Recent Readings: “How to Change the World,” by David Bornstein

How to Change the World

David Bornstein chronicles social entrepreneurs around the world in efforts to capture the spirit of Ashoka’s galvanizing Innovators for the Public

“Changing a system means changing attitudes, expectations, and behaviors. It means overcoming disbelief, prejudice, and fear. Old systems do not readily embrace new ideas or information; defenders of the status quo can be stubbornly impervious to common sense.” (47) “There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.” (Niccoló Machiavelli as quoted in Bornstein, 47) “An idea will not move from the fringes to the mainstream simply because it is good; it must be skillfully marketed before it will actually shift people’s perceptions and behavior.” (93)

According to Ashoka, social entrepreneurs assume the same ambition, tenacity and a for-profit “regular” entrepreneur, but work toward within the citizen sector. Social entrepreneurs work to improve an entire system. So, what makes someone a social entrepreneur by Ashoka standards? The person’s visions, determination, and ethics. The candidate must also successfully address the “how-tos.” How to use local pressures to solve a problem? How to overcome cultural obstacles? How to train others to do work? (122). The key is that this all takes time, experience, and relentlessness. Some other considerations include:

  1. Creativity – does this person have a history of creatively setting goals and creatively problem solving?
  2. Entrepreneurial Quality – does this person have an obsession to understand and solve the problem?
  3. Social Impact of the Idea – how many people will this idea affect?
  4. Ethical Fiber – do you intrinsically trust the person?

Best Practices of a Social Entrepreneur

  1. Putting the Children in Charge. Just like teaching children is different than teaching children, it is important to understand the fundamental differences of the beneficiary. “Like so many other social entrepreneurs, [Tateni] found that youth tended to be overlooked when problems needed to be solved. [The NPO] found them to be competent, less judgmental than adults, and always eager to help.” (200)
  2. Enlisting “Barefoot” Professionals. Favor flexible models and commonsense citizens to reach the target under-served market and put knowledge immediately where it needs to be. An example of this: Grameen Bank.
  3. Designing New Legal Frameworks for Environmental Reform. A highlighted example from the book was Bill Drayton’s work with the EPA. Instead of forcing corporations to succumb to EPA regulations, he chose to “make it more attractive for business to fight pollution than to fight the EPA.” (56)
  4. Helping Small Producers Capture Greater Profits. The target group may not always be factory laborers, but rather rural farmers. This “informal” economy can be helped by changing the “value-added chain” through changes in capital or market relations. (156) An additional example of this: Self-Employed Women’s Association (SEWA).
  5. Linking Economic Development and Environmental Reform. “Social entrepreneurs typically find that they cannot address one problem without addressing the other.” Focusing on organic produce, for those that cannot afford high cost, chemically intensive competitors, farmers can take advantage of environmental and economic benefit. (158) An example of this: European Centre for Ecological Agriculture and Tourism (ECEAT).
  6. Unleashing Resources in the Community You Are Serving. An example of thisComitê para Democratização of Information Technology (CID), founded by Rodrigo Baggio in Brazil.
  7. Linking the Citizen, Government, and Business Sectors for Comprehensive Solutions. Cross-sectoral strategy can work wonders – just consider International AIDS Vaccine Initiative (IAVI) that works like a nonprofit venture capital firm, investing in labs and providing scientific support but also requiring the vaccines created are made available at low cost in developing countries. 

Best Practices of Innovative Organizations

  1. Institutionalize Listening – make it mutually exclusive. Sharing the Things We Have (Poland) highlights how exchanging a farmer’s experience with an urban buyer can be mutually exclusive (farmers want a new market and urbanites are interested in a reprieve). (205)
  2. Pay Attention to the Exceptional – listen to unexpected information.
  3. Design Real Solutions for Real People – get people to actually use the product.
  4. Focus on the Human Qualities – hire the right people and manage them well. Grameen Bank does not screen based on academic majors or previous bank experience. In fact, the Bank looks for people without banking experience because it allows the new hires to see faults and improve systems based on functionality and rationality. (212)

Qualities of Successful Social Entrepreneurs

“The most successful entrepreneurs were not necessarily more confident, persistent, or knowledgeable. The key differences had more to do with the quality of their motivation. The most successful entrepreneurs were the ones most determined to achieve a long-term goal that was deeply meaningful to them. Accordingly, they tended to be more systematic in the way they searched for opportunities, anticipated obstacles, monitored results, and planned ahead. They were more concerned with quality and efficiency and more committed to the people they employed and engaged with in business or as partners. Finally, they valued long-term considerations over short-term gain.” (238) “[Bornstein] assumed that social entrepreneurs would be motivated by altruism. But social entrepreneurs are not selfless. If anything, they are self-more in the sense that they heed their instincts, follow their desires, and aggressively pursue their ambitions.” (287)

