A Too-Sad Truth about the Nonprofit Sector

“Is there something in society’s subconscious that expects nonprofits to operate in ‘poverty-like ways’?” That question was a showstopper in the Cohort 20 classroom of the summer 2010 master’s program in philanthropy and development at Saint Mary’s University of Minnesota. We were talking about the starvation mentality in so many nonprofits—you know, things like really old, rather dysfunctional computers and such poor wages that employees cannot afford a reasonable mortgage and may have to visit the soup kitchen for a meal.

We talked about the chronic underfunding of necessary infrastructure and overhead. We ranted against GuideStar, Charity Navigator, and their ilk, which rate nonprofits based on spurious ratios. We recognized that inadequate infrastructure causes employees to work excessively long hours with poor tools and insufficient professional development. And . . . we realized how hard it is to explain this to boards that make decisions.

There, in that university classroom, members of Cohort 20 explored why this happens. Who decided that 90 percent of the charitable gift must go to direct service . . . thus starving the organization and its employees of necessary resources? Who decided it was okay to pay a less-than-living-wage to people who work in nonprofits?

One student asked, “Does society think nonprofit employees should be paid low wages because then the employees will relate better to the clients?” Another cohort member wondered, “Why does a willingness to accept lower wages (much lower wages than for-profits) seem to be an indicator or qualification for one’s job in the nonprofit sector?”

This is terrible. And unjust.

Is this a holdover from religion? (Although why should religious orders take a vow of poverty?) Is this an implied mandate from government—somehow indicating that because the nonprofit sector gets certain benefits, the working conditions and wages can be lousy? What’s going on?

I believe in a living wage for everyone, including employees in the nonprofit sector. I believe that adequate infrastructure is necessary to support the programs and services provided to fulfill mission. And, by the way, I believe that competent people work in the nonprofit sector, just like competent people work in the for-profit sector. There are, certainly, stars working in the nonprofit sector—and they would be stars if they were working in the for-profit sector, too. I also believe that there are incompetent performers in every sector: nonprofit, for-profit, and government.

Also, I do not expect wages in the nonprofit sector to be outrageous. I think it’s a violation of the integrity and ethics of the nonprofit sector to pay the excessive salaries, benefits, and bonuses found in some for-profit jobs. That said, I have no problem with a decent wage—a darn decent wage—for nonprofit staff.

It’s time for the sector to fight this. It’s time for nonprofits to invest in infrastructure and demand fair wages for their employees. It’s time to stop honoring the unrealistic expectations of government contractors and scared boards. I believe we can explain this to our donors. Let’s get it together and make change.

By the way, what kinds of wages does your organization pay? Does your organization regularly conduct compensation surveys? Does your board talk about the morality of compensation and what kind of morality your organization embraces? I hope that your organization doesn’t claim poverty wages because it “just cannot raise enough money.” If you couldn’t carry out your mission well, I suspect you’d choose to go out of business. Because it’s unethical and immoral to provide poor-quality programs and services. I think it’s unethical and immoral to provide poor-quality infrastructure, too. If you can’t provide decent working conditions and adequate support resources, that, too, is unethical and immoral. So go out of business. Close.

I’m tired of whiny nonprofits that think it’s okay to put all the money into programs and treat staff poorly. I’m tired of nonprofits that won’t fight against this silliness. I’m tired of organizations (nonprofits and watchdogs) that promote inadequate support for infrastructure by promoting inappropriate ratios.

This is important work. It deserves serious people. And serious people don’t work like this.

About

Simone Joyaux

Simone P. Joyaux, ACFRE is recognized internationally as an expert in fund development, board and organizational development, strategic planning, and management. She is the founder and director of Joyaux Associates.

  • Robin O’Grady

    Great article. Bravo!

  • Glenn Kaufhold

    For more on this important topic, it’s worth reading Dan Pallotta’s “Uncharitable.” It’s a great exploration of this subject.

