Corrections or additions?
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
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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