Dan writes: The following is an excerpt from the essay I submitted to the SEVEN Fund’s Morality of Profit essay competition. The full essay will be available in a published collection that the Morality of Profit project will be publishing in 2011, along with the essays of other winners and thought leaders.

Excerpt:

“…In America, at least, our notions about the evils of profit come from the early Puritan settlers to the nation – people who, ironically, came here desperate to make profits in everything from fur-trading to selling soap and potash.

But there was a problem. The Puritans were also Calvinists – taught to hate themselves – taught that self-interest was a raging sea that was a sure path to eternal damnation. This creates a real problem for these people. They come to the new world to make profit and profit will get you sent immediately, directly, and permanently to hell. What were they to do? So they created two economic worlds where there was only ever one. Charity became this other world – this economic sanctuary where they could do penance for their profit making tendencies. So, of course, how could you make money in charity, if charity was your penance of making money? So the merchants, farmers and carpenters of the world got free market practice and profit, and the needy got this religion, whereby everything that worked in the market was pretty much banished.

And this was called good. This was called charity. this was called morality.

John Winthrop, the first Governor of Massachusetts who led one of the first contingents of ships carrying Puritans to New England, and who had his sights set on handsome profits himself, wrote a famous sermon entitled, “A Model of Christian Charity,” in which he wrote that, “if our heartes shall turne away soe that wee will not obey, but shall be seduced and worship . . . other Gods our pleasures, and proffitts, and [serve] them; . . . wee shall surely perishe out of the good Land whether wee passe over this vast Sea to possesse it.”^[1]

Thus was born the “non-profit” ethic. The word “profit” comes from the Latin noun profectus for “progress” and the verb proficere for “to advance.” So the term “nonprofit” means, literally, non-progress. It is a dangerous unconscious statement of intent, or lack of it. No advance. No progress.

And the sector that has been given this name is the sector charged with addressing the greatest moral issues of our time – hunger, disease, extreme poverty, and the others. We ask the one sector that has been stripped of the power of financial incentive to solve the world’s most urgent problems. It would be like sending the ambulance with the flat tires to the man dying of a heart attack. And, like the Puritans, we call this morality. Morality could not be undermined with more reverence paid to the notion of morality.

And the evidence of the immorality of this paradigm is overwhelming. This system isn’t solving problems. In 1997 UN AIDS estimated that 1.1 million adults and children died of AIDS in the world. Ten years later, despite the introduction of protease inhibitors, that number had doubled to 2.1 million adults and children. In 1997 43,000 American women died of breast cancer. Ten years later, that number hadn’t changed very much. 41,000 American women died of breast cancer in 2007. Poverty has remained stuck at about twelve percent in the U.S. for decades. In 1992 the UN estimated 824 million people malnourished in the world. Ten years later, that number hadn’t changed very much – in 2002 they estimated 820 million people malnourished in the world. And this past Christmas the estimate was upped to 1 billion people malnourished in the world.

This system of no profit isn’t solving social problems. It’s leaving a trail of dead bodies.

The scale of the nonprofit organizations charged with addressing these issues is microscopic compared to the scale of the problems. And without the fuel of financial incentive they can’t attract capital and they can’t achieve anything close to the scale of the emergencies we face.

Since 1970, the number of nonprofits that have crossed the $50 million annual revenue barrier is 144. The number of for-profits that have crossed it is 42,136.^[2]

This is the morality of no profit. These are the effects of stripping away financial incentive. The system works as it is supposed to. A system with no profit was never designed to eradicate social problems. A system with no profit was designed to guarantee their persistence. Winthrop wrote, famously that:

God Almightie in his most holy and wise providence hath soe disposed of the Condicion of mankinde, as in all times some must be rich some poore, some highe and eminent in power and dignitie; others meane and in [sub- mission . . .] soe that the riche and mighty should not eate vpp the poore, nor the poore, and dispised rise vpp against their superiours, and [shake] off their [yoke].^[3]

The Puritans didn’t want social problems to get solved. Their world order depended on the existence of the poor. If there were no poor there would be no opportunity for penance. The Puritans needed penance because they were taught that they were despicable in the eyes of God. John Calvin wrote that:

Original sin, therefore, seems to be a hereditary depravity and corruption of our nature, diffused into all parts of the soul, which first makes us liable to God’s wrath . . . we are so vitiated and perverted in every part of our nature that by this great corruption we stand justly condemned and convicted before God . . . even infants themselves, while they carry their condemnation along with them from the mother’s womb, are guilty not of another’s fault but of their own. For, even though the fruits of their iniquity have not yet come forth, they have the seed enclosed within them. Indeed their whole nature is a seed of sin; hence it can only be hateful and abhorrent to God. . . . For our nature is not only destitute and empty of good, but so fertile and fruitful of every evil that it cannot be idle . . . the whole of man is of himself nothing but concupiscence.^[4]

Belief in the evil of profit is rooted in belief in the evil of mankind.

We can no longer afford the luxury of this self-centered self-hatred. It is the ultimate form of greed to be more concerned with the degree to which we are properly self-sacrificing in our own eyes than on the degree to which we are making progress on stemming the tide of death. This is a new time that calls for new ideas. Love for others will never come from old ideas about hatred of ourselves.

While we wallow in our high-minded rhetoric about the evil of doing anything that smacks of self-interest, or worse, ordain unilaterally that others who want to earn a profit for solving the great social problems should be exiled form the playing field, little kids are dying. If the system were truly moral someone would ask the dying little kids what they think about the issue. It’s revealing that no one ever does. Do we really think it is of some comfort to the mother whose child just died of diarrhea to know that at least no one made a profit in the failed effort to bring clean water to her son?

Mankind is not evil. Ergo a man or a woman’s interest in his or herself is not evil. The truth of our underlying belief in this is revealed in our excitement about micro-financing’s ability to help poor people in developing countries start businesses that will allow them to earn a profit. We hardly expect that once they get a leg up they should give it all back and return to the original state of poverty out of which their own self-interest and a little capital lifted them.

The fact that charity exists at all is a testament to the tenderness of the human soul. On the question of whether or not mankind is basically good, this reality speaks for itself. If we can accept that there is nothing wrong with a man doing some good for himself while he does some good for the world, we will see a lot more good getting done for the world.

This is the morality of profit.

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^[1] Perry Miller and Thomas H. Johnson, The Puritans: A Sourcebook of Their Writings, Two Volumes Bound as One (Mineola, NY: Dover Publications, Inc., 2001), p. 199.

^[2] George Overholser and Sean Stannard-Stockton, “Philanthropic Equity,” January 21, 2009, “Tactical Philanthropy” blog, http://www.tacticalphilanthropy.com/2009/01/philanthropic-equity

^[3] Perry Miller and Thomas H. Johnson, The Puritans: A Sourcebook of Their Writings, Two Volumes Bound as One (Mineola, NY: Dover Publications, Inc., 2001), p. 195.

^[4] John Calvin, Calvin: Institutes of the Christian Religion, 2 vols., ed. John T. McNeill, trans. Ford Lewis Battles (Louisville, KY: Westminister John Knox Press, 1960), pp. 251–252.

CAMBRIDGE, MASSACHUSETTS —The Social Equity Venture Fund — SEVEN — is pleased to announce the winners of its 2010 Morality of Profit essay competition. The winning essays were selected through a competitive review process that included a jury of published authors and experts in the realms of ethics and enterprise solutions to poverty. Entries were received from more than 2200 individuals in 88 countries.

The grand prize of $20,000 was awarded to Daniel Pallotta for his submission exploring the role of for-profit practices to meet public challenges. Mr. Pallotta is a leading expert on innovation in the nonprofit sector, founder of Pallotta TeamWorks which invented the multi-day AIDS Rides and Breast Cancer 3-Days, and author of the landmark book, Uncharitable.

The SEVEN Fund would also like to congratulate our second and third prize winners, Bradley Hobbs, a university professor, and Mary Halpine, a Canadian and former president of the World Youth Alliance. Mr. Hobbs’ essay, “My Father’s Drugstore,” is a collection of four vignettes explaining how his father taught him the lessons of morality, integrity, profit, and trust while operating a business in a small town. Ms. Halpine’s essay, “The Wisdom to Learn,” focuses on responsible profit-making, and her experiences of this notion in her travels throughout Nigeria, Rwanda, and other developing nations.