  • Julie Wood

    Bravo! I work for a non-profit where working conditions are reasonable, and wages acceptable, but, having come from 30 years of working in the for-profit sector, I can’t understand why the outside world seems to want non-profits to “make do” with sub standrd resources. I do undersatnd that there are other benefits of working for a non-profit (that wonderful feeling of having changed, even if slighlty, the world for the better).

  • John Gear

    ” If you couldn’t carry out your mission well, I suspect you’d choose to go out of business. Because it’s unethical and immoral to provide poor-quality programs and services. I think it’s unethical and immoral to provide poor-quality infrastructure, too. If you can’t provide decent working conditions and adequate support resources, that, too, is unethical and immoral. So go out of business. Close.”

    As entertaining as that piece was, I’m afraid there’s not much evidence to suggest that failing nonprofits have the institutional form of self awareness that would be needed to recognize that they are doing any of the things you rail against. Human nature and even moreso in groups is that we over appreciate our strengths and minimize our failings and engage in endless rationalizations to justify continuing to do what we’re comfortable doing, which is usually what exactly what we’ve been doing.

    The great challenge in all organizations is seeing reality as it appears to those outside, rather than as seen from inside; people who have that knack are often those who can’t get hired or, if hired, can’t “fit in,” because seeing a fundamentally different reality than your coworkers or fellow board members or managers is a pretty sure recipe for serious conflict and communication problems.

  • Tom Platt

    Amen! Now what is anybody actually doing about it?
    We created an organization that is.
    http://charityaccelrator.org

  • Renee McGivern

    I also encourage people to read Dan Pallotta’s paradigm-shiting book or at least, listen to my interview with him last summer on Nonprofit Spark. Too, he wrote about nonprofit pathology in his Harvard Business Review blog in April, honing in on co-dependent behavior and the sector. Not a week goes by that I don’t think about my conversation with him and that blog post.

    Many nonprofit leaders and staff members simply do not value beauty and efficiency. These are very practical values. I didn’t realize how important they were to me until I noticed I was avoiding volunteering for or consulting with some really great nonprofits simply because I cringed walking into their offices. So, a values discussion might open up something with board members.

    Also, Guidestar and the Charities Review folks don’t tout 10% admin costs. They may have years ago, but they certainly don’t now.

  • Donna Panton

    @JohnGear is right. The underlying problem is resistance to change and it, indeed, is manifested in getting rid of or sidelining people who don’t “fit in” or who, in any way, question an organization’s modus operandi. One indicator that I have always felt accurately reflects how a nonprofit treats its staff is what it says about them on its website. Most corporations trumpet how qualified their employees are, how much diversity is valued, and what great workplaces they are; and many are good workplaces regardless of their external profiles (for example, the former Phillip Morris was considered one of the best companies to work for). Comparatively few nonprofits have such a section on their websites. Nonprofits tend to highlight the valuable work they are doing, but overlook the key ingredient: the people who make it happen and the conditions under which those people operate.

  • Christina Dragonetti

    I agree this is a “too sad truth” and while this article makes some really great points (“Who decided it was okay to pay a less-than-living-wage to people who work in nonprofits?”) Joyaux doesn’t offer much in the way of suggestions for *how* to change this paradigm. I think recognition of the need to change is widespread among nonprofit staff members (and most consultants, some funders, and many board members) but there is paralysis when it comes to the question of what to do about it. This June HuffPost article from Mark Rosenman talks about what nonprofits CAN do: “There is much that charities and foundations can do to challenge policy decisions that are destroying the social safety net — not to mention the social contract in place since the 1930s — while propelling us toward the cliff. Despite the fact that charitable and philanthropic organizations are prohibited from engaging in electoral politics, there are many other avenues of action open to them.” http://www.huffingtonpost.com/mark-rosenman/nonprofits-missing-from-b_b_1574783.html

  • Matt

    I started my career off in an unusually “with it” and reputable non-profit about 8 years ago, and boy did I pay for it. I can’t tell you how badly I regret investing my time in the social sciences only to find that they are worth next to nothing in the “marketplace” of Western society.

