Marek Cernocky is creating a new way to fund citizen activities in a sustainable and renewable manner by constructing one of the biggest river water electric power plants in the Czech Republic, then using the profits from the power plant to fund charitable activities specified in the statute of Marek’s organization. This is the first program of its kind in Central and Eastern Europe, and it expands how the citizen sector operates.
The New Idea
Marek has a new investment strategy. He invests gifts and sponsorship meant for charitable purposes into activities that will generate permanent income to fund the organizations in the future. Then he engages with individual business donors that are willing to support his method. This strategy strengthens citizen organizations by making them independent and grants them freedom to develop without relying on the ‘noble beggary’ approach.
In response to the limiting way charitable activities are often funded, Marek established a public benefit company to create new ventures, such as the current construction of a dam that will fund them over the long-term. Marek’s strategy destroys a perception of citizen groups as money vacuums. This activity is based on a thorough understanding of present-day society: It creates a new form of ethical business that not only invests in renewable and environmentally sustainable energy production in a socially non-exploitative way, but above all, exists to support charitable causes. Each step of his activities currently generates more profit than investment, which in turn, convinces other donors to participate. It is easily replicable not only across the Czech Republic, but also within Eastern and Central Europe.
Unlike other organizations that focus on creating a sustainable image of the citizen sector that will allow its funding through individual and corporate sponsorship in the short-run, Marek wants an attractive mainstream business enterprise to fund charitable activities over the long-term, and to inspire new ways to think about our interconnected world.
Since the collapse of communism, one of the major tasks of the past fifteen years has been to build civil society and a sustainable citizen sector; both were largely weakened during communism. It was important to raise funds for activities where communist state has retreated and the new state did not pay enough attention; or for newly identified areas and issues. However, this transition has not proved easy. When charities and citizen organizations were being constructed, the Czech Republic was drawn more closely into late modernist economic and social systems. This has had an effect on a way people perceive the world. Social problems are understood as partial and separate issues and charities as necessary evils because they appease the postmodern consciousness and protect society from those who ‘did not quite make it.’Alternatives to funding philanthropic activities include direct support for one issue. This occurs mostly when a donating corporation works with marketing targets of a donating corporation. More often than not, the corporation uses it as a venue to promote itself. A major risk is that this approach is most successful in popular and acceptable areas. Projects that are less popular, such as projects for minorities, are poorly funded in a society with a high prevalence of racism. Another risk is that such fundraising has to be constantly repeated and becomes the major activity for the organization. The other option is a gift from a corporation for a one-time concrete activity. The difficulties with this approach are similar to those described above. The last possibility is an individual funding charitable activities. This is the most labor intensive and highly dependent on the nature of the activity. People in post-socialist countries are more willing to support mitigations of a temporary failure of the state or humanitarian and ecological catastrophes. The stakes in the struggle over the nature of financing are very high and are not related to the amount of money involved. The controversy has dissociated charitable and social activities from the rest of human activity and has dismissed them as unproductive. More narrowly, it creates a feeling of a self-perpetuating dead end: It seems inevitable that charities will beg for more money while not engaging in anything worthwhile. Funding for citizen sector activities has been a rollercoaster. This stop and go system began with major U.S. foundations investing large grants and then declaring victory and moving further east. After that came a procession of funds from the EU with government regulations and now structural funds that overburden citizen organizations with bureaucracy and late payments. Today, there are only a few organizations in the Czech Republic that currently promotes sustainability in citizen organizations. Some of them increase institutional strength, others create new products that forge new demands, and still others focus on building a solid public image and presence, while some rely on corporate fundraising and alliances of citizen organizations with corporations. Until now, there has not been an organization that builds on renewable and profitable business activities to directly finance charitable causes.Few foundations have endowments which can significantly support citizen activities. One reason monetary endowments are not very attractive in this region is because the currency is not stable. Investment funds are not very open to managing smaller amounts of funds, and inflation in some countries is very high.
Marek is an entrepreneur with a strong understanding of business who has identified a method of connecting various sectors that are normally considered as disparate and even antithetical (a division that has been a source of distrust). Like any business model, this approach involves convincing outside investors about the feasibility and profitability of the idea and applying it methodically and flexibly. The novelty is that the effort leads not only to an important goal and creates profit, but that the profit is used to benefit society.
Štetí, the power plant involved, is going to be one of the biggest river water power plants in the Czech Republic, generating about 30 GWH of electric energy yearly. In monetary terms, this means a gross annual income of about 70 to 80 million Czech crowns. The whole project costs are assessed at approximately 700 million crowns. Marek has received criticism from all sides because people find it difficult to believe that such a profitable enterprise is being constructed by a public benefit company and that its profits will go to support charitable causes. He has received criticism from the citizen sector, despite its self-proclaimed altruism and stress on voluntarism, claiming his motives must be selfish and that in the end he and his wife will somehow turn it into a company for their own profit. On the other hand, the firms competing for the Štetí dam project tried to stop his public benefit company, Energia, and seize the project for themselves. Not many people could understand why a charity should get involved in such a mainstream (neither fair trade nor marginalized) and profitable business venture.
