Also, out in the field we’ve observed money laundering activities supported by microfinance, right under the noses of detached foundations who are oblivious to crime.

We also see foundations set up to serve concealed interests of business and politicians who least of all want transparency.

It’s not just about what they pay out to who, but whose interest they serve and who they obstruct in the pursuit of human rights, which needs shining a flashlight on.

I have watched nonprofit organizations literally try to destroy one another as they compete for funding. I have seen seven-figure revenue streams destroyed over egoic turf wars. When you don’t pay people with money, they compete for sainthood, and the results are far more savage, in my experience.

And the reason this horrible admin/program ratio has proliferated so disastrously is primarily because of nonprofit organizations all trying to beat one another to the lowest “price” in a war for donors. It is the antithesis of collaboration to promote a measure that brings great harm to the entire sector simply because your manipulation of it can bring big donations to you. And it gets manipulated on a big scale. The Nonprofit Overhead Cost Study looked at 125,000 IRS Form 990s and found that one third of the organizations with revenues of $5 million or more were reporting zero percent fundraising costs. Competition for sanctimony and donor dollars is what lies at the root of it. And this is a huge sample.

The competition and vitriol I have seen in the nonprofit sector is worse than anything I’ve personally encountered in the for-profit sector, where the competition is transparent and it is simply over money.

There’s nothing worse than “a war among saints,” as Thomas Merton wrote.

The case for applying capitalism to resolve social problems, had however been made, in a theoretical paper delivered to President Clinton’s re-election committee of 1996, by an honorary researcher. A businessman who’d also been active as a non-profit leader.

Visiting Russia to research in 1999, he invested in a 4 month study and strategic recommendations for a development initiative which would provide emergency relief and a community bank. It was to persuade the US State department to tag on as the 4th location in an existing initiative and became the Tomsk Regional Initiative.

http://www.p-ced.com/1/projects/russia/

The bank was to pioneer the application of ‘moral collateral’ microfinance in Russia which led on to the foundation of the Russian Microfinance Centre in 2002.

Over the duration of the project, with FINCA operating the bank, around 14,000 loans were dispensed to create 10,000 new “private entrepreneurs” in a city of 600,000 population. An investment of $6 million having been repaid.by the time P-CED launched in the UK and the following interview was given.

http://www.iccrimea.org/scholarly/economicdev.html

For comparison with a nonprofiit approach, we may examine the efforts of Oxfam who entered microfinance in Russia in 2003. In the next 5 years, they were able to assist 4,000 people in creating new businesses.

http://www.oxfam.org.uk/resources/countries/russia.html

The P-CED project had invested around $4000 to source the Tomsk initiative and had proposed measures to enhance development of civil society and fight corruption, not replace it with business. Likewise, investing since 2004 in Ukraine has influenced government to improve payments to those who adopt orphans and agree to construction of 400+ rehab centres for disabled children.

http://people-centered.net/About.aspx

Clearly this is not big business in any way and illustrates that even the smallest of entities can invest in and achieve social objectives. Tomsk 1999 was proof of concept.

When you say that “last I checked, nonprofits were competing fiercely to convince donors to support them” you need to check again, since these quotes are not isolated exanples – they describe the reality of a large amount of voluntary citizen action, so why don’t you recognise and respect it? And if nonprofits ARE competing with each-other, have you ever paused to reflect on your own role in making that a self-fulfilling prophecy?

As I said in my first blog post on Philanthropy Central on Monday, civil society and the social economy are very different things, animated by different mechanisms, fulfilling different roles, and requiring different forms of support from philanthropy. One cannot simply ignore the trade-offs that exist between competition and cooperation as you do. nor sweep under the carpet the difficulties imposed by the fact that social ‘goods’ are not commensurable or substitutable (now there’s a mouthful!). That’s the subject of today’s blog post, so I encourage you to check it out.

A “farmers market” is still a market, and markets are places where people buy and sell. Civil society is not, and that’s why we need more “meeting grounds”, not markets.

One thing that never ceases to amaze, and perhaps this is why Michael Edwards thinks as he does, is that nobody wants to confront a reasoned argument for social capitalism, though many refer to its conclusions.

It began for us with a critique of conventional capitalism with the theoretical model of a more inclusive paradigm, to make the point that an economic system which renders people disposable is not ethical.

The argument based on ideas from philosophers – Plato and Descartes, management thinkers – Peter Drucker and Alvin Toffler and social scientist s – Maslow and Carl R Rogers.

Originally one paper, it is now a a manifesto and synopsis of the original paper.

http://www.p-ced.com/1/about/background/

http://www.p-ced.com/1/about/history/