  • Rpbert Lang

    First if you liked Dan Pallotta’s last book you will really love his next book coming out in September. I am proud to have made a small contribution to it.

    More importantly, we need to change the mindset which says there are two classes of business – for profit and nonprofit. Many in the nonprofit sector look down on for profits as some sort of evil empire. It is ironic that this article is published in the NPQ. How many ads do you see in the NPQ? How much could they increase their revenue if they actively solicited ads? Could they pay their staff more? Could they fund better research? Could they lower the subscription price to get wider distribution and thereby spread the word to more people? We need to rethink the silos mentality and use all the resources available. It is time to use use the power of free enterprise as much as possible. That is why I created the L3C, If you are unfamiliar with the L3C check our website: americansforcommunitydevelopment.org

  • Simone Joyaux

    Thanks for all the great comments. I agree that far too many nonprofits don’t choose to close. Why? Lack of self-awareness, insular, self-important, passionate about mission and committed to serving, afraid…so many reasons.

    And how do we change the poverty approach?
    — First, I suppose, by acknowledging it. How many nonprofits actually belief the sector has this problem? How many board members and founders believe this is a problem? I mostly hear excuses about investing in program (mission) and just getting by with however inadequate infrastructure.
    — Next, talking about the problem. How many sector organizations talk about this issue, explore this issue, identify strategies to address this issue? I don’t hear the issue talked about much. I don’t see much writing about it. I don’t see organizations and leaders making a cause célèbre about the issue even within the nonprofit sector.
    — Advocacy and lobbying for public policy is one way to help make change. But over the years, nonprofits have decreased their advocacy and lobbying. Fear of losing donors. Threats by government. How many nonprofits choose to speak out regardless of the risk?
    — Also banding together as nonprofits to set up c4s that can actually electioneer. Getting involved in PACs to elect people who will work for good public policy. How many nonprofits are doing that?

    To make change in the poverty mentality/mandate, we need to make the issue a cause célèbre in U.S. society. But that means that U.S. society – as a society, as a culture – actually would have to care sufficiently about the haves and have nots, about the rags to riches fantasy (See Ruth McCambridge’s article in NPQ).

    To acknowledge the poverty mentality and mandate by our society towards the nonprofit sector actually requires that U.S. society recognize the injustice of U.S. society. Teddy Roosevelt recognized that when he fought the corporations and individuals. So did FDR. But now? Not so much. Certainly not enough. A weakened U.S. labor movement and an outrageously powerful corporate sector. Citizens United and the Supreme Court. Lily Ledbetter’s struggle. The Occupy Movement. The demise of Glass-Steagel. The 99% and 1%. Wall Street.

    (Then, of course, there are the sector’s own failings and scandals. That doesn’t impress our various governments or our donors or our clients or anyone in our communities who happened to read about failings and scandals.)

    So let’s talk. Let’s talk more. Let’s figure out how to make change in our organizations — helping them close when necessary. Helping them speak out. Helping them pay a living wage. Helping them collaborate or merge if that helps. And let’s raise the issues and issue the battle cry within the sector. And let’s advocate and speak out in society – formally and informally.

    All that helps make change.

  • Kevin Feldman

    I believe that much of this poverty culture with nonprofits stems from the expectations and perceptions from the corporations, foundations and major donors that fund them. Why is it that “operating funds” are the hardest funds to raise? A charitable organization must operate in order to do its good work, must it not? Why are so many nonprofits afraid to have too much of their budgets devoted to salaries, when it takes people to deliver the services?

    When it is the meager budget of a proposal that causes it to win a grant over similar programs that show higher but more realistic costs, then something is wrong with the grantor’s thinking. And worse yet, this thinking influences what would be great nonprofit organizations to struggle every day to deliver more with much, much less.