Energeia was established on November 23 in 2003. Energeia, in Greek, means “impetus, dynamics, and actualization.” Marek established Energeia (www.energeia.cz) in close cooperation with the organization, Klíček—that is building a children’s hospice (started by Ashoka Fellow Marketa Královcová). Energeia’s main purpose as a public benefit company is to find charitable projects and activities that can be profitable in a way that will allow for independent and renewable funding of activities as defined by its statutes. Marek believes that by separating human activities based on whether they are profitable, hurts the development of the civil sector, its independence, and ultimately how it functions. Marek has identified services in humanitarian, educational, and health care areas with a special focus on young children and families as the target beneficiaries for Energeia’s profits. Building a children’s hospice with Klíček fulfills these goals.
Once Energeia received a building permit, a difficult task in itself, the problem was how to fund the initial stages of the project. Marek must challenge donors willing to support charitable activities to change their way of thinking about giving and be willing to support charitable projects indirectly through a mainstream business venture that will provide permanent income. Marek has promoted his vision of the interconnectness between public benefit charitable activities and a mainstream business venture.
Marek’s clear vision, articulation of the project, and communication with the media proved to be crucial. Because it is unprecedented in Central and Eastern Europe that a public benefit company is involved in such a large-scale business project and because of Marek’s charisma and vision about the role of the dam, he was approached by a broker who specializes in energy. Marek convinced him to collaborate with him and help him raise the funds to complete his project. Marek’s systematic approach meant that each step had a higher market value than its initial costs—receiving the building permit had a high market value—however, he decided not to follow the short-term strategy of selling it and reinvesting the money to generate income to support his goals, but to continue to build an environmentally friendly power plant that would generate its own money and would fund charitable activities. With the help of the broker, they secured 30 million crowns that enabled him to take business loan from the bank. At the same time, he received the planning permission necessary for the construction, signed five separate contracts for supply of technical and organizational help in the areas of accounting, finance, tax consultancy, legal, and technical questions. The main output system is constructed and they are waiting for the construction of the power plant.
Marek always takes a flexible and collaborative approach. He is aware that one of the biggest dangers is the feeling of elitism or superiority, and that nothing can be improved. Each step refines a preceding one and leads to further improvement. For instance, details of Energeia’s statute have been refined and rewritten in light of legal and other obstructions. Fifteen employees of the organization are working on explaining and expanding its mission. Marek recognizes the need to avoid dependence on one source of funding, no matter how comfortable that might be, but to make his organization independent with diversified sources. He is also aware of the need for further changes in the law.
He has also realized that endowments in the monetary sense are not appealing to business people. The model which he offers is much more attractive for business people working on the business segment. He attracts many donations from businesses that want to assist in a more sustainable method.
By the end of the year, Marek plans to begin both the construction of the electric power plant and a nursing unit in a children’s hospice. Energeia also wants to support media and educational activities to sustain his view of interconnectedness in society, and to this aim, is collaborating with independent TV Noe. In the future, after the plant is operating and the activities are solidly funded, he will expand his activities to environmentalism, support for renewable sources of energy and research into the alleviation and remediation of ecological damage.
In future, Marek plans to expand his know-how across Central and Eastern Europe, and his prior success on a large-scale will surely help. Even now, shortly before construction of the power plant he is thinking of other investments in the area of solar energy, as well as the possibilities for countries with better environmental conditions for such projects. His dream is to change general perceptions of citizen organizations and their activities, to open new venues of financing, and above all to break an artificial barrier that separates profit and not-for-profit activities. He has started concrete negotiations with companies in neighboring Slovakia, where he has identified rivers and profiles where power plants can be built. While he is focused on finishing his project in the Czech Republic, he is investing his energy toward his next projects in different countries.
The most important event that forms Marek’s outlook on his work was the failure of the project Omega that Marek founded and managed. Omega grew out of Marek’s fascination with the universe, interconnections, and meaning. As a young boy he was interested in astronomy and was busy building home made telescopes and technical innovations. In 1993 he initiated a magazine, Omega, created in conjunction with a TV program that was supposed to be a ‘revue for becoming aware of connections.’ One of the major figures behind this project was also Jiří Grygar, a well known astrophysicist and a popularizator of science. The project ran for two years and connected some of the most outstanding scientists in the former Czechoslovakia. There are always various reasons why something starts and something ends, but Marek was most impressed by the danger of lack of sponsorship and an awareness of a lack of managerial skills. The former led to an understanding for charitable activity to be independent as possible from outside pressures and commercial interests, while the latter led to his conclusion that skills need to be constantly refined.
Marek got his interest in the energy field from his father, who was an engineer building power plants in the former Czechoslovakia. When he died, Marek and his brother decided to build a small power plant in his memory. That experience brought Marek to believe that it’s possible to use “energy” for good causes.
Marek describes the birth of his children as a life-changing experience for him. They created a feeling of awe about the world around him. In a very short time, they advanced his view of values. This became for Marek one of the major reasons why he is involved in construction of the children’s hospice. He says he cannot stand the look of suffering children.
Marek is married to Jana, a partner in establishing Energeia and is father to four daughters: Jana, Paulina, Alena, and Lenka.