  1. Willingness to Self-Correct. “The inclination to self-correct stems from the attachment to a goal rather than to a particular approach or plan.” (238)
  2. Willingness to Share Credit.
  3. Willingness to Break Free of Established Structures.
  4. Willingness to Cross Disciplinary Boundaries. Breaking free of limiting structures and assumptions, social entrepreneurs can be flexible in order to maximize options and influence.
  5. Willingness to Work Quietly. Building baseline support and a grassroots network outside the realms of inherited or purchased influence yields a strong foundation.
  6. Strong Ethical Impetus. The “why” provides the motivation based on ethics.

Harnessing the Power and Keen Intellect of Social Entrepreneurs through Blueprint Copying and Ashoka’s Mosaic Initiatives

  1. Identify General Patterns that Explains Social Entrepreneurial Success
  2. Focus on Patterns that Open Doors for Worker in Similar Fields
  3. Spread Principles Across Field’s Practitioners via the Diamond Strategy

“The test in each case is: Do we have universally empowering principles that would open major new advances to all practitioners? Do we see the jujitsu point [the point of maximum leverage]?” (Bill Drayton as quoted in Bornstein, 265). “Social entrepreneurs who are obsessed with spreading their ideas are obliged over time to eliminate aspects of their work that depend on their personal involvement or are designed only for particular locations or situations. If an approach is too complicated to teach, too expensive to disseminate, too politically contentious, or too context-sensitive, it must be made simpler, cheaper, less partisan, and more generally applicable. Otherwise it will not change society. It is the entrepreneur’s need to achieve major impact that leads to the years of experimentation and adjustments that culminate in a blueprint.” (266)

Why the need for social entrepreneurs? “The social arena does not enjoy the easy market signals that a business does. Unlike businesses, unproductive citizen organizations don’t get forced into bankruptcy. If they continue to raise funds, they can plod along ineffectually for decades. [However,] because it is inherently difficult to measure social value creation, funders and practitioners in the citizen sector historically have shied away from any attempt to compare the performance of organizations. As a result… the sector suffers from a serious ‘capital allocation’ problem.” (277) Metrics should play a role, but we cannot forget that numbers can give inaccurate illusions of truth. Analysts must provide in-depth, qualitative assessment of the organization.

Here are the nonprofit organizations (NPOs) featured in this book:

  • Pro Lu (Rural Electrification in Brazil), Fábio Rosa

“‘Installment buying literally transforms economies,’ notes Peter Drucker. ‘Wherever introduced, it changes the economy of supply-driven to demand-driven, regardless of the productive level of the economy.’ Consider that 2 billion people… are currently without electricity and half of them could afford solar power at commercial prices today if they had the opportunity to rent it or pay it off in installments. Bringing electricity to remote rural areas around the globe would not only transform economies, it would transform education and healthcare. It would transform agriculture. Access to electricity is often a precondition for farmers… Global rural electrification also would relieve the population stress on the world’s megacities, reducing the urban discontent that is so easily exploited by advocates of violence.” (39)

  • Childline (Child Protection in India), Jeroo Billimoria

“The best thing is not to have a picture of what you want, but to have basic principles.” (39)

  • Alliance Industrial Union (Assisted Living for the Disabled in Hungary), Erzsébet Szekeres
  • Associação Saúde Criança Renascer (Reforming Healthcare in Brazil), Vera Cordeiro
  • College Summit (College Access in the United States), J.B. Schramm

“Teenagers are the single most influential group in a low-income community… if teens are well engaged, it shifts the dynamic neighborhood.” (Schramm as quoted in Bornstein, 181)

  • Tateni (Care for AIDS Patients in South Africa), Veronica Khosa

“Tateni’s strategy was grounded in four principles: (1) complement the formal healthcare system; (2) seek parternships with all organizations in the community; (3) enhance the home care skills of family members and neighbors, including schoolchildren; and (4) involve the community in all major decisions concerning Tateni’s activities.” (197) “After studying Tateni’s systems, provincial health officials identified four components to successful home care: 1. The work had to be run by people from the community to be both cost-effective and locally accepted; 2. It had to be professional; 3. Training had to be practice-based; 4. The program had to demonstrate that it could bring in young, unskilled people and turn out graduates with the ability and credentials to pursue careers in healthcare.” (200)

  • National Center for the Promotion of Employment for Disabled People (Disability Rights in India), Javed Abidi

Bornstein, David. How to Change the World: Social Entrepreneurs and the Power of New Ideas. Oxford: Oxford UP, 2004. Print.