“These three essays represent outstanding examples of the essay form from the more than two thousand submissions,” said Michael Fairbanks, Director of the SEVEN Fund and Editor-in-Chief of the Morality of Profit project. “Dan’s essay was a tour-de-force, sharing his experiences pioneering a new model of social enterprise.  Bradley’s essay was a brilliant example of the personal essay, with a sweetness and level of personal integration that impressed the jury.   Mary’s piece is an excellent account of the experience of a young Westerner working in the developing world.”

In addition to our winners, SEVEN would also like to congratulate four Honorable Mentions: Joshua Ruxin in Rwanda, Paul Schwennesen in the State of Arizona, Nyla Nox in Thailand, and Blake Goud in the State of Oregon.  The winners and honorable mentions will be invited to work with editors to publish their essays in the Morality of Profit book, due out in 2011. The top fifty authors are under consideration for additional slots in the book, together with thought leaders and branded experts in business, entertainment, science, and the academy, and will be notified by the editors later this Fall.

Please check back in the next week for biographies of the winners and honorable mentions, and excerpts of their essays.

Dear Morality of Profit competitors:

I would like to thank the authors who participated in the Morality of Profit essay competition. Our main Morality of Profit essay competition is coming to an exciting conclusion. I wanted to confirm that we will be making our final announcement next week. We will make the public announcement of our first, second, and third place winners on Monday, August 16th.

We will distribute our final press release via email to everyone that participated, and it will be available online at www.sevenfund.org and www.moralityofprofit.com as well. A number of you will also be receiving messages that your essay has progressed to consideration for inclusion in the manuscript, and more detail will be provided on that timeline and process.

Thank you again to everyone who contributed, and we look forward to announcing the winners as well as moving to the next stages of finalizing the manuscript and conference. Please do not hesitate to contact me if I can answer any questions for you.

Best regards,
Elizabeth Hooper
SEVEN Fund

SEVEN would like to thank the authors who participated in the Morality of Profit essay competition, and our recent mini-competition to post excerpts on MoralityofProfit.com. We appreciate your important contribution to the discussion, and are delighted with the number of essay excerpts that we received. In total, over 175 authors posted their excerpts to the site, and those posts cumulatively received thousands of Facebook posts, comments, and hundreds of Twitter mentions.

We are pleased to announce that Ms. Carol Gutierrez Esguerra’s submission “The Good Story” received an unprecedented number of hits, including 882 Facebook shares and 24 Retweets.  Congratulations to all the participants for generating so much feedback and discussion around the topic of Morality of Profit.

Our main Morality of Profit essay competition is coming to an exciting conclusion. We’re currently finalizing outreach to the winners, which is sometimes a challenge across time zones and continents.  We will make the public announcement of our first, second, and third place winners by Monday, August 16^th at 5:00pm EST.   We will distribute our final press release via email to everyone that participated, and it will be available online at www.sevenfund.org and www.moralityofprofit.com.

Thank you again to everyone who contributed, and we look forward to announcing the winners as well as moving to the next stages of finalizing the manuscript and conference.

Best regards,

Elizabeth Hooper
Executive Director
SEVEN Fund

I think that I and people in developing nations want the same thing: a guaranteed source of income, doing meaningful work with benefits, without the need for a boss. This is what “In the River They Swim” has omitted so far. Sure, it’s liberating to not to need government aid, but isn’t even more liberating not to need a boss? Can the internet provide such an opportunity? Can we teach a person to “swim” in the river by themselves without a boss? Can’t we teach them to catch their own fish? It looks like it because I get many email offers to run independent businesses but so far, I can’t tell if they are scams or not.

So if children in Africa got those laptops from Nicholas Negroponte, and if adults in developing nations got them too, and had a system for evaluating on-line enterprises to create independent wealth, where only the most honest, environmentally sane, opportunities that are respectful of human rights and of the stakeholders were available, would this put everyone in every country on an equal playing field, able to earn meaningful income, possibly without the hierarchy of a traditional boss?

Perhaps, but some computer education and education about economics may first be in order for this method to succeed.

