New York Times Article Discusses Growing Trend of Nonprofits Opting for For-Profit Enterprises to Meet Charitable Goals

Steven Lohr reports in the New York Times today that many more philanthropists are opting to use for-profit businesses to achieve traditionally nonprofit goals.  He tells the story of a former AOL executive and his wife, Mils Gilburne and Nina Zolt, who started a nonprofit with $10 million of their own money.  The venture was moderately successful in that students participating in the charity’s program were outscoring their peers on standardized tests.  Mr. Lohr further reports that “the couple’s efforts, however worthwhile, weren’t sustainable.”  In response to the experience of the struggling, yet moderately successful charity, the couple started a for-profit business, attracting like-minded venture capitalists, and now the venture has a second chance at succeeding because it can become self-sustaining through profits and investments.  In its revamped for-profit form, the former charity is working with Intel and One Laptop Per Child, a spat between these two entities was covered in an earlier January 10, 2008 posting on the Nonprofit Law Prof Blog.  Below is an excerpt from the article:

To make a fresh start, Mr. Gilburne attracted like-minded angel investors, and at the end of 2006 the group bought a for-profit company, ePals Inc., to expand on the original mission and support the foundation. The ePals company has grown and now offers classroom e-mail, blogs, online literacy tools and Web-based collaborative projects on subjects like global warming and habitats.

EPals says 125,000 classrooms around the world are using at least some of its free tools, reaching 13 million students, and its ambition is to become a global “learning social network.”

National Geographic is to announce this week that it is investing in ePals, based in Herndon, Va., and will supply educational content for the ePals learning projects. Worldwide distribution should get a lift from Intel, which will soon ship its Classmate laptops, designed for students in developing nations, with the ePals icon on the screens. And ePals is also offered for use on the low-cost computers from One Laptop Per Child, a nonprofit group trying to bring the content and experience of the Internet to children in developing countries worldwide.

Mr. Lohr goes on to report about other efforts to achieve social goals in for-profit models, including microfinance enterprises based on the work of Muhammad Yunus, the microfinance pioneer and Nobel Laureate. 

See New York Times Article for the full story.

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