LA Times’ Article on Donor-Advised Funds (DAFs)

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A philanthropic revolution

A LA Times Op-Ed on Donor-Advised Funds, by Jack Shakely

When I first starting working in the nonprofit world, despite having considered myself knowledgeable of the space, I had never heard of donor-advised funds, or what we call “DAFs.” I am happy to see that more articles are being written about this type of charitable giving, allowing DAFs and DAGs (Donor-Advised Gifts) to gain well-deserved notoriety. DAFs and DAGs provide a great platform for corporations and corporate foundations to fulfill domestic or global charitable objectives and to provide fringe benefits to local or worldwide employees without the additional administrative burden of operating a public charity of private foundation. DAF grantmakers, such as CAF America or Silicon Valley Community Foundation, usually specialize in either domestic or international grantmaking, but it is not unheard of organizations providing both services.

In a nutshell, DAFs allow US donors to give to domestic and foreign charities (non-501(c)3 organizations) while receiving maximum deductions because the 501(c)3 holding the DAF assumes the intricate reporting requirements necessary to be compliant with IRS restrictions.

A few things to consider when reading the article:

A donor-advised fund offered the wannabe philanthropist the same tax deductions as a foundation but without the red tape and with maximum donor control.

A key differentiation between a foundation and a DAF is grantor control. The grants made into the DAF are classified as a donation to the 501(c)3 supporting organization that manages the DAF. It mentioned in the article that “Mark Zuckerberg [gets] a tax deduction immediately.” Why? Because Mr. Zuckerberg donated money to a 501(c)3 charitable organization (Silicon Valley Community Foundation). Silicon Valley Community Foundation now manages and controls all of the funds donated. These donations into the DAF are under complete control of the 501(c)3 supporting organization; any grants made by the DAF are mere suggestions. Yes, the donor can recommend that those DAF funds be granted to any number of organizations, but the donor does not have complete control.

Donor-advised funds put a thumb on the scale of the always precarious balance of power between grant seeker and donor. They don’t publish mission statements or set up application procedures, which leaves nonprofits and individuals no easy way to target funding sources or make their appeal.

The author of the article states that one downfall of a DAF is that this type of set-up makes solicitation of funds more difficult for the nonprofits or individuals; however, most corporations or corporate foundations encourage grantseekers and willingly administer standard applications for inquiring nonprofits. Despite the fact that DAFs relieve some of the administrative burden associated with domestic and international grantmaking, these corporations and corporate foundations are sophisticated operations that actively seek new charities to achieve their CSR missions.

Shakely, Jack. “A Philanthropic Revolution.” Los Angeles Times. Los Angeles Times, 13 Mar. 2014. Web. 18 Mar. 2014.

Arthritis Foundation’s 2014 Legislative Priorities!

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Here are the 2014 legislative priorities for the Arthritis Foundation. If I can provide any additional information, please feel free to reach out to me directly.
  • Passing the Patients’ Access to Treatments Act (HR 460)Learn more here.
  • Passing the Pediatric Subspecialty and Mental Health Workforce Reauthorization Act (HR 1827).Learn more here.
  • Continuing support for arthritis research funding at the Department of Defense and National Institutes of Health. Learn more here.
Click here to get involved with the Arthritis Foundation or click here if you are interested in acting as an Arthritis Ambassador!

D-Rev, NPO, Highlighted in NYT: Light-Bulb Moments for a Nonprofit

New York Times

Light-Bulb Moments for a Nonprofit

By Christine Larson

This article is particularly interesting to me because it provides an example of a form of a “social business” (Muhammad Yunus’ type 1 organization that focuses on maximizing social benefit). As a nonprofit organization, D-REV‘s mission is to, “improve the health and incomes of people living on less than $4 per day.” It seems like a broad mission, but they do so by designing and implementing various products that will provide high impact opportunities to those most in need. First, D-REV identifies a project that will improve the lives of 1 million +.  The NPO then designs and delivers the product, tailoring scaling, and adapting to local needs. Serious studies of both the users and local context plays a big role. The products range from light therapy, as mentioned int he NYT article, to solar panels, to the pasteurization of milk.

