The Nonprofit's Motive
A look at how Charles Lief, president of the nonprofit Greyston Foundation, is devising for-profit ventures to generate income, create jobs, and expand his organization's mission.
Published December 1999
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In the run-down city of Yonkers, the Greyston Foundation is building an unlikely business empire -- and leading the way for a daring new kind of social entrepreneur
It's slightly disorienting when you drive north out of Manhattan and into Yonkers, a down-at-the-heels city that seems out of place in rich suburban Westchester County. After crossing the narrow Harlem River on the Henry Hudson Bridge, the Saw Mill River Parkway threads north through wealthy Riverdale, then cuts into Yonkers. Exit the highway, and just over the hill you can see the tenement-like apartment buildings, small grocery stores, and tire-repair shops that line the streets. It's a predominantly African American and Hispanic neighborhood where the median household income is $22,000.
It may seem like an especially unlikely place to build an empire, but Charles G. Lief has big plans to add onto the roughly $8-million operation he runs there, one that includes a baked-goods business and a housing enterprise. He plans to build a new wholesale bakery plant as well as open up a retail bakery and an ice-cream shop. He's also aiming to expand the number of area housing units he runs from 150 to 190 by year-end 2000 and to offer affordable home-ownership opportunities to the poor. Then there's the venture fund he has been exploring; it will provide seed money and expertise to budding inner-city entrepreneurs. All told, Lief expects revenues from all his ventures to almost double by 2003, reaching nearly $15 million.
To get there, he's carrying out a set of initiatives that would be challenging for any entrepreneur. But what complicates the picture for Lief is that he's president of a nonprofit organization, the Greyston Foundation. On top of figuring out the strategy, planning, and logistics for growth -- an entrepreneur's everyday worries -- he has to do so within the context of the foundation's long-standing mission. And since its founding Greyston's goal has been to provide services and resources to its client base, which includes people who are homeless, jobless, or recovering from drug addiction, as well as those who were formerly incarcerated, have a limited education, classify as low income, or are living with HIV or AIDS.
But Lief's ambitious for-profit plans are in keeping with the heritage of Greyston, which actually had a business before beginning its nonprofit work. Originally, it was a meditation group, founded by a Zen Buddhist community, that started a bakery in 1982 to support itself. With a $300,000 loan, the group's members were soon churning out muffins, scones, and cakes to 100 accounts. They realized, however, that the bakery had the potential to improve the surrounding community, so in 1985 the group began hiring and training the chronically unemployed. In 1991 it opened housing for homeless families, and in 1993 it formed the Greyston Foundation to oversee the rapidly expanding activities. Founder Bernard Glassman, a Zen teacher, "plunged into unknown territory and overcame all kinds of obstacles," says real estate developer Jonathan F. P. Rose, who serves as the foundation's chairman. "He had a vision and was relentless about creating it."
These days it's a vision more and more nonprofits are eager to see clearly. Their interest is partly driven by the toughening reality of fund-raising. Private donations are projected to grow at a rate of about 3% annually through 2002, but that rate would have to triple to offset recent cuts in government spending, according to a report by the Independent Sector, a national coalition of nonprofits. In addition, the number of nonprofits has grown by 55% since 1987, although giving has increased only 15%. "You have more nonprofits competing for the same resources," says Vanessa Kirsch, president of New Profit Inc., a venture-capital fund for the nonprofit sector. Furthermore, heavyweights such as the Ford Foundation and the Rockefeller Foundation have started siphoning funds off for social enterprises that have prospects of eventually becoming self-sustaining. "You can't go to a conference about nonprofit issues and community development today where there's not a panel on nonprofit entrepreneurship," observes Lief. "Five years ago hardly anyone was talking about it."
A lawyer who took over Greyston in 1993, Lief now finds himself among the leaders of a small army of "social entrepreneurs" who look to for-profit businesses to help them generate income and expand their missions. It demands a delicate balancing act. "Organizations that fret about selling their soul, losing their values, being distracted from their mission -- obviously, this isn't for them," says Bill Shore, founder and executive director of Share Our Strength, a nonprofit group devoted to fighting hunger and poverty. Share Our Strength's first for-profit subsidiary consists of a consulting firm that helps nonprofits set up income-generating ventures. "Most nonprofits have assets that they recognize from a mission point of view but not from a marketing point of view," Shore says.
