And why the Harvard Business Review’s model of fiscal sponsorship serves the greater good better than the model as portrayed through the eyes of the non-profit world.
I am starting the process of applying for a grant with a deadline of May 1st. It’s a challenge to figure out the chicken-and-egg dilemma intrinsic to an entity as complex as Andersen Design, a small free enterprise that interacts with a world that lacks an understanding of what distinguishes a free enterprise from a publicly traded corporation or feudalism and serfdom. It’s time for more voices to stand up for the lost understanding of the free enterprise sector, by which I mean the business sector that stands outside of the subsidized business sector that envelops publicly traded corporations.
This post is my way of processing, so it might be construed as self-indulgent, but this is my sounding board for my thoughts. I need to communicate what I am trying to do to the world at large but I don’t have a team or community that supports my vision today. Tomorrow is another day.
As a small free enterprise engaged in a creative field co-habited by many non-profits, but relegated as economically insignificant by the government in an age now receding into the past, when the ceramic industry was transferred to developing nations with low-wage labor markets, I have a unique perspective on how the for-profit, non-profit wealth redistribution systems operate and its narrative. My purpose is to be a conduit for the revitalization of the small free enterprise economy, which is frequently worker-owned, but not necessarily as a collective. The small free enterprise community is independent, individualistic, and culturally diversified.
Regarding the complexity of Andersen Design’s operations, there is, for instance, the website, which can be expanded upon to include a unique culture of artist-designer-craftsmen. The reason I never pursued increasing the website profile in the past is that Andersen Design made the products it sold so increasing our online profile needs to be coordinated with the ability to produce. By the time I re-entered the family business, production was confined to what we could produce with a very small staff in our home studio. So which comes first? The production or the marketing- or the refinancing?
For years I have allowed myself to be misled by a system that demands that in forming a new organizational concept, the board come first, but after my encounter with the Maine Community Foundation, which excluded me from applying for a community grant because I am an individual project manager lacking a board, I see that the board would put me in the hierarchical system and might even have the power to boot me out. Since my project has to do with legacy, it is all the more reason why the things that matter have to be legally established before a board can be brought into the picture, to ensure that the board cannot change the principles on which the legacy is founded.
Before anything else happens, the legal structure of the organization must be established as a heterarchy in which intellectual property rights belong first and foremost to creators and are not based on the ownership of facilities, and there needs to be legal assurance that the assets will never get into the hands of a publicly traded corporation as Andersen Design has always been a worker-owned production while publicly traded corporations divorce the workers from the owners. These principles are essential to the “greater good” purpose of my mission and consistent with the legacy of the assets I have inherited.
If the idea is enabled to fully blossom, there will be a manifest community dedicated to returning to a more equitable distribution of ownership in society through a Museum of American Designer Craftsmen that will function as a fiscal sponsor for the designer craftsmen community so that designers and craftsmen can access debt-free funding resources for studios and projects, the same access to such funding as the non-profit sector and publicly-traded corporations currently enjoy.
The museum would also assist the community as a location where events could be thrown in support of fundraisers so that there would be community support for those trying to raise funds for a project through fiscal sponsorship, but that is getting ahead of myself. Right now I am the individual trying to raise money through fiscal sponsorship with no community support because I am an individual, as I have been told by the Maine Community Foundation, individuals do not qualify for community support- let’s unwrap that one!
In today’s world free enterprise means small entrepreneurs since large corporations receive so much public funding that they don’t qualify as free enterprise. Our free enterprise entity was established in 1952 and never had a board. By requiring a board, The Maine Community Foundation excludes the free enterprise sector from the community. Why? Because free entrepreneurs operate individually and outside the hierarchical order. There is no one giving or denying permission to the free enterprise. Free enterprises make and are responsible for their own choices. The hierarchical order believes that everyone and everything should be granted or denied permission to exist, by the hierarchical order.
Meanwhile, non-profit organizations are tied at the hip to large subsidized publicly-traded corporations and to the government which also has an inseparable relationship to large publicly traded corporations. That’s the World System!
Identification as a free enterprise entity is intrinsic to the purpose of my project but I am very familiar with the non-profit bias against the free enterprise sector. However, if we are talking about “the greater good” that concept includes everyone and the planet we live on and all of its life forms. I identify small entrepreneurs as an unrepresented cultural faction of society in the age of the advanced world system.
