory with innovative social enterprise,” says Pace President David A. Caputo. “His extensive experience will help us leverage Pace’s performance in nonprofit organization development and education, and create heightened awareness throughout the University of the nonprofit sector in civic life.”

Before joining Pace, Trexler taught nonprofit organization law at Saint Louis University, the SMU School of Law and the Yale Law School.

Emerging nonprofit areas. In his doctoral dissertation, Professor Trexler examined the link between nonprofit management and organizational identity in higher education, with a particular focus on educational missions to China. His recent writing and research cover topics in the area of social enterprise including Russian nonprofit law, Native American tribal philanthropy, the rhetoric of nonprofit design and the nature of nonprofit networks.

In addition to his academic research and teaching, Professor Trexler has worked with U.S. and foreign nongovernmental organizations to develop more effective nonprofit institutions. In the 1990s, he helped Russian lawyers and government officials establish a new legal framework for civil society in the post-Soviet era. As a practicing lawyer specializing in tax-exempt organizations, he has assisted groups covering a spectrum of nonprofit activity including venture philanthropy, grassroots education, health care, religion and mutual aid.

Pace University established the Wilson Center for Social Entrepreneurship in 2005 to help cultivate the risk-taking spirit and managerial skills of nonprofit organizations. The center was launched with a gift of $5 million from Helene and Grant Wilson, whose involvement with nonprofits convinced them that more entrepreneurial management can help these organizations increase their impact. With Executive Director Rob Johnston and Pace faculty members, the Wilson Center (www.pace.edu/wilsoncenter) provides scholarly research, short training courses, and advisory services to nonprofit organizations, in addition to contributing new nonprofit courses to the University’s current entrepreneurship offerings.

Celebrating its centennial in 2006, Pace University is known for an outcome-oriented environment that prepares students to succeed in a wide-range of professions. Pace has facilities in downtown and midtown New York City and in Westchester County at Pleasantville, Briarcliff, and White Plains (a graduate center and law school). A private metropolitan university, Pace enrolls approximately 14,000 students in undergraduate, masters, and doctoral programs in the Dyson College of Arts and Sciences, Ivan G. Seidenberg School of Computer Science and Information Systems, Law School, Lienhard School of Nursing, Lubin School of Business, and School of Education. www.pace.edu.