What I find a very inspiring source of guidelines on this subject are ideas presented by Scottish Enlightenment thinkers. Here I would especially like to mention a few thoughts of Lord Shaftesbury, who introduced the expression of a natural moral sense, later famously used by Adam Smith. In his ‘Characteristics’, while arguing against psychological egoism, he regarded the self-directed impulses (‘self-passions’ as he called them) as necessary aspects of human nature. The important thing for him was knowledge of one’s true self-interest:

“Happiness was to be pursued and in fact was always sought after; but whether found in following Nature, and giving way to common affection, or in suppressing it, and turning every passion towards private advantage, a narrow self-end or the preservation of mere life, this would be the matter in debate between us. The question would not be, who loved himself or who not, but who loved and served himself the rightest and after the truest manner”.

and the height of wisdom was ‘to be rightly selfish’ because narrowly considered self-interest provokes actions that work against a person’s real interest:

“Now these affections (self-passions), if they are moderate and within certain bounds, are neither injurious to social life nor a hindrance to virtue; but being in an extreme degree, they become cowardice, revengefulness, luxury, avarice, vanity and ambition, sloth; and as such are owned vicious and ill with respect to human society. They are ill also with respect to the private person and are to his disadvantage”.

Thus it is not greed, but rational and tempered self-interest that contributes to people’s social and economic welfare. The wise man is not necessarily someone who renounces wealth, but someone who understands its proper role in human life.

“When it is dark enough, you can see the stars.”

– Persian Proverb

Many consider this a time of economic darkness. The news is littered with cries of ruin, poverty, and self-indulgence in the wake of the current global economic crisis— a result of undue federal regulation and an element of greed, both on the part of the brokers, investors, and bankers and on the part of the consumers. Venerable journalist Robert Samuelson agrees that “Greed and fear…have seeded this global crises…short term rewards blinded [profiteers] to the long term dangers.” Jim Wallis, author of The Great Awakening, indicates that “the moral consequence of [this] greed [is that] private profit has prevailed over the concept of the common good.” Richard C. Cook, a retired federal analyst for the U.S. Treasury Department, realizes that “this [outlook] is what must be changed, not just mechanics.” It’s against the dark backdrop of this defective moral outlook that we are able to see the stars—to see profit not through the polluted lens of greed but through the Biblical lens of stewardship.

Greed and profit have become synonymous for each other in modern-day society, but this couldn’t be further from the truth. Greed is unquestionably immoral; profit, on the other hand, (as well as the entire market system) is amoral and condoned by the majority of world religions, but particularly by Christianity. Deuteronomy 8:18 declares simply that “it is [the LORD your God] who gives you the ability to produce wealth” (NIV). But the key is not the profit itself; rather, it’s the motive behind the accretion of profit and the ultimate application of profit that becomes moral or immoral…

The poverty-battling circulation of profit gives life to Deuteronomy 15:4 which argues that “there should be no poor among you.” Nelson Mandela agrees that “poverty is man-made and it can be overcome by the actions of human beings.” The total eradication of poverty will not be in this moment, but right now we can take a step that may lead to that day. As the Chinese Proverb goes, “Those who wish to move a mountain must first start by clearing away small stones.” Profit is the key. If we harness profit and use it for the common good, poverty won’t have much of a chance. Profit must be altruistic, not egoistic. Once we as a collective global community choose to love our global neighbors as ourselves (Romans 13:9) instead of forsaking the common good out of self-indulgence, we will be closer to moving this mountain of poverty than we’ve ever been. It’s in these darkened days of greed that we need to see the Biblical model of profit twinkling in this economic night. It’s time we recognize the saving power built into profit and unleash this power in an unselfish defense of the worlds’ poor.

It is not out of the benevolence of the brewer, the baker or the butcher that we get our daily bread but by their own selfish interest.

This statement by Adam Smith underscores the fact that our global economy cannot be shaped without considering the workings of the global society. The recent economic crisis show that global markets have separated morality and business activity in recent times. The missing piece, I believe, is recognition and care for society. It is fundamental to promoting the real ethical principle of responsibility in the event of the crisis. Managers especially, in their risk taking ride forgot that their actions impact beyond their offices and national borders. If one could mirror the devastating effects of a wrong decision in their institution on the poor in the global society we would have been better of.
We need to shape moral markets formed by institutions driven by a ‘compass of morality’ and also built on the six dimensions of virtue ethics in business as Aristotle present in his philosophical theory of ethics- community, excellence, role identity, holism, integrity and judgment.

