“Article originally hosted and shared with permission by The Christian Economic Forum, a global network of leaders who join together to collaborate and introduce strategic ideas for the spread of God’s economic principles and the goodness of Jesus Christ. This article was from a collection of White Papers compiled for attendees of the CEF’s 2019 Global Event.

by Marshall Everett

Anyone working in the secular marketplace has faced the dilemma at one point or another: What should we prioritize, profit or people? Is our ultimate responsibility—in whatever capacity we are operating—to the shareholders of the business? Or, as Christians, should our highest priority be to love and serve those around us without regard for the bottom line (I mean, isn’t that what nonprofits are for)? And it seems logical, doesn’t it, that at the basest level, these two priorities are incompatible? Either you are going to care for people (which usually costs something) or you are going to return every possible dollar back in profit.

This has certainly seemed to be the case for most of our careers. We have seen rents raised so aggressively that people lost their homes, and eviction was chosen over the option of providing a modified payment plan. We saw too much leverage used to squeak out an extra dollar, only to result in loss of jobs and principal. And we have seen highly capable employees lost due to cultures that treat them like machines. In almost all of these circumstances, decisions were being made in a conference room or while looking at a spreadsheet, and the human individual or family on the other side of the decision was rarely ever thought of:

• “Evicting and relisting will result a higher recurring rent than working with this tenant.” Meanwhile, the family that will have nowhere to sleep remains unnamed.

• “The IRR will improve if we push leverage as high as the bank will let us.” Meanwhile, the human cost of risky investing is not factored in.

• “Steve did not meet the target, so I guess we have to let him go.” Meanwhile, we never to stop to ask who God made Steve to be and whether or not his current role aligns with his God-given talents.

But we have also seen glimmers of hope along the way. We have seen untapped potential realized when employees were loved and intentionally developed in accordance with who God made them. We have seen how radical transparency with investors has led to a counter-cultural level of trust between investors and operators. And we have seen, occasionally, families restored and kept off the street by choosing a payment plan instead of eviction. Beyond personal anecdotes, the histories of world-class companies like Hershey Chocolate and Guinness Brewing also make one wonder whether or not the dichotomy we seem to be living in is really the truth.

So, is it really true, as seems to be the norm, that in search of the almighty dollar, there has to be some collateral damage along the way? Or, as in a few but compelling examples, is it possible that the same, if not better, financial results can be achieved while loving and serving everyone along the way? And if so, what are the structures needed to prove the simple, yet profoundly compelling, thesis that financial returns and human flourishing can be synergistic instead of antagonistic?

It’s a question that many of us have been wrestling with for years. We fundamentally believe that, as investors or operators, we are responsible for creating a fair return on any dollar entrusted to us. At the same time, informed by our faith and our calling to love others more than ourselves, we want to spend our time and resources on endeavors that truly better the lives of the people involved.  

Rather than feeling stuck between a rock and a hard place, we believe these seemingly conflicting ideas are different sides of the same coin. You do not have to choose between people and profit. Strong economic performance leads to greater capacity to make a positive impact on people. Thriving people who feel loved and valued lead to better financial returns for the companies they work for, shop from, sell to, live near, and invest in.

It sounds nice right? But if it is true—if we really can approach profit and people synergistically and believe that making money and loving people can be part of a self-reinforcing virtuous cycle—why don’t we see more of it in this broken world we live in. Why, even in companies that put much lip service towards being “people first,” do we still see people commoditized and devalued? And why do we still—especially in Christian circles—view the nonprofit sector as the only real career option for those that care deeply about loving and serving others in line with the gospel?

Within the investing world, two newer ideas have taken hold that seem to be addressing this concern. However, upon closer evaluation, they both fall short of truly breaking the old dichotomy of people vs profit. The first is the ESG (Environmental, Social, and Corporate Governance) investing movement. While there are many great things one could say about the ESG movement, it isn’t fundamentally about people on an individual level. Equity and diversity goals, environmental sustainability goals, and corporate governance goals are all worth pursuing, but lots of people could still be hurt and used while pursuing these goals. If you care most about flourishing families, healthy minds, strong bodies, fulfilled spirits, engaging careers, and thriving relationships for all the humans involved, ESG still leaves something to be desired.

