• Profit or Perish

Staunching the Flow of Bleeding Hearts, Bleeding Wallets

by Noel Bagwell
for ExecutiveLP™

Bleeding Hearts, Bleeding Wallets

Charity never humiliated him who profited from it, nor ever bound him by the chains of gratitude, since it was not to him but to God that the gift was made.

— Antoine de Saint-Exupery

Profit or perish… There are only two ways to make money: increase sales and decrease costs.

–Fred DeLuca

One of the most heartwarming things about my legal practice is hearing from so many entrepreneurs about the good they want to do. I don’t know whether or not my perception reflects any sort of reliable statistics, but it seems to me that social entrepreneurship is on the rise. There are a lot of people out there who want to run a business in a socially responsible way, who want to “pay it forward” or “give something back” to their community or to people in need. This charitable impulse is incredibly noble.

Charity is something Pope Francis talks about, a lot. I think he is often misunderstood; a lot of people think he is a socialist. I think his perspective is just different–not properly categorized as part of a political or economic system, but above such human systems. I recently read a great quote by Ben Shapiro with which I think Pope Francis would likely agree:

Socialism has no moral justification whatsoever; poor people are not morally superior to rich people, nor are they owed anything by rich people simply because of their lack of success. Charity is not a socialist concept–it is a religious one, an acknowledgment of God’s sovereignty over property, a sovereignty the Left utterly rejects.

True charity, you see, can only happen when what is received has been freely given. The good news is that many, if not most, people want to be charitable; they want to give something back, to “pay it forward.”

This noble impulse is often bound up with another impulse, one that is neither at odds with charity nor naturally harmonious with it–the entrepreneurial impulse. When starting a business, everyone wants to do well. Some want to do well by doing good, yet few know how to succeed in walking the fine line that such social entrepreneurship requires. For most people, a bleeding heart will mean a bleeding wallet, because they do not know how to bring the impulse to give and the impulse to earn into balance.

Giving (being charitable) is always a cost. Sometimes it’s a loss leader; but even then it is a cost, one which must be acknowledged and understood in the greater context of a business model designed to yield a profit, if one wishes to avoid perishing. Fred DeLuca is right; your only two choices in business are profit or perish. And a dead business cannot do anyone any good. A social entrepreneur must choose profit, even if he or she wishes to do well by doing good, otherwise they will lose the means to their cherished ends.

Choose This Day

If one does not know to which port one is sailing, no wind is favorable.

–Lucius Annaeus Seneca

The winds and the waves are always on the side of the ablest navigators.

–Edward Gibbon

Choosing to earn a profit doesn’t make you a bad person or a greedy one. Ignore the Marxists and the naysayers, the Leftist ideologues who have never had to meet a payroll or build anything of value. The only thing that makes you a bad person is doing things that are actually wrong, and earning a profit is not among them. Even setting aside the usual “greed is good” sermon, I might be inclined to preach, I will only say that greed directed towards a higher purpose can be redeemed.

How can you do it, though? Well, any number of ways. The attorneys at ExecutiveLP™ can help you form a low-profit limited liability company (L3C), for example, which can provide you with the business structure in which to operate a social entrepreneurship firm. The How is something you should call us to discuss. This article is about something else: the what. What is your business? Are you selling goods and services, or are you giving away goods and services? In other words, which comes first, charity or profit?

If you choose charity, that’s fine–noble, even. Just remember, you have to have resources in order to be charitable. From whence will your resources come?

If you choose profit, and if you are successful, you will always have the option to be charitable. The resources you will use towards charitable ends will come from your success in earning a profit.

The important thing is to make a choice. You have to know into which port you intend to sail. Then, choose a path. Work with professionals who can help you reach your goals. When you need to find a way to bring greed and giving, profit and charity into balance, have a plan. Your bleeding heart doesn’t have to bleed your wallet dry, but it will if you don’t make the right choices, prioritize your activities, and rely on good professional guidance to get from where you are to where you want to be.

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