D. Management, Organization and Administration
Christian Enablers Mission Support and Facilitation will function in partnership consisting of one or more US partners and one or more Tanzanian partners. However, the legal formality will require negotiation, as well as investigation into Tanzanian law and regulation, especially as it may pertain to foreign ownership of or involvement with Tanzanian businesses.
If a formal and legally recognized “partnership” turns out to be infeasible, a contractual partnership could serve in its place. A contractual partnership would simply consist of two (or more) entities agreeing to do business with each other, possibly incorporating a purpose-sharing arrangement. Generally, this is referred to as a Joint Venture.
Businesses in the United States are generally formed in order to make a profit. US businesses may operate as corporations, partnerships, limited liability companies (LLCs), or proprietorships. Each of these various types of business organization offers multiple variations. For example, a corporation might operate as a C corporation or an S corporation. A partnership might operate as a general partnership or a limited partnership with limited partner liability. Limited liability companies may operate as a manager managed or a member managed LLC. Even proprietorships (generally single owner, unincorporated businesses) may operate as such or simply be single member LLCs (generally considered by the IRS as “disregarded entities”, for tax filing purposes).
Generally, for profit businesses in the United States must adhere to their purpose of maximizing profits for their owners. When they don’t do this, then their owners may take legal action against the company in which they are invested to force decisions that recognize the profit motivation under which it was organized. US for-profit businesses are accountable to their owners for maximizing profits and the values of owner interests.
1) The B” Corporation or Organization
An interesting wrinkle to this concept has evolved over the past few years. There now exists in the United States (Colorado and other states, but not all) the concept of a “B” corporation. According to Wikipedia (as of July, 2017), a B corporation is defined and described as follows:
“In the United States, a benefit corporation is a type of for-profit corporate entity, authorized by 30 U.S. states and the District of Columbia that includes positive impact on society, workers, the community and the environment in addition to profit as its legally defined goals. Benefit corporations differ from traditional C corporations in purpose, accountability, and transparency, but not in taxation. . . .
The purpose of a benefit corporation is to create general public benefit, which is defined as a material positive impact on society and the environment, i.e. maximum positive externalities and minimum negative. A benefit corporation’s directors and officers operate the business with the same authority as in a traditional corporation but are required to consider the impact of their decisions not only on shareholders but also on society and the environment. In a traditional corporation, shareholders judge the company’s financial performance; with a benefit corporation, shareholders judge performance based on the company’s social, environmental, and financial performance. Transparency provisions require benefit corporations to publish annual benefit reports of their social and environmental performance using a comprehensive, credible, independent, and transparent third-party standard. In some states, benefit corporations must also file the reports with the Secretary of State, although the Secretary of State does not control the content of the annual benefit report. In some states, shareholders have a private right of action, called a benefit enforcement proceeding, to enforce the company’s mission when the business has failed to pursue or create general public benefit, although, to date,] no such proceeding has been instituted by benefit corporation shareholders in any U.S. court.”
In 2014, Colorado’s legislature authorized the legal creation of “B” corporations so that such corporations might exist not simply to maximize profits, but to provide a societal good, in addition to profit.
Christian Enablers anticipates that Colorado’s “partner” in a Christian mission support & facilitation business will likely not be a corporation. Rather, it will likely take the legal form of a Limited Liability Company (LLC) with one or more limited partners. This LLC will exist to make a profit from its investment in the mission support and facilitation business that it pursues. Similar to a “B” corporation, it will, by charter, not only aspire to make a profit; it will also aspire to accomplish a societal good, or more specifically, a Christian purpose, partnered with a profit purpose.
2) Why Profit?
When considering societal or Christian good, most people think that organizations that exist to effect a charitable goal should operate as a non-profit organization or a non-governmental organization (NGO). By tradition, that’s the way things have worked. However, Christian Enablers takes a different perspective. Consider the following table of organizational characteristics, and follow-up discussion:
|Characteristic||For-Profit||Not for Profit|
|Accounts for results;|
|Program results||Moderate||Sometimes strong, many times weak|
|Maximizes societal good||Weak||Strong|
|Transaction Orientation (Parties treat each other as equals, and hold each other to transactional valuation measurement)||Strong||Weak|
|Incentivizing||Strong (Incentives independence)||Weak (Incentivizes dependency)|
|Societal Contribution, Burden||Strong (Pays taxes)||Weak (Avoids paying taxes)|
Profit Maximization – Many “do-gooders” consider profit an undesirable objective, sometimes even an evil one. In the eyes of many worldwide, capitalism portends the rich taking advantage of the poor. The United States, as a capitalistic incentivized society, is often seen as economically domineering, over-powering and ruthlessly motivated by self-interest. Especially people living in nations that are highly “economically socialized”, a rich/poor divide is associated with, or maybe blamed on evil capitalism.