The second is the impact investing movement. Again, it is a powerful movement that has done an incredible amount of good for the world. However, most impact investing platforms include the idea that some level of decreased returns are required in order to accomplish the social goals of the investment. These so-called concessionary funds are willing to leave some value on the table in order to make an impact. Again, these are valuable and important platforms that are doing a lot of good, but they aren’t going so far as to break the people-vs-profit dichotomy; they are choosing to sit on the side of people and are willing to sacrifice some profit. However, we believe that we can push even farther, to a point where investments perform better because people and profit are seen as complementary.

Human thriving and financial performance can work in harmony. However, companies have to create—and work hard to maintain—an environment where this symbiotic relationship can work. Investing deeply in people will lead to better economic returns, but it often takes time to see the full return on investment. For example, spending $100k/yr. on drug and alcohol prevention and abuse programs will likely lower EBITDA by about $100k in the short term. But it might reduce employee turnover and sick days in the long term, saving the company far more than the program costs. Companies must exist within a structure that allows decision making based on long-term impact. For both private and public companies, the most common forms of ownership do not incentivize long-term value creation. Instead, short-term profit generation is what matters most, for owners and often for the compensation packages of management teams. The biggest hurdle to an environment where people and profit exist in a virtuous cycle is the propensity for short-term thinking in most capital structures.

For public companies, the need to make quarterly earnings targets and the ever present and constantly fluctuating stock price incentivize management to do whatever will make the stock price appreciate. Investors evaluate management performance based on stock market appreciation, and management teams are typically incentivized to meet short-term stock price goals. In privately owned companies (both private equity backed and venture capital backed), it is the fund life cycle that is the primary culprit of short-term thinking. Most funds are structured with predetermined end dates, typically less than 10 years. The value creation and realization must all happen within that window. Moreover, fund manager incentives are typically IRR based, incentivizing managers to realize profits as quickly as possible. For private, family-owned businesses, the propensity to be short or long-term focused resides primarily with the main owner/CEO. Whether he or she personally cares about long-term value or short-term profit is usually the critical factor in whether the business is existing within, or breaking free of, the people-vs-profit dichotomy. Thus, privately held, family-owned businesses often offer the biggest beacon of hope when led by a long-term focused, caring leader.

So, what to make of all this? Fundamentally, human flourishing and financial profit are synergistic over the long term; however, the ownership structure of most companies does not incentivize long-term thinking or decision making that prioritizes long-term value creation. Thus, we have been fooled into believing that we must choose between profit and people, when in reality, we should be talking about what kinds of structures can be created to incentivize the right kind of long-term, people-AND-profit decision making. A personal favorite is the private, evergreen holding company structure, but that is certainly not the only solution.

If we, as a group of Christian investors and operators, can work hard to creatively eradicate short-term thinking from our organizations, we will be able to break the people-vs-profit dichotomy and show the world that when you care deeply for the humans involved, companies will thrive financially.

by Amanda Lawson

It’s a big, big house, with lots and lots of rooms. 

Or maybe it’s an apartment complex, a multifamily living property that can serve as a model for this big heavenly house, full of people from all walks of life who share a community.

Today, about 37% of the population lives in multifamily communities. That number is likely to skyrocket due to shifts in multifamily living and even more as Gen Z-ers graduate from college and move to new cities. This presents an opportunity for FDIs in multifamily to increase their impact and reach people of all nations, ages, and family situations. 

David Snyder, founder of Apartment Life, explained that among the most significant changes in multifamily living are the increased tenure of residency, diversity, and motivations for apartment living. These differences pose interesting opportunities for organizations like Apartment Life to reach a broader range of residents over a longer period of time. 

