Society has handcuffed charity organizations and nonprofits to mediocrity and inefficiency in the name of some skewed sense of morality and pseudo-ethics. We judge (either consciously or subconsciously) charities that spend money on the newest technology, lavish events, marketing campaigns, or high salaries. “That money should go to the needy,” we say. So what are we left with? Nonprofit organizations with employees arebarely able to make ends meet working from laptops that were manufactured in 2006, low-cost fundraising events that donors attend out of pity, and ads designed by an unpaid intern covered in graffiti at an irrelevant bus stop.
We have it all wrong. In this system that we have created by our flawed moral standard, nonprofit organizations are not allowed to operate the same way as profit-maximizing capitalists. Capitalism, though not perfect, undeniably does something right: make money. Making money is the first goal for all nonprofits, as the greatest challenges society faces will not be solved purely through good intentions. But still, nonprofits face attacks left and right when they open the capitalist playbook.
The prime example of this are the salaries of nonprofit executives and employees. To paraphrase Dan Pallotta, who put it best in his paradigm-shifting book Uncharitable, why is it that a CEO making a million dollars a year selling violent video games to children is less critiqued than a CEO who wants to make a million dollars a year operating a charity working to cure childhood leukemia? Both are making incredibly high salaries, but one is a good businessperson — or entrepreneur — and the other is “stealing” from sick kids.
Society holds this false belief that nonprofit workers should be selfless and willing to sacrifice their paycheck for the greater good of the world. This privileged perspective is harmful for multiple reasons. First, it forces financial comfort and stability to be prerequisites for wanting to work in the nonprofit sector, unless the employee wants to risk their own financial security. For example, in New York an independent organization found that over one third of all non-profit employees qualify for social safety net programs such as food stamps and Medicaid (Human Services Council). This issue disproportionately impacts women, who make up 82% of the non-profit workforce in the United States. Secondly, it assumes that the nonprofit sector should be the only sector that doesn’t pay for talent. It comes as no surprise that people who work for the largest and most well-known financial firms make more money than those who work at small regional firms — that’s basic economics. Our labor market ensures a system that pays more for people of higher demand. If non-profit organizations are unable to pay livable wages, how are they able to compete for top talent who are offered six-figure salaries post-graduation? Nonprofits and forprofits need the same type of talent: accountants, marketers, human resource managers, and policy experts, However, if Amazon is offering $120,000 + retirement benefits + stock options + healthcare, and [insert any local charity] is offering $45,000 and a seven year old laptop, there emerges a clear winner.
And, this issue doesn’t just go for executive salaries. Consider the following case of expensive advertising and fundraising. In 2018, Canada’s charity watchdog Charity Intelligence Canada (CIC) attacked and cut the “evaluation ratings” of the foundations attached to professional sports teams, namely the Winnipeg Jets’ True North Youth Foundation (TNYF). Their basis: the foundation raised nearly $2 million at a gala and celebrity hockey game that cost a combined $880,000 according to CBC, netting a total donation of over $1.1 million in two events. By any other standard, $1.1 million (profit) in two nights would be considered a massive success; however, since TNYF is a charity, they spent too much to raise money. The managing director of the CIC called the foundation, which raises money to provide opportunities to underserved youth, “puck hogs,” a statement which has since been apologized for but not without causing damage to the foundation’s public image.
The double standard between nonprofits and forprofits limits the potential good that a nonprofit is able to do in the world. As a society, we are holding nonprofits back when we obsess over every penny that a charity spends. Unless nonprofit organizations are given the tools of “profit” maximization, they will never be able to raise the capital necessary to combat the complex — and expensive — issues faced by our global population. We find ourselves at a crucial fork in the road; will we continue to judge nonprofits that spend money to attract talent and fundraise, or will we let them play by the same set of rules that have allowed the trillion dollar for-profit industry to grow?