The world system as conceived by Wallerstein (1974, 1979, 1983) is a modern phenomenon with roots in the 16th century. The model hinges on capitalism and complex commodity chains in which the production of a single item is geographically dispersed. Profits are crucially linked to wage levels and the availability of labour. As capitalism develops, more and more items are commodified, increasing quantities of goods are produced, and consumers increase in number. The capitalist world system depends on world labour markets across state boundaries The Bronze Age: Unique Instance of a Pre-Industrial World System? by Shereen Ratnagar
I have witnessed the emergence and evolution of the prolific non-profit culture that exists today. I have a lifetime of experience dealing with non-profit organizations in our field that consistently do not recognize our achievements within the field of ceramics as they reduce Andersen Design to “being in it only for the money”. It is only a very slight exaggeration to say that upon introducing ourselves to a non-profit organization, the response is “Nice to meet you but you are only in it for the money so we have nothing to say to you”.
In comparing contemporary times with the Bronze Age, archeologists examine a time before the market system existed as civilization developed simultaneously in Egypt, Mesopotamia, Central Asia, and South Asia. Bronze was the material basis of the new technology but it was to be had only at a remote distance, leading to the question “Was there a World System during the Bronze Age?”, and to the conclusion that crafts production was controlled by the elite,
But while bronze produced better tools, they were not cheap; only elites could organize the long-distance procurement of “fantastically costly” copper and tin, as both were scarce. This means that only elites could control production processes (mainly crafts) requiring metal tool – in fact, only those among them who controlled a political organization which made possible the mobilization of surplus …….Significantly, Childe (1957:6,8) referred to “totalitarian regimes” and “totalitarian economies.” Craft specialists (the smith was the first of them) worked in the household of the god or king. Compulsory labour was the earliest form of surplus mobilization and, according to Mandel (1968:26–45), a legacy of tribal society. In many ways, then, the Bronze Age is unique in history source
Subscribe or Update to Paid
Andersen Design produced its products from raw materials sourced locally and sold them at a price affordable to the middle class- because there was a middle class back in the day before the centrally managed economy replaced it.
In the present day, over time, the non-profit industry expanded its fund-raising into the free market, changing the long-existent rules of engagement to advantage the organization by such practices as changing the commission sales ratio, long established in the free market as 70% to the maker and 30% to the retailer, with wholesale agreements based in up-front payment at a 50-50 split of the maker’s retail price point.
The non-profits enter the free market system and up the percentage on commission sales to match the traditional wholesale split and often add on a monthly fee for displaying works sold on commission to help pay their rent on the retail space, which in the free market system is treated as part of the retailer’s cost of doing business.
Some definitions of “capitalism” by which is intended “free enterprise” emphasize making a profit as if there is a system in contemporary times when the means of production operate without the intent to make a profit. Nonprofits make profits. They just have to ensure that profits do not outstrip their expenditures, They are also accumulating a lot of land and property ownership on which they do not pay property taxes as they secure their positions as owners of the facilities of production.
Watershed Center for the Ceramic Arts, a non-profit organization, is a bed and breakfast complex with ceramic working spaces that features workshops lectures, and events but does not teach formal ceramic making. Instead, for a fee, it offers seven-month residencies with access to the ceramic studio spaces and an opportunity to interact with the other residences. One must apply for such a residency. The ability to work independently is stressed in the application.
By being a non-profit organization, The contemporary hierarchical hegemony designates Watershed as “being in it only for the public good”, in the same way, that Andersen Design is designated as “being in it only for the money” by being a free enterprise. This is the reason I have been given whenever I question why non-profits change the long-established rules of engagement of the free enterprise market economy. Why are you charging a jury fee for vendors to present their wares to be sold in your retail store? “Because we are in it for the public good!”
Andersen Design is a ceramic design research and slip-cast production enterprise that teaches how to make ceramics on the job. Andersen Design creates original ceramic bodies, glazes, wildlife sculptures, and functional forms.
Watershed Center for the Ceramic Arts, has an event every year called Salad Days in which it sells the products made by its artists-in-residence as a fundraiser for Watershed.