Multifamily living used to be a predominantly short-term, needs-based living arrangement. Now, more singles and families are choosing multifamily, apartment life, over a house in the suburbs. A significant portion of this population is the millennial generation who for personal preference, rather than economic need, remain in apartments. Reasons include access to public transportation, walkability to work and groceries, and the community that tends to bustle in downtown areas. 

But one thing auspiciously missing from this list of apartment-living pull-factors is a local church. Not coincidentally, this surge in long-term apartment-dwelling directly corelates to an unfortunate trend of unchurched Millennials and Gen Z-ers. 

Taking into account the negative reality of gentrification that pushes some of the needs-based multifamily residents into different communities, there is still a high level of diversity in multifamily living. This leads to communities blended with singles, marrieds, parents, and retirees of a plethora of nationalities and races, coming from different economic and faith backgrounds. 

How then, can this increasing—and increasingly diverse—population be met with the gospel? While churches can reach out and have occasional touchpoints with multifamily residents, property management has constant opportunity to engage in their daily lives. Regardless of socioeconomic status, education, or family style, residents of multifamily living have universal needs that FDIs know can only truly be met through a relationship with Jesus. 

But FDIs also know that multifamily residents have tangible needs that as believers, they are called to address. The diversity of residents provides incredible opportunities for the Church (the body of believers, rather than just the local parish) to actively be the Church and really live out the call of its origin story in Acts 2:42-45

They devoted themselves to the apostles’ teaching and to the fellowship, to the breaking of bread and to prayer. Everyone was filled with awe, and many wonders and miraculous signs were done by the apostles. All the believers were together and had everything in common. Selling their possessions and goods, they gave to anyone as he had need. Every day they continued to meet together in the temple courts. They broke bread in their homes and are together with glad and sincere hearts, praising God and enjoying the favor of all the people. And the Lord added to their number daily those who were being saved.

This may mean that for some residents, a weekly Bible study or community group is the most pressing need. For others, childcare or a cooking class. Others may simply need prayer. While the local church may play a part in this, it is the call on every believer to live out both the Great Commission—make disciples, teach, baptize—and the Great Commandment—love God and love others. 

Being known and loved and knowing the saving grace of the gospel is the most foundational need of every person. As FDIs step into the evolving culture of multifamily living, they will continue to find unique opportunities to be the hands and feet of Jesus to an increasingly diverse community of people. In this way, multifamily living mirrors the picture of a big, big house—with room for many and all kinds of people—where residents believe they are known and cared for by loving and true (land)Lord.

Article originally posted here by Tech Crunch

by Tech Crunch

Colin Kroll  was the co-founder of Vine and HQ Trivia, both consumer sensations that brought joy to millions; Anthony Bourdain had been a chef, journalist and philosopher who brought understanding and connectedness to millions of lives; Robin Williams built a career as a brilliant comedian and actor.

What these three share in common is that they were all people at the pinnacle of their industry and they all died too soon. Their premature loss is a tragedy.

The most brilliant and creative amongst us are sometimes the most troubled, and nowhere is that clearer than in the entrepreneurial ecosystem. With each passing unnecessary death, the importance of mental health comes briefly into focus… but that focus lasts no longer than a news cycle and nothing changes. The time for lip service came and went long ago. We must take these issues seriously and we need to act.

The mental health epidemic is real. There are 18.5 percent of Americans that will suffer from mental illness this year; 4 percent of them will suffer so acutely that it will substantially limit their ability to live their lives.

That means it is extremely likely you or someone you know is suffering right now and could use support. Moreover, unlike many of the challenges we face today, the most common expressions of mental health disorder (anxiety, depression, substance abuse and imposter syndrome) are largely addressable through individual action. Not only should we all take action, we all can take action.

