Charity vs business: why volunteers don’t always do the most good
This morning, I woke up to read that Kentuckians are among the nation's leaders in volunteerism, with the headline "Percentage of Kentuckians Who Volunteer Nearly Doubles National Average" (BizLex article). While my gut reaction was to cheer (I helped start a non-profit last year), I stopped for a moment to really think about this:
All these hours volunteering (presumably for charitable causes) are hours that Kentuckians didn't spend building scalable businesses.
This reminds me of the give a man a fish vs. teach a man to fish argument. I, for one, would much rather give a man a job. While I fully support the positive work being done by our charities, my fear is that these same people who currently serve as volunteers could do more good if they were spending that time building the type of organizations that more sustainably support their passions: businesses. Gail Hoyt often discusses this issue in her ECON201 courses at the University of Kentucky. If she and several of her professor-friends, all earning ~$100k/year, take a day off work to volunteer, say building houses for Habitat for Humanity, will they have done more good than if they had worked that day and donated their wages? The answer here is not straightforward, but it points out that while volunteering to support a good cause is intrinsically good, it may not be the most efficient way to benefit society.
TOMS shoes is an excellent example of this. Founder Blake Mycoskie had cashed in on his tech startup (online drivers ed software), and had plenty of time and money to "volunteer" to help kids who needed shoes. He probably could have made a difference in the lives of a few hundred kids each year, and they would have been very grateful, and he would have felt good about his work. Instead, Blake starts a shoe company that has given away nearly one million pairs of shoes to date, and provides employment for hundreds of people, as well as enjoyment to countless customers who get to share in the act of giving (and wearing their own shoes). More locally, it is difficult to deny the tremendous impact that Alltech has on Central Kentucky, not only by its support of philanthropic goods, but by employing people and generating tax revenue.
Why this concerns me for Kentucky is that we live in an age in which our local industry, which employs and financially enables our volunteers, is in flux. We are in need of the next Lexmark, the next Alltech, the next Exstream in order to continue supporting the volunteering habits of our citizens. While I agree that volunteering is helpful, I am concerned that we are forgoing something that is more helpful, and commerce might be that thing. Volunteering certainly has more short-term rewards (not only for those in need, but also for volunteers), while business can have more long-term benefits. As Chris Dixon eloquently points out, we may be "falling for a common trap highlighted by behavioral economists: people tend to systematically overvalue near term over long term rewards."
Here's my original discussion-provoking tweet:
Study shows that Kentuckians lag behind rest of country in charging for their services http://ow.ly/4oPGO#EntrepreneurFail via @BizLex
(and thanks to Pyromanfo for debating this with me, and inspiring me to better articulate my contrarian view on the original news post)
And some other references on the business vs charity debate:
To reiterate my point, volunteering is not a bad thing (it is in fact very humbling and good for both providers and recipients), but I am concerned that its innately positive connotation masks its true capability to positively impact our society relative to alternatives (such as businesses with social impact baked in).