However, Christian Enablers holds a different perspective. Profit maximization incentivizes creativity, risk taking, and mutual expectation that the people with whom it deals stand on equal footing. Each party to every transaction expects the other party to act in his or her best interests, as well as to the transactional interests of the first party. Each party must respect the other as contributing value to whatever transaction takes place between them. Generally money, or currency, is used as the measure of transaction values. When each party expects the other party to act in its own best interest, profits as well as economic efficiency of both can be maximized. Each party thereafter accounts to its investors or owners for the economic profitability and efficiency that was expected of its management.
Results Accountability – A profit oriented enterprise measures results of operations by its success in earning profits. However, non-profit organizations cannot continue to exist without also at least breaking even. Hopefully, non-profit organizations make profits also, because such profits enable growth and continued success. No organization can operate economically on a continuing basis without adhering to a profit motive, be it a weak one or a strong one.
There exist generally two types of publicly supported charitable organizations. (There are many other non-profit organizations, such as business and professional societies, but these are not the focus of this comparison.) From an accounting perspective, they are considered Type A and Type B charities.
Type A Charities – Type A organizations refer to those charities that rely primarily upon charitable donations to exist. The services that they provide generally do not have a marketable service that can be sold for value sufficient enough to generate a profit.
Type B Charities – Type B organizations refer to those charities that do compete in the marketplace, but whose purpose remains charitable rather than primarily profit motivated. In some respects, these organizations can operate much like B corporations, inasmuch as they both recognize a profit as well as a charitable purpose motivation. The main difference relates to accountability and the lack of interested investors who can hold management accountable for both financial and program performance results. Nevertheless, Type B charities as well as B corporations (or their LLC counterparts) generally operate with boards of directors who similarly try to hold management properly accountable for results.
Historically, Type A non-profit organizations have been held to, and have held themselves to, rather weak results accountability. They often rely upon charitable contributions to survive, because they cannot survive by charging users of their services what they believe their services are really worth (from a societal-good perspective). Their clients or customers often cannot afford to pay a fair value for services because such clients or customers are often economically distressed or otherwise shut out of the marketplace for such goods or services. Rather than reliance upon market-place service valuations, they tend to rely upon their appeal for charitable contributions to fund program objectives that appear to both serve a worthwhile charitable purpose and demonstrate an underfunded need. Very little attention is given to a competitively determined valuation of services or to a fairly and openly reported rendition of program results.
Type B non-profit organizations come closer to maintaining accountability. However, members of their boards of directors (or, trustees), generally rotate on and off their boards. They often do not possess professional qualifications sufficient to maximize wise decision-making, and their motivations lack financial incentive. Most Type B organizations lack sufficient strength on their boards to ensure appropriate accountability for results.
By design, financial accounting for non-profit organizations emphasizes programmatic purpose much more greatly than for-profit organizations. This is demonstrated through the fact that their income statements generally contain a statement of functional expenses, as well as a traditional income statement that includes natural expense account classifications. However, charitable organizations’ reporting of programmatic results generally are difficult to extract from their reporting. Although expense results are broken out functionally, statistical accomplishments are generally lacking. Many non-profit organizations tend to statistically report their efforts, such as labor hours, counseling sessions, or other effort-oriented measurements. Nevertheless, their societal-good seems to lack exposure, transparency or objective reporting.
For profit organizations don’t always adequately report programmatic results, either. Their focus remains upon profit, many times without the disclosure of product or service offering statistics. And when such product or service statistics are presented, they tend to emphasize measurement of sales volumes rather than measurements of societal good.
Christian Enablers aspires to sustain itself by making a profit (rewarding its investors), as well as by providing a societal good (jobs provided, managers promoted, entrepreneurs rewarded). Rather than gifting from one more economically advantaged person to a less economically advantaged person, Christian Enablers expects the less economically advantaged participants to contribute value to the relationship commensurate with the currency exchanged. Transactional partners will treat and respect each other as equals, rather than as contributors and contribution dependents.
