I’m blunt and sometimes I want to tell people straight up that I think they have a really bad idea. Mostly I’m able to contain this urge and can find a more polite way to suggest they rethink their plans. But blogging is sort of anonymous and doesn’t require the same sort of delicate communication. So today I will share two bad ideas I’ve heard during this journey with Impact Investing Foundation.
1. “Losing Money for Jesus”
A few months ago, we visited a Christian business leader who had grown tired of supporting various missionary businesses. These missionaries were trained in theology, ministry, and evangelism, not management or finance. They sought the cover of business to gain access to countries unfriendly to Christianity. These groups kept coming back for donation after donation and their enterprises never reached sustainability.
This donor expressed concern that his philanthropy hadn’t accomplished much. He couldn’t point to measurable impact and the constant requests for funding left him feeling a bit used. Worse, he felt a bit insulted that these well-meaning evangelists were abusing the term “business” which to him connotes excellence, discipline, and the pursuit of profit for the sake of fueling generosity.
He declared, “I’m done with this whole “losing money for Jesus” idea.”
Indeed, Impact Investing and Ministry Enterprise (for a refresher on what those terms mean, see this post) must represent the very best of business. The pursuit of social and Kingdom impact cannot be excuses.
Industry-leading strategy, execution, integrity, transparency—these must be the hallmarks of any venture that attempts to impact the world for Christ. No more losing money for Jesus.
2. Assuming passion or vision can atone for a flawed business model
Similar to the first point, if a business model wouldn’t work in a ‘normal’ context, it won’t work just because someone attaches purpose to it. To put it another way, without profit, there will be no impact.
A recent case study in Stanford Social Innovation Review looked at the demise of a philanthro-pub and makes this point very well. The entire article is worth the read, but if you’re short on time, here’s a short excerpt to summarize the important points:
“The biggest misstep that Vilelle and Ratwani [the founders] made was to assume that their mission would sustain them. In fact, they made this assumption explicit in that closing Facebook message: “We knew going in that it was a very difficult industry, but we hoped that the mission behind CAUSE would help carry us to success.”13 Today, the founders of Cause readily note the limitations of that perspective. “You’ve got to put the warm-and-fuzzy side away and make sure that the nuts and bolts are in place, or else you’ll just never achieve the impact that you’re going for,” Vilelle says.”
Great business model with execution + purpose = financial return and accelerated impact
Flawed business model + purpose = going out of business
The lesson for investors: follow the same principles when vetting an impact investment as you would apply to a similarly situated traditional business. Put the potential impact aside and consider the financial merits alone. Is the deal structured well? Can the CEO execute? You get the idea.
The lesson for Ministry Enterprise: Make sure you have operators in place who know how to run the venture. Don’t assume that success running a charity will translate into success running a Ministry Enterprise. Get the education you need or bring in additional team members who can fill in the gaps. See The Profitable Charity for more help on this topic.
Aimee Minnich is a founder of Impact Foundation, facilitating charitable investments in Ministry Enterprises and other impact companies. She was formerly President and General Counsel of National Christian Foundation – Heartland. He’s the author of 'The Profitable Charity.' She and her husband, Marshall have three adorable, high-energy kids. www.ImpactFoundation.org