  • Ruth McCambridge

    Dear Robert:

    I have to admit that in this case I do not understand what you are talking about since anyone reading either the newswires or our front page can easily see we have advertising. In fact NPQ has a good mix of earned and contributed revenue as do countless other nonprofits. It’s a tradition in many types of nonprofits and very few of us are silly enough to think about all business as any sort of “evil empire”. I think that for profits can be good citizens and nonprofits can be bad citizens. That said, I no more think that L3C’s are the answer to every nonprofit’s revenue issues than I believe that the NYT revenue model will work for us. Most nonprofits are plenty smart enough to know that it may not so much be an issue of structure as it is an issue of accurately identifying a viable business model for the particular endeavor. I would not usually answer something like this but I do think it is important to be intellectually honest. Not to put too fine a point on it but if what you wanted to do was adverise your website, maybe you should take out a contract with us and maybe we will all see that salary hike you refer to….just sayin’!

  • claire axelrad

    I love this post. I’ve felt this way for a long time. Of course, I feel this way about a lot of low-paying professions that are enormously valuable (e.g. teaching). It may indeed be a holdover from religion, but the feeling is rampant. I once worked at an agency where the E.D. did, in fact, make a darn decent wage. When her salary was made public, donors called me up and said they’d no longer give. It was ridiculous! No one argued that she hadn’t made a huge, positive impact on the organization’s ability to deliver services. They just thought a “nonprofit” should not pay that kind of salary (even though it was significantly less than what she could have earned in the private sector). The argument was emotional; not rational. I’m not sure how we make this culture shift. But it’s important if we want to attract the best and the brightest to the sector.

    Way to go Simone!

  • michael

    Great piece Simon and a vital discusion in the Age Of Austerity

    You know how hard it is to a Board to even evalaute the organization’s strategic position? The failure leads to organizations lumbering on blindly living on bread crimbs and hope. These are what I call ‘Zombie Nonprofits’ and we let them suck up so much money and resources that could be better used elsewhere.

    More here: http://michaelbrand.blogspot.com/2012/08/the-problem-of-zombie-organizations.html

  • Marjorie Love, MSW

    Thanks for raising this important topic, and for these very interesting responses. I believe that part of the problem is that our passion for the work we do, and for the people we serve, sometimes blinds us to the no-win situation we’ve been put in.

    Case in point. Not long ago, there was a local effort to find a way to pay “living wages” to folks doing the front line work in so many human services, including direct care workers (like CNA’s and aides) in nursing homes, assisted living faciliites, and supported residencies for people with disabilities. Years of level funding — or funding cuts — for these services had long ago gone beyond cutting whatever “fat” ever existed, and created a norm of substandard wages and no benefits. Too many direct care workers were relying on Medicaid and/or Food Stamps. Progress was being made … until the recession hit.

    I believe that our efforts to perform service-delivery miracles despite inadequate funding have the unintended consequence of “enabling” policy-makers to continue to cut funding, while claiming to still provide necessary human services. While it goes against our nature to say “no”, knowing that people will suffer, we sometimes need to do just that. To point out that the “emperor” has no clothes, when funding levels don’t permit the provision of a quality service, by staff being paid a living wage (plus benefits), with appropriate facilities and tools. Nothing will prompt change.

  • Marjorie Love

    Sorry (correction): Nothing LESS will prompt change.

  • Simone Joyaux

    So many more wonderful comments. Thank you!

    Can we engage our board members in these conversations? How about engaging our donors? How about a roundtable conversation with major funding sources – foundations, corporations? How about a chat with the government agency that barely (and not always) reimburses the actual cost of doing the work – But definitely pays defense contractors et al exactly what they request. It’s as if we’re all colluding to create this problem…from the staff to board members to donors to major funding sources to government.

