By Mark Lewis
American News Service
It would be easy to mistake William Linder for the local tycoon of Newark, N.J. His organization seems to have a finger in every pie -- housing developments, retail franchises, a fancy restaurant, a highly profitable supermarket.
But Monsignor Linder -- yes, as in priest -- is not really raking it in, at least not for himself. His New Community Corp., like a growing number of non-profit groups, has found that profit-making activities are not necessarily incompatible with their charitable missions.
"The idea of generating wealth through a for-profit enterprise to further our mission is exactly where we need to be going," said Michael Howland, president of the Independent Charities of America. "I think you're seeing the beginning of a trend."
New Community is a non-profit organization with a for-profit subsidiary that owns two-thirds of a Pathmark supermarket, a spiffy and spacious store in Newark's inner city that would do any upscale suburb proud. The subsidiary pays taxes on its share of the profits, then turns the net revenue over to New Community to help fund its various revitalization activities.
"What it does is pay for economic development projects, so we can do more," Linder said.
And the organization's for-profit activities not only make money, they also help the community. The supermarket, for example, sits in the heart of Newark's Central Ward, which was devastated by the riots of1967.
"We had gone 25 years without a major supermarket in the Central Ward," Linder said. "People had to leave Newark to do any major shopping."
The partnership New Community formed with Pathmark in 1990 gives Central Ward residents access to the good selection and low prices a major chain store can offer; adds 240 jobs to the local economy; and helps support New Community's other activities, such as creating low-cost housing.
In San Francisco, the Delancey Street, an organization run by ex-convicts to help them reintegrate into society, built a block-long residential and retail complex. The residents operate a number of businesses, including an upscale restaurant. "I've eaten there a number of times," said Howland, whose Independent Charities group is based in San Francisco. "It's a tremendous example" of non-profit groups making profits to support their mission, he said.
Operating the businesses -- catering, printing, moving, advertising and more -- provides useful training for the former prisoners and helps keeps Delancey Street economically self-sufficient.
Despite the success of these and other ventures, some non-profit groups are wary of stepping into the for-profit world.
In Washington, D.C., the National Center on Education and the Economy sells its standardized math and English tests to school systems. But officials there emphasize that this is different from setting up a separate for-profit arm that has little to do with the organization's main purpose.
"It's an important distinction," said Marc Tucker, the center's president. He wants to stick close to his group's basic mission, which is improving the quality of America's schools. "As an organization, we're not in business to be in business," he said. "I'd hate to be driven by the bottom line."
But many in the non-profit world will probably have little choice in the matter, according to Bill Shore, author of "Revolution of the Heart." He noted that in these times of cuts in government social service programs, non-profit groups must find ways to make money themselves to support their budgets. "It's time to do something differently," he said. "There's a terrific opportunity for them to take advantage of a lot of resources that have been too long ignored in the non-profit community."
Shore is executive director of Share Our Strength, a Washington, D.C. based group that raises money for anti-hunger and anti-poverty programs. He said that before his SOS group started aggressively developing profitable projects like its "Charge Against Hunger" partnership with American Express, it was able to distribute only $3 million to local charities. But last year, he said, the group gave away $8 million.
Much of the new money came from cause-related marketing, such as getting American Express to give a certain amount to SOS every time its card is used.
For-profit activities, including selling the SOS logo to a wine maker, also increased the group's revenue. Still, not every non-profit is ready to abandon the traditional approach to fund-raising. At United Way of America, the nation's biggest charity, they make their money the old-fashioned way -- by soliciting donations. Last year they raised $3 billion.
"Every year our numbers are going up," said Marianne McInerney of the United Way of America research department. She said the for-profit trend among non-profits is primarily confined to community development groups like Linder's New Community Corp., which has eight smaller for-profit businesses in addition to its share in the supermarket.
But Howland of Independent Charities said that with thousands of new non-profits being created each year, the for-profit approach is likely to spread quickly to a wider spectrum of charity groups.
"Charities face more and more competition (for donations)," he said. "You can only redistribute wealth so much. At some point you need to create new wealth to distribute. That's the bottom line."
Putting the Profit in Non-profits
Among the potential problems for non-profit groups trying to generate profits are that people who go into charitable work may not be well suited to working in a profit-seeking environment.
The solution, according to Bill Shore of Share Our Strength in Washington, is to bring in new people with entrepreneurial skills to tackle the for-profit challenge.
"They don't need to be the same people," said Shore, whose group raises money for anti-poverty groups nationwide. "You can have people of both stripes in your organization."
Another worry has to do with the fact that charities, by accepting philanthropic contributions, help redistribute wealth. If they focus on creating wealth themselves, would the contributions continue to roll in?
The support of philanthropic foundations "is absolutely crucial," said Marc Tucker, president of the National Center on Education and the Economy. "Foundations are there to do things the market won't do. That will always be the case."
But Shore said that adding a for-profit component does not mean abandoning traditional revenue sources.
"I think most of the philanthropic people I know would continue to donate money to SOS," he said.
Copyright ©1997 American News Service
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