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This article was prepared for the November 13, 2002 edition of U.S. 1 Newspaper. All rights reserved.

Between the Lines

You won’t find too many people in U.S. 1’s circulation

area who feel sorry for Educational Testing Service. First off people

think ETS and they also think SAT — the dreaded college entrance

examination. Then they discover that ETS is also a big business, with

a sprawling corporate campus on Rosedale Road, the rich part of town.

And then they discover that it’s all a non-profit — how can this

be fair?

As Barbara Fox’s profile of ETS president Kurt Landgraf makes clear,

ETS is a non-profit but it’s also an enterprise with overhead, salaries,

and research and development to support. And it clearly does not want

to become a charity. Can you imagine the poor telemarketer calling

people at dinner: "We’re asking for your support for Educational

Testing Service, a wonderful organization that brings joy to high

school students all around the world."

Apart from the notoriety of its services, ETS is actually a lot like

many other Princeton-based nonprofits. The Robert Wood Johnson Foundation,

for instance, offers some of the highest payscales in the state, and

it is not-for-profit. The Medical Center of Princeton — indeed

any hospital — puts its hand out for donations and volunteer time

but simultaneously competes with the for-profit gyms and fitness centers

by opening its own new fitness center on Route 206.

Meanwhile the national YWCAs and YMCAs continually fend off charges

of unfair competition. Paying no taxes, they often offer lower rates

for fitness center services similar to those offered by for-profit

businesses. Let’s face it, we want our nonprofits to be business-like.

But when they are too efficient we raise our eyebrows: "Why are

they making so much money?"

In Princeton the 900-pound non-profit gorilla — Princeton University

— is a thriving business. To take just a couple of examples, the

university makes money from royalties from its technology spinoffs,

and it has a carefully managed investment portfolio. But it treads

a narrow line. If it owns a property that is used for academic purposes,

it does not pay taxes. But if the property is used to house students

or faculty, the university does pay taxes, just like any landlord.

Then there are the nonprofits that desperately want to be viewed as

part of the for-profit world. Community Options, which employs those

with disabilities, qualifies as a do-gooder but wants to be efficient.

Robert Stack, the CEO of Community Options, says he thought long and

hard before deciding to found a not-for-profit agency. For-profit

agencies get government contracts, but not-for-profit agencies get

charitable donations and volunteers. And the existing major nonprofits,

he says, were built from grass roots, bit by bit, chapter by chapter,

resulting in gross inefficiencies. Instead, he aims to run his agency

like a business.

Just last week David Holmes, CEO of the Eden Institute (which also

provides services to the disabled) made a similar point at a presentation

of awards to employers, including U.S. 1, which hires Eden workers

to help with delivery. Holmes said he knew some businesses would hire

Eden people as an act of charity, but he hoped that the most of the

hires would be considered a smart business move, not as a charitable


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