    Can we start putting a stop to this by refusing to do some of the work at such poor reimbursement rates? Yes, I realize that may well harm the ultimate beneficiaries…but it may be a wake-up call. Can many NGOs go to the foundations and explain, together, that operating support is what matters? That’s the core program support for the much-needed services? Can we enlist our donors to speak out, too?

    Thanks to you all.

  • Naeema Campbell

    I’m forwarding this to everyone I know or who has ever expressed interest in nonprofit workers’ salaries. We deserved living wages just like every other sector!

  • Srikanth Jandhyala

    While, I am not a staff of a non-profit I work in completely volunteer Driven non profit (Association for India’s Development). I am more worried about infrastructure which people expect the these non-profits to have. Anything fancy to present themselves in a good manner or do good job at what they are doing is treated indulgence. At the same time I dis agree with the author that expecting high end salaries or to say we have to demand for high salaries is uncalled for. Every organization has its benefits and that is why one joins it. People join starts ups in for-profit world not for salaries but for the work and it should be the same for non-profits.

  • Judy Anderson, Community Consultants

    I’m with you on this. And, I’ll add some observations from conservation nonprofits who are thinking about their salaries.

    1. Many E.D.’s don’t want to pay their staff more, because “they have to raise it, and it’s hard enough raising what I do already.” I have also heard from E.D.’s that “I’ve been in the field for 25 years, and I only earn X, so why should I pay someone who has been in the field 5-7 years more than I earned?” In addition, it is not uncommon for me to be told (when I am encouraging them to pay higher salaries) that “we can get someone for less, so why would I pay more than I need to?”

    2. I have heard many board members state “People will work for less here because our community is such a great place to live.” Or, “that is the market rate here–that is what nonprofits pay. If they needed or wanted more money, they wouldn’t be working in the nonprofit sector.”

    3. Foundations often will pay “x” towards a salary (not very much) and require a 25% or 50% match–thus providing the concept that the total of that amount is what a reasonable wage would be.

    4. When boards or E.D.’s do salary research, they are finding low salaries that then justify keeping the pattern the same. It takes leadership to recognize what it will take to live in a community with school loans, childcare, a mortgage payment, elder-care payments, and care loans–to say nothing of supporting a family.

    5. Finally, I find that the gap between the E.D. and the rest of the staff (with the possible exception of the Development Officer) is significant. Often 2-3 times more than what the rest of the staff get paid. There is no ethic of team value, of making sure that everyone is compensated at a level that reflects they are necessary to make the whole “ship sail.” There is not discussion at the board level about what it means to run an organization with shared leadership and to establish both the expectations and the salaries in a way the grows people, where they are, as part of the team.

    I think the foundation community could really start helping to reverse this. They have the carrots…they have the ear of the nonprofits.

  • michael

    More bad news folks….this is a really crappy time to be asking for $$$ to boost wages. Almost every nonprofit I advise receives some type of local funding….usually local government has to put up some match to the state and federal funding. Well, as horrific as Federal and State budgets are, the news today that Warren Buffet is pulling the plug on Muni bonds is red flag that local budgets are a shrinking pie

    Read it and weep: http://michaelbrand.blogspot.com/2012/08/warren-buffet-throws-in-towel-on-local.html

  • Betsie

    Thank you for this article. I agree. There are organizations on the brink of closing every day because of this issue.
    Founders who work for nothing find their “baby” being closed when they leave because there is not another person available to replace them for no compensation. Often founders find themselves feeling that the candidates must not have the same passion for the mission because they want to be paid for their service. These issues can be very destructive to programs that are providing much needed services and it is a shame that they are closing because someone somewhere at some time in the past decided that nonprofits should operate with substandard compensation and infrastructure.

  • Henry Quinn

    Fantastic. I’ve been saying this about teachers for years and years and years:

    If you build a system that can only attract well-intentioned amateurs who will accept hugs in lieu of respect, stimulation, and, yes, dollars, you’re going to wind up with a workforce that favors passion over getting things done.

