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Thursday, July 8, 2004

Cause or effect?

How often have you heard statements like these at conferences, in board rooms, or in the back of your head?

Nonprofits are driven by mission. For-profits are driven by money.

Nonprofit performances are engaging and ennobling. Commerical entertainment is crass and pandering.

Nonprofit arts organizations build community. For-profit organizations destroy bonds and values.

Heads will nod in most rooms where you hear this...especially when all the heads belong to nonprofit organizational leadership or staff. And yet you'll seldom hear a voice asking if any of the above statements are actually true. Tease it out a bit and we all realize that plenty of nonprofits are driven by money (it just happens to be in the form of philanthropy in addition to sales). On the other side, plenty of 'for-profit' organizations are driven by passion and vision -- think of the florist, or the garage band, or the indie record label that never makes a nickel of profit and never seems to care.

But it just occurred to me recently that the real problem may not be the soft assumptions behind these statements, but the way they expose our distorted sense of causality. The statements above suggest that causality flows from an organization's tax status. A folk museum is more noble than a freelance folksinger, for example, because one is organized to be tax-exempt and the other is not. Tax status is the cause and nobility is the effect.

But what if we have it backwards? What if corporate and tax status are effects rather than causes? The cause would be my choice of creative expression and the context of a consumer market's willingness to buy it. When there wasn't adequate volume or density of consumers to cover the cost of my work, the effect would be a drift toward nonprofit status. When there was a sufficient group of individuals that wanted to buy the work at a price that covered its costs, the effect would be a drift toward for-profit status.

It seems a little point, but in making any kind of decisions in a complex world (management decisions, policy decisions, funding decisions, etc.), the flow and direction of causality is a rather essential issue. By the logic above, if I want more nobility, truth, engagement, innovation, and beauty, I should create more nonprofits or ensure that the larger portion of creative experiences are delivered by nonprofits -- because they are the cause. But if I've confused a cause with an effect, I may be doing more damage than good. And that's not a little point, at all.

Tax status is not a cause. It is not a source of nobility or honor or excellence or any other foundation-friendly word you care to utter. Tax status is a tool, a step, a way, an option. To boldly paraphrase a favorite quote of the gun lobby: 'nonprofits don't make art, people do.' They just happen to choose that tax status sometimes along the way. But they can also choose another if it serves their vision, their purpose, or their art.

posted on Thursday, July 8, 2004 | permalink