Societal Good Maximization – Christian Enablers, like a traditional non-profit, will seek to realize a societal benefit. Generally, this objective remains the strongest in the context of non-profit operations and motivation. Profit oriented enterprises generally leave societal good as, in the best case, a collateral benefit, and in the worst case, collateral damage. Christian Enablers aspires to turn economically disadvantaged individuals, though caught in the trap of a poor economic opportunity circumstance, into profit incentivized and rewarded participants in both a profit-worthy as well as a Christian discipleship-opportunity endeavor. Both motivations can co-exist, especially when investors are similarly motivated to achieve both.
Transaction Orientation – A key element to achieving economic parity between financial investors and “sweat-equity” investors lies in the requirement that both parties always transact business with each other in ways that require each side to contribute appropriate value (as perceived by the other party) to every single transaction that occurs between them. Therefore, there should never exist any charity. There will always exist the expectation that the value of compensation or earnings requires a commensurate value of productive and efficient effort. Each party to the partnership will require and expect full economically valuable and fair participation by the other.
Many (especially Type A) non-profit organizations operate without this requirement. Value is given, without the reciprocal requirement to return similar value to the first party. For-profit organizations, when they feel societally pressured, societally incentivized, or financially flush, will donate funds for societally good causes, without expecting tangible rewards in return. Christian Enablers will always conduct itself with the utmost respect for its partners, never rewarding anyone without requiring reciprocal fair value and always rewarding value received with reciprocal fair compensation. It only makes good sense, especially when the enhancement of economic opportunity remains a part of its core purpose and entity mission.
Incentivizing – For many years, many well intentioned organizations, both religious and secular, have attempted to improve economic and survival conditions in various African and other countries. Many authors and researchers have concluded that the patterns of one-way giving and receiving has done more to incentivize economic dependency than economic independence. Christian Enablers seeks to achieve a worthwhile co-discipleship between Christians from economically contrasted countries; it also seeks to provide economic and spiritually motivated individuals the opportunity to participate in this discipleship walk and to strengthen themselves economically in the context of full mutual respect and economic partnership.
Societal Contribution – Much as many non-profit organizations (at least in the United States) contribute to a one-way dependency-enhancement result, they also end up being the recipients of the graciousness of the government and society in which they serve. They generally avoid having to pay income taxes, even when they make substantial amounts of money. They (Type B organizations) often compete with profit oriented organizations leveraging their non-profit status and societal profile to their economic advantage. The general rationale for governments allowing non-profit organizations to legally avoid paying income taxes is that they effectively take the burden off of the government of some societal service that the government would otherwise have to pay for or perform. The need for performance is thus measured by the financial contributions of their contributors. Their compensation for performing a societal good is received in the form of tax avoidance.
The problem with this perspective is that someone else still has to pay the government through their taxes for the government to operate (or, run a deficit). It’s not clear that the value that any individual non-profit organization provides to society is worth the sacrifice of tax dollars that the authorizing government gives up. Nor is it clear that fairness is achieved between for profit and non-profit organizations when they compete with each other in the marketplace.
Christian Enablers will not seek to avoid taxes, either to itself or on behalf of its investors and partners. To the extent that Christian Enablers yields profits, it will pass those profits on to its investors in the form of taxable income, or allow itself to be taxed itself. (As an LLC, it’s likely that all US taxable income will be passed through to its investors, because, just like a partnership, an LLC exists as a pass-through entity.)
The societal contribution that Christian Enablers seeks to achieve will accrue to its investors, owners and partners as Christian motivated, rather than tax-advantage motivated. Any profits realized by its owners may be contributed back to the church or any other non-profit organization as a deductible charitable contribution, or retained by the investor as he or she chooses. But, Christian Enablers will not attempt to burden society or the government with the amorphous concept of doing the government’s job or doing something that the rest of society should accept as universally beneficial to it.
Research remains outstanding relative to Tanzanian law and Tanzanian treatment of non-Tanzanian investment in Tanzanian enterprise. Nevertheless, Christian Enablers expects to, at a minimum, engage in a joint venture (a form of partnership) or other contractual arrangement with one or more Tanzanian individuals or groups to achieve the objectives described above.
Partnership between individuals from the United States and those from Tanzania will be negotiated in the context of honoring Tanzanian law and the fairness of mutually beneficial engagement. Furthermore, such partnership will respect the mutual contributions of all parties on a fully transactional basis. Christian charity will not be given from one party to the other (one-way charity). Rather, Christian charity will be realized through fair and honorable transactional incentives.