    And that’s NOT OK. It’s not ok in the education of our children, and it’s not ok in sectors that are oriented toward solving other very serious problems.

    You’ve described, accurately, an organizational culture that attracts martyrs, and martyrs don’t have sustainable career paths, they just get burned. If that’s who you want helping the poor or the environment — people whose feelings matter more to them than results — and if that’s who you want in front of your kids — people who’ll take a hug and job security over respect for being a professional — well, good luck getting anything done.

    There’s nothing ethical about paying people less than they’re worth just because they’re willing to take it. We all know this. But it’s also a lousy strategy from a results point of view.

    Very nice article.

  • Larry Ekin

    I once turned down an Executive Director’s position when the chairman of the Search Committee offered me a salary that I knew was less than the previous ED who had no family to support and had been there only a couple of years. I looked around the room at the other two committee members and thought to myself, “None of you sitting here would accept that.” It was not just the amount, but the realization that 1) they expected their staff to sacrifice beyond what they would be willing to accept for themselves and their families; and, 2) if this was their starting point, everything I tried to get out of them, for myself or other staff, or programs for that matter, would be a struggle.

    At the same time, I have also witnessed situations where sloppy management was at least partially responsible for subsequent sacrifices by staff.

    For many years, in addition to working in the nonprofit sector because I was a “mission-oriented” person, I told people that I was willing to accept less money because the nonprofit sector offered a workplace flexibility that neither the private sector or government could match. I am not sure this applies anymore; it sometimes seems to me that as many nonprofits adopted more and more private sector management practices, they did not improve their infrastructure or pay scale.

    I agree that the issue of nonprofit compensation is is a large and continuing problem needing more systematic and sustained attention and discussion than we are likely to be able to bring to bear here. But what I am curious about is whether there might be some way to organize our thinking and discussion in a manner that leads to something more focused and productive than just griping? I am interested to hear what others think, and I will continue thinking about it as well.

  • Rebecca

    Simone, Excellent article!

    I believe wholeheartedly that the only thing that brings change to such environments is exposure. In this day and age, the Internet can be a huge force for good and these situations need to be brought out into the light so both staffers and potential donors can judge the organizations. I for one would never give money to an organization that took advantage of its staff. I think many people feel the same. And for a corporation to do so is a potential damage to its community reputation.I have thought since my time with the non-profit I describe that it was high time for a web based review site of non-profits by staffers for staffers! Care to develop that with me? I’m in if anyone else would like to team up.

    If interested in discussing this in more detail and perhpas organizing a team, please contact me on LinkedIn via the group, Idealist.org.

    Best,
    Rebecca

  • Paula J MacLean

    No doubt this problem is all to frequent and you have articulated some of the dymanics and casuality very well. A few points about solutions seem to be in order. Banding together as a sector is likely never going to happen. Sector is a word often used to describe a highly divserse, geographically scattered, large and unlinked (I almost wrote “group”, but it is not a group) mix of associations. As you identified, they are (not without some exceptions) resource poor. People, time and money are needed for any sector to become organized to do anything. These three things are in short supply for even the most basic services to be delivered making it highly unlikely that “the sector” will get anything done on optional (although crucial) projects like lobbying for better funding and wages on a mass scale.

    So, if wages are a function of revenue, and revenue comes from three sources (public donors, funders and earned income) what is missing? I think there is an under-emphasis on social enterprise within the sector (again, people, money and time are the barriers). However, I see hundreds of articles a month about funders, donors, event coordination, fundraising etc. Clearly, organizations are finding a way to spread their resources a bit more thinly as they raise money in various ways. If we (one agency at a time will work here, no sector coordinaton is required) spent the same time, money and creativity on planning and developing self-sustaining business ventures I believe the results would be rewarding (financially and in terms of community perception). Not easy, not without risk, not with out some the need for seed capital – but these are all true of other more conventional fundraising activities and of most funder – agency activities as well. You can argue that governments SHOULD fund us better until the cows come home. They SHOULD also fix roads, improve educational systems and so on too. It is not likely to happen.