As a small-scale production, Andersen Design often sold its products to non-profit organizations to be used in their fundraiser. We paid our staff to produce the product because that is how it works in the free enterprise economy.
I have heard that the individual Watershed artists get to keep a couple of the pieces they make but most of the fruits of their labor are sold to benefit Watershed. The artist in residence also pays a fee to Watershed for accommodations and the use of the kiln and facilities. The full fee is subsidized by donors.
The Salad Days Artist spends seven months at Watershed – from September to April – producing 475 plates or shallow bowls for the following summer’s Salad Days. The Artist is also commissioned to create approximately thirty small functional or decorative pieces for Watershed’s sustained giving donors. source
The meaning of the artist being commissioned is unclear. Is the artist being paid for his work, or does this refer to the donors who are subsidizing their fees? In the free enterprise system, if there is an exchange of product for money, it is called a sale, not a donation, or subsidy. I am guessing that the donors “give” in exchange for a number of small functional or decorative pieces. The use of the term “commissioned”, involves instructions and raises questions about whether there is a one-to-one relationship between donor and artisan.
There were many kinds of exchange besides the conventional market exchange during the Bronze Age and the same is true today.
The model that Watershed uses is similar in concept to the intellectual property rights policy of The University of Maine, which holds that intellectual property rights belong to the owners of the facilities and not to the creators. The difference is only that in the case of Watershed it is the ownership of a physical product produced by the artisan’s labor. Such a policy has its roots in corporate culture but in corporate culture, the creator is employed by the corporation and earning an income and so there is justification for the intellectual property rights belonging to the employer.
University of Maine Statement of Policy Governing Patents and Copyrights
Works of Non-Employees. Under copyright law, Copyrightable Works of non-employees such as consultants, independent contractors, etc. generally are owned by the creator and not by the University, unless there is a written agreement to the contrary. As it is the University’s policy that it shall retain ownership of such Copyrightable Works, the University will generally require a written agreement from non-employees that ownership of such Copyrightable Works will be assigned to the University. Examples of Copyrightable Works which the University may retain non-employees to prepare include: reports by consultants or subcontractors; computer software; architectural or engineering drawings; illustrations or designs; artistic works; and websites.……IV. APPLICABILITY This policy, as amended from time to time, shall be deemed a part of the conditions of employment for every employee of the University, and a part of the conditions of enrollment and attendance at the University by students. It is also the policy of the University that, by participating in a sponsored project and/or by making significant use of University Resources and/or by participating in teaching, research, or service projects, individuals (including non-compensated individuals) accept the principles of ownership of Intellectual Property as stated in this policy, unless an exception is approved in writing by the Intellectual Property Office. Statement of Policy Governing Patents and Copyrights
The Maine state and municipal governments and large for-profit and non-profit corporate entities function as a cohesive network characteristic of the world system, which is a centrally managed hierarchical system.
When Maine recently created a council to develop a 10-year plan, in addition to its usual private corporate partners, the state included the non-profits. Everybody except the free enterprise sector was invited.
Small entrepreneurs operate outside of the world system framework similar to the hypothesized “free men” whose existence archeologists ponder about during the Bronze Age. Could they have existed? This is the real issue that the hierarchical order has with free enterprise. It’s not because the motivations for being a free enterprise are only about the money. Why should they be allowed to govern themselves and not serve as underlings in the hierarchy? As the name says- the true motivating factor is the freedom of self-government.
Mackenzie Andersen’s The Individual vs The Empire! is a reader-supported publication.
To receive new posts and support my work, consider becoming a free or paid subscriber.
The network of my vision is a heterarchy:
Heterarchy, form of management or rule in which any unit can govern or be governed by others, depending on circumstances, and, hence, no one unit dominates the rest. Britannica
My vision for the productivity assets of Andersen Design is to create a heterarchical network of independently owned studios that work collaboratively at times. The legal framework will protect the intellectual property rights of the creators, including Andersen Design, whose assets might be preserved in trust and made available to artisan studios via terms of the agreement within the legal framework. I want our assets to be used in a way that is consistent with the Andersen Design brand and this will require finding the right talent to take the helm, both philosophically and artistically. Perhaps my Employment page will include a Philosopher and a Stylist. While Watershed’s Employment page is about fundraising. Mine will be about the work process.