Greed makes the global system volatile and morality is key because any wrong act sends seismic waves across the global landscape. We are at the cross-roads to act together for generations to come. I conclude with Albert Einstein’s quote, “The significant problems we face today cannot be solved at the same level of thinking we were at when we created them”. Let’s think and act differently.

“Sharing Skills and Changing Lives,” said Julie to me, “is not as easy as it sounds.”

Julie was a 32 year-old Canadian midwife working in Sri Lanka. She was talking to me about the tagline of VSO, an international development organization that had employed me as one of its national program officers. At that time, I had returned to Sri Lanka from the U. K. only recently. I found it easy to identify with Julie.

Every year VSO places international volunteers who possess skills that are scarce in fields such as mental health, good governance and disability which the organization identifies as its development-goal areas in the most disadvantaged countries around the world. During a placement that averages two years, volunteers attempt to strengthen local organizations by sharing their knowledge with employees. The request for the volunteer is made by the organization. The program officers assess the organization’s need and match volunteers to the request. Julie was one of my volunteers. I was directly linked to her placement and her progress.

I posted Julie on a sprawling plantation settlement on a mountain range eight hours away from Colombo, the capital of Sri Lanka. During the last three hours of our journey to her plantation bungalow we travelled on narrow dirt roads that had been cut into the mountain surfaces. All around us we saw emerald tea plantations and in the far distance beyond the valleys, the southern plains we had travelled from shimmered in the morning sun.

In the 19th century the British had cleared virgin forests of this region and planted one of the most lucrative crops at the time; tea. When they found that the locals did not want to work on the tea plantations, they brought laborers from South India. Until recently this group of estate Tamil people has had little access to their rights such as a minimum wage or claims to citizenship.

When I met the managers of the tea plantation companies they told me they wanted change. Most of the plantation companies had made substantial efforts to improve housing facilities and provide access to health and primary education for their employees. This is a labor intensive industry. Every morning women climb the mountain face picking out two leaves and a bud from tea plants. The women bear the real burden of labor on a tea plantation.

My first visit to Julie’s plantation came two months after I had taken her there. I had left behind a young, enthusiastic and highly skilled woman. The plantation women laughed and giggled the moment she greeted them in her wavering tamil. The children and the dogs flocked around her. When I went back Julie had changed, had become subdued. She was having issues with her employer. She told me that the managers only promised to implement her suggestions. She wanted to work with the local nurse at the plantation health unit and train her in more up-to-date nursing care procedures, but the managers had not given her the time to do so. Julie also expressed doubts that the plantation women really wanted the sterilization they opted for after the birth of their second child.

I acted as an intermediary between Julie and the superintendents of the estate. They seemed surprised and upset that Julie could not appreciate the efforts they had made to allow her to work on the plantation.

When I returned 4 months later Julie displayed obvious signs of despair. She had doubts about the impact of her work. She had still not met the local nurse. She complained that the doctor did not administer adequate levels of anesthetic to the women during the sterilization procedure. She was angry. She said that the administrators of the plantations manipulated the women’s choice to be sterilized by giving them a financial bonus for the decision. “This is not right. This is very unethical,” she said over and over again, shaking her head.

Now I ask, is there a way to make the pursuit of profits our way to solve social problems?  Is there a way to steer the invisible hand towards social justice? Is there a way to make the interest of a CEO akin to those of a Nigerian child? Instead of saying no, ill say lets try.  Let’s try making the pursuit of profits and the pursuit of social justice compatible.  We have done it in the past.  Some governments have give tax breaks to companies who turn environmentally friendly.

Are markets moral?  They could be more moral.  Let’s try to make markets moral.  In my country we pay a 7% sales tax.  Why keep it 7% for all products?  We can charge 10% to a company who exploits children and isn’t environmentally friendly.  We can charge 7% to a company who evidences that they are environmentally friendly, 6% to a company who evidence that they keep with labor laws and 3% to those who keep with both.  This can give an economic advantage to companies that wanted to change their ways but couldn’t because of profits or make very greedy companies change their ways to maximize profits.  This gives also the knowledge to consumers that the higher the sales tax of the product the more suffering or destruction it laid in its wake.  Individual human choices are paramount in life.  We must try to make conditions so that the correct and easy choices tend to be the same.