My Tuesday visitor has $15 million to spend on a public project. I urged him to leverage that money into $30 million by exploring philanthropic and federal grants. I've had this conversation many times over the past decade.
Leverage and partnerships are how large public projects get built these days. Portland State University is the master of leverage. At the mouth of the Columbia River, we play the same game of multiplying the size of initial capital investment. Liberty Theater restoration wouldn't have happened without leverage, nor would the refurbishing of the Columbia River Maritime Museum. Creation of the Fort-to-Sea Trail was a masterpiece of partnerships and leverage.
Government, private sector and nonprofit organizations have ceased to be discrete arenas. The "No trespassing" signs are gone. This blurring of lines has happened out of necessity. It has also been caused by younger business people who aren't content simply to make money. Business writer Stephanie Strom offered an extensive exploration of this generational phenomenon in The New York Times on May 6. Her article was headlined "Make Money, Save the World: Businesses and Nonprofits Are Spawning Corporate Hybrids."
Strom reports a new designation - the fourth sector. These hybrids are "...composed of organizations driven by both social purpose and financial promise that fall somewhere between traditional companies and charities," reports Strom. Her examples included a brokerage firm called Altrushare, General Electric's $12 billion Ecomagination business and the Patagonia brand.
At the heart of the fourth sector are the limits of the market economy. Markets only set prices and allocate resources. The new fourth sector combines social purpose and financial promise.They don't necessarily recognize social costs, such as environmental degradation or poverty. Those costs have left portions of American and British society, for instance, wanting. Charity was the traditional manner in which the social gaps were filled, and there is a profusion of nonprofits for that purpose. But a new generation of economists and financiers is not content to leave such matters to charity or nonprofits.
For instance, South Shore Bank of Chicago showed how to make money by lending into an urban housing market that traditional banks would not touch. Subsequently, the renamed ShoreBank entered our coastal market, to lend to natural resources projects that didn't fit traditional banking models. And now the ShoreBank model is a prime exhibit of the new Fourth Sector, under the name of ShoreBank Enterprise Cascadia.
Economists would not classify the newspaper industry as part of the fourth sector. However, there is a public and social purpose to newspapering that offers much more meaningful activity.
One of the things that ails many American newspapers is their abject devotion to the bottom line. Gannett, for instance, has stripped down some of its properties to the point that precious little substance is left. The real product of Gannett is cash flow, not news or journalism or community building. And now that newspapers face external challenges, the companies like Gannett that have squeezed their properties and their communities find there's little left to squeeze. Compounding Gannett's problem is that its stripped-down products lack significance for a world that is hungry for meaning and community.
Frank Blethen, publisher and CEO of The Seattle Times, is an outspoken critic of the newspaper culture based on cash flow. Blethen argues that publicly-traded media companies are willing to compromise the First Amendment.
It is an exciting day in the newspaper bus-iness, for all the reasons that Ms. Strom describes. We have an opportunity to be much more than a cash-flow machine.
It's also a transitional moment at the mouth of the Columbia River. And the trends that Strom describes are making things happen here. If you are building a new library in Seaside or Astoria, refurbishing a community college in Astoria, or if you are seeking to conserve ecologically significant land, you must explore partnerships in order to leverage your money.