The network will be fluid and open to other types of crafters but for my purposes, I am focusing on how the network will interact with the Andersen Design productivity assets which can provide income to the independent studios that will be free to create their own line and work with other studios as well as Andersen because they will be independent owners of their studio. If a line and artisan is compatible with the Andersen line, it can be represented on the Andersen Design website which will be different from other craft selling venues because it will be curated.
As part of the Andersen Design unique entity, there should be a glaze and research studio as well as a product design studio. New artists can contribute to the Andersen line. The research and design studio will require a small production that can also be used to teach the processes involved in creating Andersen Design artwork. Artist-in-residence training is something to consider as ultimately the trained artisan can produce the line in their own studio that can be at any distance. This design-research-production space can also accommodate a retail gallery space.
However for such fluidity and openness to be sustainable, there needs to be mutually agreed upon terms of engagement. The legal platform will provide basic terms of agreement while allowing flexibility for individual terms of agreement to be negotiated between parties. Perhaps there will be a library of crafted agreements available for the use of the participants. Freedom and limitations go hand in hand.
This is an alternative to the world system at a time when it makes sense to have such an alternative as the forces of nature may soon make the world system impractical if the planet is to prevail as suitable for human life. Consider that there is no sustainable alternative to date for shipping across the ocean in large boats that use fossil fuels. At the rate that climate change is progressing, this type of transport may have to be curtailed for the sake of preserving life on earth and this would greatly disrupt the world system of production and trade.
Mackenzie Andersen is a sponsored artist with The Performance Zone Inc (dba The Field), a not-for-profit, tax-exempt, 501(c)(3) organization serving the performing arts community. Contributions to The Field earmarked for Mackenzie Andersen are tax-deductible to the extent allowed by law. For more information about The Field, or for our national charities registration, contact: The Field, 75 Maiden Lane, Suite 906 New York, NY 10038, phone: 212-691-6969. A copy of our latest financial report may be obtained from The Field or from the Office of Attorney General, Charities Bureau, 120 Broadway, New York, NY 10271.
Donate on Mackenzie’s Profile on the Field
Once, when Watershed was our neighbor for a short time, I introduced myself. After listening to the director explain how their organization worked, for quite some time, I attempted to talk about Andersen Design but the stone-cold look on the director’s face told me it was a waste of time. Being familiar with the non-profit world’s attitude toward free enterprise, I attributed the coldness to that commonplace attitude.
Today I saw this on the Watershed Salad Days Artist Application:
7. Describe your experience with large-scale production.
Large-scale production refers to a particular type of production, begging the question, does Watershed understand the term they are using?
Large scale production refers to the production of a commodity on a large scale with a large sized firm. It requires huge investments in plant and machinery. Large scale production can be carried out if the market size is large and expanding.Large scale firms are division of labor and production and sale of goods in large quantities. They cater to a large market. The industrial revolution laid the foundation of the factory system. The factory system which extensively used machinery and adopted division of labor made large scale production possible. source
The Watershed application says they only accept American students, I do not know of large-scale ceramic dinnerware productions in the USA. That type of production was moved to low-wage labor markets in the 1980’s. Does Watershed not know this? Are they really looking for experience in small-scale production?
There is a company in Texas that does large-scale contract manufacturing Here is a quote from their blog:
Manufacturing Plant Culture vs. Office Culture
Often the plant workforce is labeled as manual unskilled laborers that require constant supervision to “stay busy.” But today, the manual workforce has been replaced in all areas possible to reduce labor costs, improve efficiency, and increase outputs. Complex control systems, lean manufacturing, and six sigma are prominent on the plant floors. Digital and robotic factories can be found across the country. These advancements demand that managers and supervisors be much more than overseers or babysitters. info ceamics
If they mean large-scale dinnerware production, it looks like this:
In terms of large-scale ceramic dinnerware production, it currently means geographically dispersed production to other countries.
The only asset Watershed has to justify jumping into any-scale production is a low-wage labor force, and then they face the same issues that Andersen Design had to work out – marketing! That is going to require more than Salad Days.
