Donation As Investment

Sasha Dichter has written a great post about why it is NOT bad for nonprofits to pay decent salaries for talented, hard working people or to invest in new technologies:

…we find ourselves having the same conversation, one that boils down to: is it a wasteful to pay nonprofit professionals to do their jobs well?

I wonder if it is we in the nonprofit space who need more guts when we take on this question. Maybe it’s time to say something along the lines of, “if you want your money to go directly into the hands of very poor people who need it, you should do just that and give to Give Directly.” GiveDirectly is optimized for this, they are efficient and transparent in their operations, they rigorously study their results, and they’ve shown the effectiveness of direct cash transfers for creating both short- and long-term improvements in people’s lives. It’s a completely legitimate way to help others, and it’s a great benchmark against which to measure our work.

“Or,” we should have the courage to continue, “you can have the point of view that the programmatic work that we’re doing is better than giving cash.” “Better” can be because it does different things (fights corruption); “better” can be because the impact of giving a dollar is more than $1 (investing in a scalable social business); “better” can be because of long-term return on investing that’s higher than the social return on giving cash (supporting a child’s education).

“But,” we should be sure to say, “if you believe that the IT that we do matters, if you believe that there is something real that we are bringing to the table that goes above and beyond your money ending up in the hands of someone who will benefit from it, then you’re saying that our judgment, our relationships, our expertise, our capacity for oversight, and our ability to create leverage for each dollar you give is real. This means that you trust this judgement and our expertise. So please give in a way that respects that judgment and expertise, or don’t give at all.”

He references a TED talk on the same subject that’s an essential watch for anyone interested in how we can make sure the nonprofit sector can deliver the goods and services that are increasingly in demand. Here’s a link to it and I highly recommend you watch it.

While I do work for a nonprofit, it’s a trade association so it truly feels much more like a business. Our members pay dues and we provide services and products to help their companies and industry at large succeed. Basically our members see us as more of a business and while we do sometimes have to defend our compensation it isn’t viewed as morally wrong for our staff members to be paid a decent wage. On the other hand the “feel good” nonprofits that are addressing a social need, like the food bank I often volunteer with, often are judged harshly if they pay a competitive wage because every dollar they spend on compensation is seen as a dollar not spent on food.

As Dichter points out this is faulty logic. If you pay a competitive wage and invest in good tools then you can attract and retain talented, dedicated people who, properly armed, can work magic with those dollars and generate a return that is many times greater than the dollar given. Take the food bank example – would you rather go to the store and spend a dollar that would buy one can of soup on sale, or donate it to an organization that could turn it into seven full meals? That’s the kind of thing that well run nonprofits can do.

This isn’t to say that nonprofits shouldn’t be monitored and evaluated to make sure they’re providing the best possible service for the communities they serve. It is to say that if a nonprofit is delivering the goods, so to speak, that there is nothing inherently wrong with the people doing the good work making a decent living or with them being provided adequate tools to do their jobs.

Anyone who has spent time volunteering with a social nonprofit has likely seen the effects that poor pay and lack of capital investment can have on an organization. People who spend 80 hours a week doing something they truly believe in, but are hamstrung because they’re using outdated technology that was likely donated, and barely make enough money to keep food on their own tables, much less save money for retirement or their kids’ college education, tend to burnout and that leads to turnover. Turnover leads to increased hiring expenses and a loss of expertise that puts even more pressure on the staff and volunteers who are left to do the work, which leads to more turnover, and so on, and so on, and so on.

Please, the next time you hear someone criticize the pay of a nonprofit staff, or question the wisdom of buying a new computer, tablet, truck, etc. please try put it in perspective by looking at the big picture. If the organization is barely serving anyone while the senior executive is tooling around in a new Mercedes leased by the organization, then by all means ask a lot of hard questions. But if the organization is meeting a community’s needs, if it’s returning multiple dollars of service for every dollar donated, then support their efforts and find a way to help them do even more.

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