 So, after seven years of operations, what are the obstacles of this “social business?”

“D-Rev has had to become far more involved than it expected in financial models, licensing deals, consulting services and manufacturing arrangements. In essence, it is redesigning not only high-tech products but also supply chains and procurement systems.”

“To make sure that end prices remain low, D-Rev has needed to find manufacturing and distribution partners willing to cap prices and forgo substantial markups.”

“While the organization has learned much about [one product] in developing countries, specific experience with one condition may not apply to another.”

Regardless of persistent, complex problems, D-Rev is making serious strides in the nonprofit/social business sector. It has provided current donors with the education necessary to make the products successful; influenced and encouraged other NPO/social businesses; and emphasized collaboration between NPOs. Much will need to be done, but it appears that D-Rev is asking the right questions in the right context. I look forward to following D-Rev’s impact.

 

Larson, Christine. “Light-Bulb Moments for a Nonprofit.” The New York Times. The New York Times, 11 Jan. 2014. Web. 11 Jan. 2014. <http://www.nytimes.com/2014/01/12/business/international/light-bulb-moments-for-a-nonprofit.html?nl=todaysheadlines&emc=edit_th_20140112&_r=0&gt;.

 

 

Recent Readings: “Creating a World Without Poverty,” Muhammad Yunus

Creating a World Without Poverty: Social Business and the Future of Capitalism

This has to be one of my favorite books of all time. Not only an easy read, but educational, thought-provoking and, above all, inspiring. Regardless of profession or passion, I encourage you to read this book and expand your scope of thinking.

Noble Peace Prize laureate Professor Muhammad Yunus believes that there is an inherent problem with the capitalist system and profit-maximizing businesses (PMBs): “unfettered markets in their current form are not meant to solve social problems and instead may actually exacerbates poverty, disease, pollution, corruption, crime, and inequality” (5). Not to say that he does not agree with open markets, trade and globalization, but rather that these markets require “proper oversight and guidelines” (5).

Yunus explores several potential avenues for solutions:

1. Government (pages 6-9)

PROS – Governments can provide programs that private organizations cannot, including rule of law, central banks, and national health services. Governments can also enforce taxes and mobilize resources that can be redistributed among of its citizens.

CONS – Governments can only do so much and not all governments operate altruistically (especially fragile states). Also, governments can be large, bureaucratic, and sometime ineffective.

2. Nonprofit Organizations (NPOs) (pages 9-11)

PROS – Charities have an inherent need to achieve a social objective and their generous work saves tens of thousands of lives around the world.

CONS – NPOs typically require a steady influx of funds that are determined by the generosity of donations. Furthermore, poorer countries have a much more difficult time getting attention from rich donors in other countries (personal note: US donors have to abide by strict IRS giving regulations in order to receive a tax benefit). Handouts can encourage corruption, relief persons of responsibility, and creates a one-sided power relationship (115-116).

3. Multilateral Institutions (sponsored and funded by governments, including the World Bank) (pages 11-15)

PROS – Bring together several nations to achieve economic growth, which is incredibly important to reducing poverty.

CONS – Chronically underfunded, bureaucratic, and slow-moving, these institutions focus on gross domestic product (GDP) rather than local, tailored growth. Even with “pro-poor growth policies,” Yunus finds issue with the idea that those in poverty are marginalized and viewed as objects. Furthermore, “policymakers are focused on efforts to energize well-established institutions” and “donors work almost exclusively through the government machine”  (12).

4. Corporate Social Responsibility (CSR) (Yunus names two types: “weak CSR” (do no harm to people or the planet (unless that means sacrificing profit)) and “strong CSR” (do good for people and the plant (as long as you can do so without sacrificing profit)). 

PROS – CSR has informed millions of consumers and given legitimacy to thousands  of charities around the world.

CONS – According to Yunus, CSRs can misuse well-intended foundations and grants towards selfish endeavors. “The same company that devotes a penny to CSR  spends 99 cents on moneymaking projects that make social problems worse” (16). Profit-maximization is their “legal obligation to their shareholders unless the shareholders mandate otherwise” (17). At the end of the day, the objective of business is to maximize profit.

So, after all of the downfalls of these organizations, alliances, corporations — then what we can do to move towards the eradication of poverty? We must re-configure our idea of business. Mr. Yunus changed the playing field with his concept of a social business.