The sort of transition implied by the large-scale production question on the application for Salad Days artists-in-residence represents what occurred within the non-profit sector as that sector expanded. There was so much competition for non-profit funding that non-profits expanded into the free enterprise marketplace.
From the perspective of the free enterprise economy, a question about experience in any kind of production would be located in the Employment section, as a highly-skilled qualification, not on the artist-in-residence application where the emphasis is on the ability to work independently. Production is teamwork.
The fact that this question is asked on the artist-in-residence application underscores that artist-in-residences are the laborers who produce the commodity that Watershed uses to raise funds.
There are no jobs listed in the Employment section that have to do with ceramic-making skills. The jobs listed are related to fundraising except for a Studio Coordinator involving administrative and maintenance responsibilities for the studio facilities.
The complete absence of jobs relating to the ceramic-making process in the employment section makes the question about such experience on the artisan residence application even more curious. Is Watershed running or planning on running a large-scale production? Why?
Large-scale production is about the money. Watershed received generous funding to expand its facilities but now they need to sustain those larger facilities. However Watershed does not create designs, its artists in residents do the designing on generic forms. If Watershed is thinking of using those designs in production, it runs into intellectual property rights.
Watershed received generous funding to invest in facilities (tangible assets)
Tangible assets have a physical form and are the most basic types of assets listed on a company’s balance sheet. Examples of tangible assets are a company’s inventory and its property, plant, and equipment (PP&E). Investopedia
However, to sustain those facilities Watershed might now be facing a monetary asset challenge::
Monetary assets include cash and cash equivalents, such as cash on hand, bank deposits, investment accounts, accounts receivable (AR), and notes receivable, all of which can readily be converted into a fixed or precisely determinable amount of money Investopedia
Andersen Design lacks monetary and tangible assets but Andersen Design has the intangible assets that Watershed lacks such that if we had the tangible assets specific to our needs, we could readily produce the monetary assets through our intangible assets.
The board of Fractured Atlas denied my application as a social enterprise because I used the word “production”, which the board deemed to mean that anyone using this word is only in it for the money. Then after denying Andersen Design status as a social enterprise the board of Fractured Atlas said I could apply as a school or a museum but as a school, I would be forbidden to teach how to make our product but I would be allowed to teach how to make our original bodies and glazes, which are an identifying signature of our brand.
Fractured Atlas, the gatekeepers of access to debt-free funding, didn’t just deny that Andersen Design is a social enterprise, it wanted to destroy our brand by dispersing to the entire world. our intangible intellectual property consisting of the original bodies glazes, and decorating colors that Andersen Design created. We would be allowed to teach the world how to make our bodies glazes and decorating colors and they could be used on any form, except our own, in the context of the school that FA would fiscally sponsor as they denied our identity of six and a half decades as having any social enterprise attributes because I used the word “production”, as if any production has to be a large-scale production, although our process, as I described it in our application is not practical for large-scale production.
The idea put forth by the non-profit world, that fiscal sponsorship is for organizations with intentions to become 501 (3) C organizations overlooks the reason that non-profits expanded into the free market. It was because as the number of non-profits expanded, there was too much competition for non-profit funding and so non-profits needed to find other ways of supporting themselves. That is why the model for fiscal sponsorship as put forth by Havard Business Review is much more systemically sustainable” as it is not based on an overpopulated non-profit sector:
The Social Enterprise Model
Typically, the aim is to benefit a specific group of people, permanently transforming their lives by altering a prevailing socioeconomic equilibrium that works to their disadvantage. Sometimes, as with environmental entrepreneurship, the benefit may be extended to a broader group once the project has provided proof of concept. But more often the benefit’s target is an economically disadvantaged or marginalized segment of society that doesn’t have the means to transform its social or economic prospects without help.
The endeavor must also be financially sustainable. Otherwise the new socioeconomic equilibrium will require a constant flow of subsidies from taxpayers or charitable givers, which are difficult to guarantee indefinitely. To achieve sustainability, an enterprise’s costs should fall as the number of its beneficiaries rises, allowing the venture to reduce its dependence on philanthropic or governmental support as it grows. Harvard Business Review
Andersen Design’s founding identity, the identity rejected as a social enterprise by Fractured Atlas, fits Harvard Business’s erudite description of a social enterprise, including an eventual shift away from dependency on non-profit fundraising toward self-sufficiency. This was exactly my plan. When one reads descriptions of fiscal sponsorship on non-profit websites, fiscal sponsorship is portrayed as a transitional phase before acquiring one’s own 501 (3) C status versus a transitional process toward self-sufficiency. Despite the non-profit’s competitive funding environment caused by overcrowding of the field, the non-profit industry still insists on policies that will continue to overcrowd the field.