Opportunity for increased self-sufficiency will be afforded to Tanzanian partners who demonstrate;
- Motivation, efficiency and hard work required to make a decent living,
- Christian desire to walk in discipleship with US Christians, and
- Enthusiasm towards contributing to the Christian spiritual enrichment of their US based partners and visiting mission team participants.
Opportunity for US partners and mission team participants to walk in co-discipleship with Tanzanian brothers and sisters will be afforded by Tanzanian partners. Discipleship opportunity to Tanzanian partners will be afforded by US partners in similar manner. Each partner will walk hand in hand with a Christian partner as equals before God, and as inspired by Christ.
Initially, the US initial partner and organization founder, John Haeck, will assume managing partner responsibilities.
The managing partner will negotiate partnership and joint venture arrangements. The managing partner will identify and accept US investors and negotiate their roles as active or silent partners. In addition, the managing partner will similarly identify, negotiate and arrange for one or more joint venture partners in Arusha, Tanzania.
Tanzanian joint venture partners will generally assume responsibility for creating, organizing and managing culturally relevant activities for mission trips. Each mission trip will incorporate multiple activities into its agenda of discipleship partnering. Each mission trip activity will utilize the oversight responsibility of a single joint venture partner, although a single joint venture partner may arrange for and supervise multiple mission trip activities.
Mission trip activities will comprise the substance of each mission trip. Such activities will require supervision, coordination and management of appropriate resources. Resources will include the engagement of Tanzanian individuals and materials. Activities may also involve interaction with;
- Ordinary Tanzanian vendors during the ordinary course of their enterprise,
- Families who might host missioners from the US in various ways, and
- Game/activity referees who help transition a particular stage of an activity or event into the next stage.
For example, consider the following hypothetical activity. A discipleship team departs from a host’s home after having been hosted by TZ host with a sleep-over and breakfast. After that, the following activity takes place:
|From||Action||TZ Assist||TZ Supervisor||Supplies|
|Host Home||Walk to bus stop||Cinematographer||Monitor, ensure safety, follow-up as necessary.|
|Bus Stop||Take dala dala to potato farm||Cinematographer||Monitor, ensure safety, follow-up as necessary.|
|Potato Farm||Load farmer’s cart with potatoes||Cinematographer, Potato farmer||Monitor, ensure safety, follow-up as necessary.|
|Potato Farm||Dig and load add’l 3 potatoes||Cinematographer, potato farmer||Monitor, ensure safety, follow-up as necessary.|
|Potato Farm||Pull potato cart to market||Cinematographer||Monitor, ensure safety, follow-up as necessary.|
|Potato Market Place||Deliver and unload potatoes for potato vendor, obtain receipt||Cinematographer, Potato vendor||Monitor, ensure safety, follow-up as necessary.|
|Potato Market||Return (deliver) cart to potato farmer||Cinematographer||Monitor, ensure safety, follow-up as necessary.|
|Potato Farm||Deliver receipt to potato farmer, receive certificate of task completion.||Cinematographer, Potato farmer||Monitor, ensure safety, follow-up as necessary. Accept certificate of completion as basis for continuation of activity.||Certificate of Completion|
|Potato Farm||Take Dala Dala to next activity||Cinematographer||Monitor, ensure safety, follow-up as necessary.|
In the above example, the human resources include the following:
- A host to launch the missioner(s) on to their next activity,
- A cinematographer to video the activity,
- A monitor to ensure safety and to follow-up as necessary,
- A potato farmer,
- A potato vendor.
In addition, the activity anticipates the use of a certificate of completion, which will likely be included in the mission participant’s experience chronicle or journal. The Activity manager will need to arrange with the host, potato farmer and potato vendor to take time out of their ordinary daily lives to participate in a minor way in the activity. They will need to be recruited, screened, prepared and compensated.
In addition, a cinematographer or photographer or videographer may be assigned to record the activity for later incorporation into a trip documentary. The cinematographer will later need to edit and update that documentary.
An event monitor will need to monitor the entire activity in order to ensure that the participant or missioner doesn’t get lost or hurt. If the mission trip organizer arranged this activity as a competition or game, then this activity’s rules will require monitoring and their completion attested. The monitor will serve as a referee in order to ensure that rules of the activity will have been followed.
There appear to be multiple components to this activity.
- The activity will need to be created and planned.
- The activity producer will need to make arrangements and obtain the participation consent of the potato farmer and the potato vendor.
