In the
middle of Holy Week, there was cause for celebration as the nation received its
first-ever investment grade credit rating. The landmark upgrade brings down the
risks and cost of doing business in this country, which the government hopes
will lure more investments and create more jobs – a massive boost to big
business.
It is indeed shocking to read that a UP scholar had
to solve her financial quandary by ending her young llfe. We have many NGOs
devoted to attend to such financial constraints. But, as what actually took
place – where could she go for immediate relief. Charity institutions on our
country are mostly hard-up and any help given out has to be squeezed through bureaucratic
red tape.
This brings to mind a TED talk episode given by Dan
Pallota. He believed that what the US thought about charity was dead wrong. Our
country also treats the non-profit sector shabbily. This situation however
allows us to find ways to make our NGOs the instrument to ease poverty in a way
better than the CCT dole-outs.
A lot of people presume that business will lift up
the developing economies, and social business will take care of the
rest. However it is now generally acknowledged that most of the
country’s new-found impressive economic gains have been going to the elite, who
pay marginal lip service to their corporate social responsibility. Former NEDA
chief Cielito Habito was reported as having said: "… something is
structurally wrong. The oligarchy has too much control of the country’s
resources." Habito estimated that 75% of wealth gains have been going to
only 40 families, widening further the wealth gap between the rich and the poor. I do believe that we now have the
potential to move the great mass of humanity forward.
I was involved in the
operation of a health care foundation for a couple of years, but it was a total exercise in futility. The
Internal Revenue people discouraged NGOs to take on quasi for-profit
operations, such as selling services and goods at discounted rates, even if the
“profit” generated was earmarked to the support the foundation’s cause.
Non-profit organizations are legally limited to use only 30% of all receipts
and donations received on all
administrative requirements, which, of course, includes salaries, advertising,
marketing, as well as all contracted services.
We follow two rulebooks. We have one for
the non-profit sector and one
for the rest of the economic world. It is an apartheid that discriminates against non-profit
organization in five different areas.
The first area is on compensation. For the
profit corporations, the more value you produce, the more money you can
make. But the rulebook does not like NGOs to legitimately use
money to incentivize people to produce more in social services. The
board of trustees cannot be motivated. We have a visceral reaction to the idea
that anyone would make very much money helping other people. But it
is interesting that we don't have a visceral reaction to the notion that
people would make a lot of money not helping other people.
We think of this as our system of
ethics, but what we don't realize is that this system has a powerful
side effect. It gives a really stark, mutually exclusive
choice between doing very well for yourself and your family or doing
good for the world. Our system allows the brightest minds coming out of
our best universities to march every year directly into the for-profit
sector because they are not willing to make the kind of lifelong economic
sacrifice that is the direct result of joining non-profit organizations.
Some people react saying that those MBA types
are greedy. This is not necessarily so, because they are just smart enough
to know that it's cheaper for that person to donate P100,000 every
year to his favorite charity and save P50,000 on their taxes. He can
still be roughly P270,000 a year ahead of the game, while being hailed as a
philanthropist.
The second area of discrimination is advertising
and marketing. The for-profit sector spends lavishly on advertising and
promotions. But donors do not want their donations spent on advertising
but only directly to the needy - as if the money invested in
advertising could not bring in dramatically greater sums of money to
serve the needy.
The third area of discrimination is the taking
of risk in pursuit of new ideas for generating revenue. Because of
the wide-spread encroachment of corruption that still lingers in many sectors, NGOs
are afraid to pursue risky innovative ideas for fear of being branded corrupt.
The fourth area is time. New innovative
projects have a long gestation period and returns take time to trickle in.
For-profit companies know that there is a long-term objective down the
line of building market dominance. But if a non-profit organization
ever had a dream of building magnificent scale that required some time during
which there can be no money going to the needy, we would expect a
crucifixion.
The last area is profit itself. The
for-profit sector can pay people profits in order to attract their capital
for money and their new ideas, but you cannot pay profits in a non-profit
sector, so the for-profit sector has a lock on the multi-trillion-dollar
capital markets, and the non-profit sector is starved for growth and
risk and idea capital.
So, to enable NGOs to be able to help the likes
of Kristel Tejada, poor UP scholar to be financially comfortable, our
legislators should find ways to allow NGOs to put those five things together –
1.
They can use
money to lure talent away from the for-profit sector.
2. They can advertise on anywhere near the
scale that the for-profit sector does to generate donations.
3. They can take the kinds of risks in pursuit of
those customers that the for-profit sector takes, such as hiring
professional fundraisers. Fundraising has the potential to multiply the amount
of money available for the cause that we care about so deeply.
4. They be allowed a longer gestation period
similar to the amount of time for the for-profit sector.
5.
NGOs need to be allowed to take on quasi for-profit
operations, such as selling services and goods at discounted rates, to make up
for the extreme disadvantage of the non-profit sector because non-profits do
not have stake-holders providing capital and motivation.
At this point, it is important for legislators to
review the charter of the Philippine Charity Sweepstakes Office (PCSO). Being
government, PCSO has been subjected to political misuse, over-use and abuse.
But this charter can serve as model on what legislators can creatively do to
enable the shift of wealth being generated from the very profitable conglomerates
towards the lowly non-profit sector. This sector can finally be made to play a
massive role in changing the world for all those citizens most desperately
in need of change.