Without NPOs becoming irrelevant and insignificant, social businesses can play a very important role in eliminating poverty. Social businesses are structured just like any operational, for-profit business – innovative, efficient, and self-sustaining. Instead of pursuing profits, social businesses pursue a social objective (22). So, how is this different than a charity? Well, it takes investors, just like a business, and works to fully recover its costs (no endowments, no dissolution clauses). There are no fundraisers, donations, or grants. It operates as a fully-functional, sustainable organization. Investors will recoup their original investment. Their payments are in social objectives. There are two types of social business: companies that focus on maximizing social benefit and profit-maximizing businesses that are owned by the poor.

In the first type, the “nature of the products, services, or operating system of the business… creates the social benefit. This kind of social business might provide food, housing, health care, education… it might clean up the environment, reduce social inequalities…[essentially this type achieves] objectives like these while covering its costs through the sales of goods or services and that pays no financial dividend to its investors” (28-29).

In the second type, like Grameen Bank, “goods or services produced might or might not create a social benefit. The social benefit created by this kind of company comes from ownership. Because the ownership of shares of the business belongs to the poor or disadvantaged (as defined by specific criteria)… any financial benefit generated by the company’s operations will go to help those in need” (29).

“Social businesses will take their place along with profit-maximizing businesses as basic fixtures in the world of business. Social businesses will operate in the same market spaces as PMBs, competing with them and with one another for market share. Consumers will become accustomed to choosing between social businesses and PMBs when buying goods and services. In many cases, they will choose based on traditional criteria – price, quality, availability, brand appeal.” (174)

“Social businesses will either bring ownership to poor people, or keep the profit within poor countries, since taking dividends will not be [the] objective.” (246)

Example of profit-maximizing business that is owned by the poor:

“Social investors can raise the money with the explicit understanding that, once the investment money has been recovered from initial profits, the investors will sell the company at a negotiated price to a trust… The trust will be owned by poor people, at least 50 percent of them women.” (126)

“Shadow shares of this company will be sold by the trust to the poor people… Of the total sold, at least fifty percent will go to women. [This] share will not give any legal ownership of the company to the shareholder, but it will create an entitlement to a dividend of the company as determined by the board.”  (127)

Another example of a successful venture was Grameen Danone. This social business provides healthful yogurt to children in rural Bangladesh. From the construction of the production facilities to local suppliers to the distribution, every aspect of the model was built around employing local, poverty-stricken individuals. Even the factory is owned by the people. Despite large innovation costs, the program is successful because there is no need for expensive marketing or fancy packaging — the reality is that the products could be made cheaply by the local communities. After all, the “goal is not only financial efficiency, but also maximum social benefit” (139).

So, who will invest in social businesses? Well, to those that give your money away to charities every day, week or year, this is an ideal project because you get your money back!

Favorite quotes:

“If the poor are to get a chance to lift themselves out of poverty, it’s up to us to remove the institutional barriers we’ve created around them.” (49)

“Effective anti-poverty programs must start with a clear operational definition of poverty. In order to recognize those whom the program is designed to help, they must be defined by clear decision rules that will exclude the non-poor and keep them from siphoning off resources that the poor desperately need.” (110)

“There will not be sustainable economic value creation if there is no personal development and human value creation at the same time.” (Antoine Riboud, 170)

“A new breed of business people, empowered for the first time to express humanistic values through the companies they found, will demand new institutional structures to support the new kinds of ventures that will emerge.” (174)

Yunus’ has issues with the idea of ‘social responsibility:’ “the lack of any recognized system for evaluating, testing, or enforcing claims of socially responsible products…how can a consumer know for sure that the chicken she buys has been produced using methods that are humane and enviormentally sound?” (175)

“Poverty exists because we’ve built our philosophical framework on assumptions that underestimate human capacities. We’ve designed concepts that are too narrow – our concept of business, our concept of credit-worthiness, our concept of entrepreneurship, and our concept of employment. And we’ve developed institutions that are half-complete at best – like our banking and economic systems, which ignore half the world. Poverty exists because of these intellectual failures rather than because of any lack of capability on the part of people.” (232)

Yunus, Muhammad, and Karl Weber. Creating a World without Poverty: Social Business and the Future of Capitalism. New York: PublicAffairs, 2007. Print.