While national mental health statistics are troubling, they are downright terrifying for entrepreneurs. According to a study by Michael Freeman, entrepreneurs are 50 percent more likely to report having a mental health condition, with some specific conditions being incredibly prevalent amongst founders.

Click here to read the full article!

This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more:TEDx .

by Danita Bye

Article originally posted here by Eventide.

by Shaun Morgan

As America’s fear was escalating alongside the spread of the coronavirus, the U.S. Chamber of Commerce released the results of a poll it conducted with small business owners. The highlights of the poll were unsettling:

• 24% of small businesses said they were two months or less from closing permanently

• 11% were less than one month away from permanently going out of business

• 24% of small businesses had already shut down temporarily

• Among those that had not shut down, 40% said they were likely to close at least temporarily within the following two weeks1

This means a total of 54% of all small businesses reported that they had already closed or were expecting to close temporarily in the following 14 days.

The Greater Purpose of Business

Countless organizations and government programs have rushed to help save small businesses.

But why?

It’s simple—the health of our communities is largely tied to the health of the businesses within them. When just one business, whether large or small, closes its doors, the impact of the closure goes far beyond the company’s profit and loss report—it reverberates to its customers, employees, suppliers, host communities, the environment, and the broader society that rely on its success. This negative ripple effect on stakeholders is the reason for the visceral outcry of people across the country to save businesses.

Surely the deep concern for the health of businesses during a global pandemic comes from the realization that business serves a greater purpose than simply generating a profit. Profit generated by business is merely one of the essential elements that allow it to fulfill its greater purpose. As Charles Handy explains, profit is a necessary condition, not a sufficient one that gives purpose or meaning:

We need to eat to live; food is a necessary condition of life. But if we lived mainly to eat, making food a sufficient or sole purpose of life, we would become gross. The purpose of a business, in other words, is not to make a profit, full stop. It is to make a profit so that the business can do something more or better. That “something” becomes the real justification for the business.2

The “Something More” of Business

So, what is that “something more” that business provides?

We believe that the “something more” that a good business provides is the ability to create value for its stakeholders rather than merely redistribute resources. Consider the following ways in which a good business creates value:

• It creates a product or service that brings enjoyment, practicality or efficiency to the lives of its customers.

• It creates dignified work for its employees and provides them with income so that they can flourish outside of the workplace.

• It creates avenues for other businesses to succeed by being a reliable and responsible customer to its suppliers.

• It creates opportunities for its host communities by contributing to a flourishing economic culture.

• It creates products and practices that sustain the resources of the environment.

• It creates a positive impression on broader society by carrying out its mission.

We believe that the ability to take raw goods and labor and create something more or better is far more than just profit generation—it’s value creation. Good businesses create value.

The Business of Business is More Than Business

What is perhaps most remarkable about good businesses is the lengths to which they will go to ensure value for their stakeholders. Amid this crisis, we have seen several struggling businesses become scrappily creative about how they care for their stakeholders. CEOs are taking pay cuts and private investors are doubling down to float cash flow needs with the caveat that stakeholders are taken care of.

While this behavior is generous, it is not entirely selfless—there is a deep understanding on the part of business that its future wellbeing is heavily dependent on the wellbeing of its stakeholders. Indeed, the future health of a business’s stakeholders will determine its future success or failure. Stakeholders have a true impact on businesses.

This symbiotic relationship between businesses and their stakeholders has been brought to the forefront during this pandemic, reminding us to consider that the business of business is more than business.

References

1. “New U.S. Chamber – MetLife Poll: One in Four Small Businesses on Brink of Permanent  Closure, Half Eyeing Temporary Shutdown.” U.S. Chamber of Commerce. Accessed April 29, 2020. https://www.uschamber.com/press-release/new-us-chamber-metlife-poll-one-four-small-businesses-brink-of-permanent-closure-half.

2. Handy, Charles. “What’s a Business For?” Harvard Business Review. Accessed April 29, 2020. https://hbr.org/2002/12/whats-a-business-for.