- A certificate and appropriate supply will need arrangement and production.
- The time and engagement of an activity cinematographer and monitor will require completion.
After an activity has been planned (in detail), then the Tanzanian partner will need to determine the costs, necessary profit, and appropriate price inclusion into the participating missioner(s)’s trip fee.
The costs associated with this activity, taken together with related activities, perhaps all occurring on the same day, will need to be identified as to their variable character and cost drivers. The costs and drivers will be used in the business plan’s cost projections in order to eventually arrive at a fair projection of project costs, which costs will depend upon volume of activity participants.
Prior to any activity, and likely prior to any mission trip, all participants will require training and preparation. Typically, the entire trip will incur a walk-through, so that everyone knows their roles, what to expect, and contingency plans, should something go awry.
Each activity will require detail planning, event day preparation and walk through, and follow-through. The actual carrying out of the activities will distill to the overall experience quality and rating of the participant missioners. In short, the guts of the Christian Enablers program will require careful attention to designing, planning, execution, monitoring, and reporting. Missioner experience will directly correlate with these.
Initially, management of the company will vest with a single Manager. The Manager will also serve as marketer, administrative staff, and every other functional position needing fulfillment from Colorado. The Manager will initially serve without compensation.
An initial Board of Directors will also require appointment. Until such time as other investors join the company as partners or partial owners, all ownership will vest with the initial Manager, and all Director appointments and decisions will similarly vest.
The company will also require coordinating management based in Arusha, Tanzania. The Tanzanian Manager (TZ Manager) will supervise all activities and preparation for mission trips that take place in Tanzania. Therefore, the TZ Manager will establish and maintain relationships with TZ vendors, Activity Supervisors, Mission executives, church leaders, and all other individuals involved with Tanzanian mission preparation, participation and interaction with third party constituencies.
Tanzanian organization and component partnership or joint venture structuring requires resolution at the writing of this business plan. As with the US based Manager, the TZ Manager will initially serve without compensation. The TZ Manager will also provide all administrative support, or will arrange for compensated administrative support, at his discretion.
The Company will maintain a general ledger, and produce traditional financial statements. Traditional financial statements will include a Balance Sheet and an Income Statement. A Cash Flows Statement will also reflect the effect of changes in Balance Sheet accounts and reporting line items, on the Income Statement.
The Company will annually prepare a budget in the context of updating its longer range financial projections and plans. The Company will establish a fiscal year that considers a natural business cycle. Inasmuch as a natural business cycle has not yet been firmly determined, the Company anticipates establishing its fiscal year on a calendar year basis, each year ending on December 31st.
Although the Company anticipates the production of financial statements quarterly, or on another interim basis, the Company will produce financial statements on an annual basis, at a minimum, preferably within two to three months of fiscal year end. Annual financial statements will include a budget comparison, as well as a prior year comparison, after the first year of operation. Additionally, the Company will produce management financial reports, as it deems appropriate and helpful to its management, analysis, planning and operations.
Financial statements and supporting accounting records will support the Company’s objective of maximizing the reasonable generation of profits, and return of a portion of profits to its equity investors. In addition, the Company will supplement traditional financial statements with the reporting of program achievements, both with quantitative measurements to measure efficiency, and qualitative analysis to serve as the basis for qualitative analysis and reporting. Quantitative and qualitative reporting will provide the basis for making conclusions relating to the accomplishment of its programmatic mission and objectives.
The Company’s management will receive and evaluate financial statements in advance of any other financial statement users. Through this feedback loop, management will contribute to identifying and correcting errors and omissions from its reporting. Furthermore, such reporting will hopefully minimize or eliminate surprises from other parties whose analysis and questions might otherwise precede management’s knowledge of key issues and events.
The Company’s Board of Directors will receive financial statements after management’s apprising. The Board’s evaluation and comment may or may not precede the distribution of financial statements (or their drafts) to other constituencies. Nevertheless, such other constituencies will also receive or be afforded the opportunity to receive and evaluate financial statements subsequent to Board receipt.
Financial and programmatic reporting will respond to the analytical needs of its owners and investors. In addition, such reporting will also attempt to provide transparency of results to other constituencies, such as potential investors, church leaders and churches who provide mission team participants, and possibly charities with whom the Company decides to establish and maintain close relations.
The Company intends to provide programmatic reporting of results concurrently with financial statements. Distribution priority of programmatic reporting will mimic that of financial reporting.