Monday, June 23, 2008
“The highest degree of charity—above which there is no higher—is he who strengthens the hand of his poor fellow Jew and gives him a gift or [an interest-free] loan or enters into a business partnership with the poor person.” - Maimonides, Ladder of Tzedakah
Maimonedes, who lived from 1135AD to 1204AD, is well known as the first person to write a systematic code of all Jewish law, the Mishneh Torah. One of his small contributions, cited among donors who have researched how they might best give their money away, is his hierarchy of giving known as the Ladder of Tzedakah. “Doing business with the poor” is just one of the many ways that the highest level of charity is translated and written. The common thread in all translations is to help the poor become self-sufficient.
There are 110,000 people in Zimbabwe who are dependent on the nonprofit CARE who are not getting the food they need each month since the crackdown of Mugabe on international aid flowing into to Zimbabwe. Although it is probably no longer fair to pick on CARE for irresponsible giving it demonstrates what food aid programs have done for many years: created dependency. If CARE had rejected federal aid a long time ago, as they are now, Zimbabwe may have 110,000 self-sufficient people who are better able to weather the current political storm.
I have made the point in past posts and will continue to make the point many more times - the single most charitable thing anybody can do is to start a ridiculously profitable, innovative and responsible company. The other point I will never grow tired of reiterating is individuals are corrupt not corporate structures.
So what is the positive news in this post? Where are the positive people?
The positive people highlighted above include every honest working employee and especially every honest entrepreneur. Honest for-profit entrepreneurs are the true social entrepreneurs - it is their money that largely finances every non-profit social entrepreneur today. Trace every non-profit dollar back to it’s original creator and you will an entrepreneur.
This post implicitly highlights positive people like Arthur Blank and Bernie Marcus who created The Home Depot (now highlighted explicitly). Without adjusting for inflation The Home Depot has since it’s inception in 1978 reduced the cost of home improvement goods to the average consumer by 30% ! In the process they created hundreds of thousands of jobs, thousands of millionaires and thousands of philanthropists. No nonprofit can boast anywhere near this impact. How about Sam Walton? I would put him right at the very top of the list of the world’s all time greatest social entrepreneurs. Wal-Mart committed to continuously driving down prices of our most basic goods through SCM innovations has revolutionized the world of business. I don’t like shopping at Wal-Mart, but I thank Wal-Mart for Target’s low prices, a place that my family does shop. The story of Wal-Mart is the same as The Home Depots’. It reduces prices and allows the average American to enjoy a quality of life unlike any known in the history of this world. On top of that - who knows how many hundreds of thousands of jobs, thousands of millionaires and philanthropists Wal-Mart has created. I could go on and on about General Electric, Samsung, GM, Chevron, Apple, Oracle, Koch Industries, etc. Just go down the current list of Fortune 500 companies.
If you really want to take social action, if you want to truly achieve social impact, if want to be a social entrepreneur, and just flat out want to be charitable - then create innovative products and or services that drive down consumer costs for the world’s poorest, give them jobs and ultimately convert many of them into wealthy philanthropists.
June 24th, 2008 at 1:13 am
fantastic! nice interpretation of maimonides. well done. i teach it a lot, and like the concept. it is exactly what he had in mind.
and the second step is to be sure that any money given to tzedakah goes to people and places that use it efficiently and effectively - and do NOT waste your precious shekels….
arnie draiman
philanthropic consulting
http://www.draimanconsulting.com
June 28th, 2008 at 3:29 pm
For the most part I would agree with you and am a strong advocate for business for good but I do think the argument can be taken too far. Often entrepreneurial wealth is fed back to fix problems that their own business created but not at an replacement value, the classic example being the environment.
I also think there is a strong tendency for money and the pursuit of wealth to corrupt. So you get some who say they will go into business, make lots of money, then give to charity. But the data shows that as a percentage of income and percentage of different income brackets the working class are more charitable than the rich (http://abcnews.go.com/2020/story?id=2682730&page=1). Another discouraging fact is that economic disparity has never been greater in the history of the world.http://bigpicture.typepad.com/comments/2006/03/economic_dispar.html
I also think the corporate structure does lend itself to the pursuit of profits with greater weight to the short term and at all costs. The structure itself is not conducive to environmental responsibility or fair wages, we have had to overcome that negative tendency with legislation and with a strong moral fiber in society.
So I think what we need is more Sam Walton’s and Arthur Blank’s that are committed to corporate responsibility and special consideration of the poor from their very beginnings. The extreme poor will rarely be a profitable market in the short term and hence will remain out of the society that are benefiting from the increased productivity and standard of living. I do think as a society we are progressing more towards that ideal alongside the publicity surrounding successful public/private mixings such as the Grameen Bank but I think we are doing a disservice to society if we say we can continue as normal, not sacrifice in any form and that all of the world will be better for it.
June 30th, 2008 at 8:27 am
I understand that entrepreneurial, free-market capitalism allows for greed, and that individuals always seeking to increase their profits and profit margins can at times create a net negative over their lives. But look at the aggregated result. There is no other “social program” in the history of this world that has had even near the positive impact that American capitalism has had. I agree that capitalism doesn’t work very well from an idealist’s point of view, but it is by far the best we’ve got.
The only way we can improve capitalism is by building the character of each player. That is the best bottom up approach. If you could hold the moral fiber of all players constant, I am very, very skeptical you could create a better system than American Capitalism.
When I speak of moral fiber, I refer to people making decisions based on their conscience not based on the coercion of policy and law or even pressure from media and others.
The problem is, the more bad choices people make, the more “evidence” we have that we need a law. There is no question that the number of laws are directly proportional to the number of individuals who don’t govern themselves. Until we address the root cause we will continue to try and legislate ourselves to a better world; in the process hampering the potential and ability of the moral and ethical to have the positive impact they would like to have. Sarbanes-Oxley being one good example of what I speak of.
It makes more sense to only punish the guilty than come up with blanket legislation that punishes everybody. This idea of improving American Capitalism by creating more restraining blanket rules is just plain impossible, but with one caveat - American Capitalism is so robust that if you restrict it in any way, it will see some of those rules as opportunities and innovate around them. Put a cap on gas mileage for example and the players will eventually figure out a way to make it happen.
I don’t have enough time to massage everything I’m saying. To make my response complete I need a different medium than a blog comment section - I need a book.