Economic Development Organizations – exempt status requirements

G. ECONOMIC DEVELOPMENT CORPORATIONS: Charity Through the Back Door (1992 EO CPE Text)

IRS Publication by Robert Louthian and Marvin Friedlander

– Charitable purposes: “Charitable” includes the relief of the poor and distressed, lessening the burdens of government, and the promotion of social welfare by organizations designed to lessen neighborhood tensions, eliminate prejudice and discrimination or combat community deterioration and juvenile delinquency.) (IRS Regs. 1.501(c)(3)-1(d)(2))

– Economic development corporations: Economic development corporations “generally are established to assist existing and new businesses located in a particular geographic area through a variety of activities including grants, loans, provision of information and expertise, or creation of industrial parks.” (Louthian and Friedlander, 2) While they are established to stimulate economic activity in depressed areas,  economic development organizations are for-profit entities and thus not exempt under Internal Revenue Code (IRC) 501(c)(3).

In order for economic development organizations to be become exempt under 501(c)(3), the organization must demonstrate that it is both organized and operated exclusively for charitable purposes. We must ask ourselves, “are these activities likely to accomplish exempt purposes?”

In all, the ultimate good received by the general public must outweigh the private benefit afforded to the direct beneficiaries. THE ACTIVITIES MUST SERVE A PUBLIC RATHER THAN A PRIVATE INTEREST. Per Louthian and Friedlander’s article, “the organization should demonstrate its specific criteria in eligibility and show how said criteria furthers public [not private] interests.”

The following factors are necessary to conclude that an economic development corporation is primarily accomplishing charitable purposes:

(1) Assistance is targeted

(a) to aid an economically depressed or blighted area;

(b) to benefit a disadvantaged group, such as minorities, the unemployed or underemployed; and

(c) to aid businesses that have actually experienced difficulty in obtaining conventional financing

i. because of the deteriorated nature of the area in which they were or would be located or

ii. because of their minority composition,

(2) Assistance is targeted to aid businesses that would locate or remain in the economically depressed or blighted area and provide jobs/training to the unemployed or underemployed from such area only if the economic development corporation’s assistance was available.

The following organization were granted exemption under IRC 501(c)(3) because their activities were accomplishing the following exempt purposes: relieving poverty and lessening neighborhood tensions caused by the lack of jobs in the area; combating community deterioration by establishing new businesses, rehabilitating existing ones, and eliminating conditions of blight; and lessening prejudice and discrimination against minorities.

1. Rev. Rul. 74-587, 1974-2 C.B. 162: The organization

a. devoted its resources to programs to stimulate economic development in economically depressed, high-density, urban areas, inhabited mainly by low-income minority or other disadvantaged groups, qualified for exemption under IRC 501(c)(3);

b. made loans and purchased equity interests in businesses unable to obtain funds from conventional sources because of financial risks associated with their location and/or because of being owned by members of a minority or other disadvantaged group;

c. established that its investments were not undertaken for profit or gain, but to advance its charitable goals;

d. funds for its program were obtained from foundation grants and public contributions.

2. Rev. Rul. 76-419, 1976-2 C.B. 146: The nonprofit organization

a. purchased blighted land in an economically depressed community and converted the land into an industrial park;

b. induced industrial enterprises to locate new facilities in the park through favorable lease terms that required employment and training opportunities for unemployed and underemployed residents of the area.

Some organizations were NOT granted exemption because “their overall thrust was to promote business as an end in itself rather than to accomplish exclusively exempt purposes.” (Louthian and Friedlander, 4) Operating in  an economically depressed area is not sufficient to receive exempt status.

3. Rev. Rul. 77-111, 1977-1 C.B. 144: One organization wanted to attract customers in an economically depressed area that is mainly minority groups. The organization used various marketing and advertising tools to attract potential shoppers. Another organizations wanted to revived retail sales in an area in economic decline. This organization constructed a retail center via private developer that is required (by the city) to employ minorities for the construction and operation of the project. The organizations:

a. did not limit their assistance to businesses located in a deteriorated area that could not obtain conventional financing;

b. did not limit its aid to businesses that are owned by members of a minority group or to businesses that would only locate within the area because of the existence of the center;

c. did not target benefits for businesses that were actually disadvantaged because of their minority-owned composition or location;

d. did not target benefits for businesses that would only locate or remain in an economically depressed or blighted area and provide jobs to unemployed area residents on account of the organization’s activities.

United States. Internal Revenue Service. G. ECONOMIC DEVELOPMENT CORPORATIONS. By Robert Louthian and Marvin Friedlander. Internal Revenue Service, 1992. Web. 8 Jan. 2014. <http://www.irs.gov/pub/irs-tege/eotopicg92.pdf&gt;