“We’re not a nonprofit, but we’re not a profit maximizer, either.”
I heard a businessman on a mission say that the other day, and while I found it refreshing, it also reminded me of something: People who have a lot of money want more of it. To be sure, there are different levels of desire for wealth — those who inherited it want to build on it so they can lead comfortable lives, take care of their families and indulge in philanthropy; those who have achieved wealth through hard work (and not merely inheritance) are probably always focused and driven, (maybe a little insecure) and savvy investors; some are employed in finance and seek to maximize all investments, take a more aggressive approach and never let up.
I don’t speak from experience, but from observation and listening. The man who said he wasn’t a profit maximizer is a real estate investor with a social mission, funded at startup with a grant from a major foundation. So he doesn’t answer to stock holders or Wall Street sharks and, in that sense, he has it easy; he doesn’t have to show a fat profit margin to keep his job. The world of capital is very different — a profit maximizer, a wealth amasser.
This is where I hear Barack Obama’s voice: “There’s only so much you can eat. There’s only so big a house you can have. There’s only so many nice trips you can take. I mean, it’s enough.”
Wealth and what other people do with their big money always interests me. It was top of mind this week as I read a lenghty report about Opportunity Zones in Baltimore — the subject of Wednesday’s column in The Sun.
People with money in private equity funds and those who manage them can get big tax breaks on capital gains if they invest in designated Opportunity Zones to bring new development and business to “distressed neighborhoods.” But, three years in, there’s not a lot of that going on yet, the report says. Instead of going to neighborhoods that have been the subject of disinvestment for decades, capital is going to areas already being redeveloped or on the edge of it. Port Covington in South Baltimore is a prime example. People and institutions with money to invest look at Baltimore Opportunity Zones and the potential returns and quickly move on. “We all know they are only going to consider the same five or six neighborhoods that outside investors have always looked at,” a housing developer in West Baltimore told Michael Snidal, one of the report’s authors. The president of a community development organization, which has completed hundreds of residential and commercial renovation projects in Baltimore, told Snidal that “the moment one of these investors sees the returns we are offering, the OZ conversation halts and we discuss whether our work might be a candidate for their philanthropic coffers.” The people Snidal interviewed say OZ investors want mid to high double-digit returns, and, as a result, they did not expect to see large investments in Baltimore’s lower-income and Black neighborhoods.
Mid to high double-digit returns — even when you’re trying to have a social impact?
Some people — the vaunted “owners of capital” — either promise too much or expect too much, or both. They want to be seen as doing good, as long as it provides double-digit returns and they can get a break on capital gains tax. Great.
I’ll leave you with one more Obama quote: “It shows a poverty of ambition to just want to take more and more and more, instead of saying, ‘Wow, I’ve got so much. Who can I help? How can I give more and more and more?’ That’s ambition. That’s impact. That’s influence. What an amazing gift to be able to help people, not just yourself.”