The economic figures I presented in my application for Andersen Design as a free enterprise design and production entity projected that the funding received could generate a similar level of income in the first year. I used a system of cost ratios that my Dad designed to establish the costs. Off the top of my head I don’t recall how I did the income projections but Andersen Design has been in business for a long time and has established markets and name-brand recognition and the marketability of its classic line of designs is firmly established, while its history as a small-scale production means that it has never saturated its market.
My presentation coincided with Harvard Business Review’s concept of the purpose of fiscal sponsorship. After I was rejected and told I could instead apply as a school or museum, I was feeling really angry at the system when I made up the numbers out of thin air for the museum application making sure to show a large loss at the end of the year. I figured a significant financial loss was needed to show the board of Fractured Atlas that if Andersen Design were a museum instead of a design and production enterprise, it would be transformed into an entity that is NOT only in it for the money. It took me about half an hour to do that application and it was readily accepted. It took the Fractured Atlas Board twice the estimated amount of time to reject my original application by citing the use of a forbidden word, but getting accepted for a museum that would lose money happened lickety-split.
This demonstrates how non-profits try to change the meaning of fiscal sponsorship so that it only applies to entities planning on becoming non-profits, even though fiscal sponsorship is now commonly used by non-profits to create for-profit subsidiaries allowing them to fiscally sponsor themselves, such that, in example, a for-profit investors subsidiary will get the advantage of pooling private investment money with non-profit funds and then lending the money out under special rates offered by the government. Since the for-profit subsidiary enjoys the privacy of any for-profit, what goes on after the funds are pooled is hidden behind an aggregate figure. The for-profit investors may make out very well in such an arrangement in which their investment funds are cushioned with non-profit funds, even at the lower interest rate of the federal government programs, and yet I have yet to hear that they are only in it for the money. They too are in it for the ”greater good”.
And what is the greater good? It is systemic. Looking through the systemic lens, It has become the expectation if a large corporation is going to be located anywhere that it will be granted generous tax exemptions and refundable tax credits which when combined become subsidies. Who pays for these subsidies? taxpayers pay and that includes the small free enterprise entrepreneurs who, by definition, are not tax-payer subsidized. The publicly subsidized and publicly-traded corporations make large profits and create foundations that redistribute wealth to tax-exempt organizations. What goes around does not come around. Instead the free enterprise sector, the only sector not being subsidized is portrayed as being in it only for the money
Economic development is a charitable cause. Systemically it makes sense to make debt-free non-profit funding available to the free enterprise sector. The availability of debt-free capital to the small enterprise sector was the rationale put forth by the Governor’s board in 1976 to justify the establishment of a centrally managed economy. However, I submit that was a ploy to get small businesses to accept investments at the cost of independent ownership and soon the goal of any start-up company became the IPO wherein ownership would be transferred to shareholders completely removed from the work process. This is what the Governor’s board sought to emulate in Maine’s small business economy. No one asked the small businesses what they wanted but it is commonplace in the small business culture to value owning oneself.
Fiscal sponsorship can provide access to debt-free capital without sacrificing ownership. As the small business sector is taxed to subsidize the publicly traded corporations, let what goes around, come around. Stop excluding the free enterprise sector from the loop. Fiscal sponsorship does not make the free enterprise sector tax-exempt, it just makes it possible for free enterprises to accept tax-deductible contributions via the 501(3) C fiscal sponsor. Systemically it’s for the greater good because free enterprises create jobs and opportunities for others and make the community more diversified, breaking up the totalitarian character of the world system hierarchy. And they make contributions to non-profits. What goes around, comes around.
Systemically, the Harvard Business Review model of fiscal sponsorship serves the greater good more so than the model in which fiscal sponsorship is for those intending to become non-profits, only.
