Where Most Needed

The Houston Business Journal announces the opening of a Ben & Jerry's ice cream shop in a downtown mall operated by the nonprofit Houston Works USA (EIN 76-0138443 Form 990).  This project is part of B & J's PartnerShops program, in which community nonprofits operate franchises without franchise fees and can use the profits to fund other programs. 

As the web site says, this is a form of social enterprise.  It also lists the qualifications for participation in the program: all it takes is nonprofit status, an annual budget of $5 million, programs that include job training for youth & young adults, staff & board with small business expertise, excellent credit history, and a record of fundraising success. 

Houston Works USA more or less fits the profile, but the Form 990 shows that the organization's entire $28 million in annual funding comes from government grants.  The organization lumps all of its program expense into a single line rather than breaking it out by type of expense, and it leaves out the number of staff.  The organization runs a number of job training and related programs, but to me it seems closer to a government agency than an entrepreneurial nonprofit. 

Meanwhile, the magazine Health Affairs published (online) a study by Mark Schlesinger and Bradford Gray that reviewed a number of previous studies that compared the performance of for-profit and nonprofit hospitals and nursing homes.  Most studies showed that nonprofits performed better than for-profits in patient outcomes and that nonprofits also had lower costs in the case of hospitals. 

The conundrum here is that for-profit firms are aggressively going against nonprofit organizations in these health care areas where nonprofits seem to perform better.  And nonprofits are going after small businesses, like ice cream stores, where nonprofits clearly have no performance advantage (they can only survive at all by having franchise fees waived).   Social entrepreneurs mean well, but charities should focus on improving in the areas where they already have the clear advantage. 

Ice cream is more fun, but it's bad for your health.