    “Insanity is doing the same thing over and over and expecting a different result.” How about trying some innovative out of the box thinking and see if in a decade or so, some of us are further ahead. There are some good models (Richard Steckel “Filthy Rich” is one of them) and some forward-thinking organizations that have successfully done this. Surely we can learn, create and create benefits for all by doing something different.

    There are some interesting resources at http://www.silvercreekpress.ca as well.

  • Daniel F. Bassill

    If we want social sector organizations to solve complex problems we need to find a way to generate the resources the need to attract and keep top talent and have the technology, facilities and training needed to do this work. I also read the book Uncharitable and wrote about it in this blog article. http://tutormentor.blogspot.com/2011/11/if-we-keep-doing-same-thing-same-way.html

    I also created a map outlining chapters in the book so that discussions could be held focusing on different parts of the book. http://cmapspublic.ihmc.us/rid=1K093X8BT-217BYXR-20WS/Discussion%20of%20%27Uncharitable%27.cmap

    The internet has given non profits tools to connect and learn from each other, which are also tools we can use to connect with donors and policy makers. We need to learn to use these tools to build communities of practice focused on the different sub-categories in our sector (e.g. health, education, environment, etc.) so people who focus on the same goals can work with others who may share same goals but be located in different places.

    For those involved in tutoring/mentoring and working with inner city youth I host a Tutor/Mentor Conference in Chicago every six months to draw people together and to build advertising visibility that would draw new volunteers and donors to tutor/mentor programs throughout the city, not just to one or two individual programs. The web site is http://www.tutormentorconference.org. If you’re in the Midwest and want to find ways to overcome the challenges non profits face I encourage you to attend.

  • Simone Joyaux

    Thanks for keeping this conversation going. And it’s up to all of us to make sure the conversation happens elsewhere…with foundations who fund nonprofits and have lots of power to make change; with government who fund nonprofits and can, also, make change; with donors who may not understand the wage levels and lack of infrastructure– but want the product; with board members who can help the conversation.
    There is more money that can be raised as charitable contributions. For the 50+ years of the annual study GIVING USA – no matter the economy (good economies!) – charitable giving represents only 2% of GDP. Even during boom economies, cumulative charitable gifts remained at that level. How about philanthropy programs in schools – more than service learning. How about better fundraising by nonprofits? Read Growing Philanthropy in the US Report posted on my website. Lots of comments there from a summit on the topic.
    Government can change its mind about reimbursement for nonprofits. I know. I know. Now may not be the time to raise the issue, given the financial situation facing governments. But let’s move the conversation forward in the future. And nonprofits might want to push back and refuse to do work when government refuses to pay the cost. Let’s push back a bit. Let’s advocate and lobby.
    I agree that “bringing the sector together” is tough. But each sector within the sector can be a voice about living wages. Each sector within the sector can be a voice about public policy and lobbying. Each sector within the sector can speak out about adequate infrastructure to support mission.
    And each of these steps and activities and approaches can…cumulatively…help us improve.
    And how about writing articles for publication? And speaking at workshops and conferences? And…
    Thanks, everyone.

  • Isabelle

    I really just wanted to say that I completely agree with you! I hold an MA in Nonprofit Management from Florida Atlantic University and during the course of my program all of my research focused on explaining the “mistakes” of nonprofits that too often put them under the magnifying glass and the all too familiar “FRAUDULENT” category. I focused a lot of my papers on the starvation cycle of nonprofits where they succumb to donor pressures and under invest and under report their finances and ultimately hurt themselves.

    I currently live and work in Haiti where the local population has a genuine distrust of NPOs, many reasons are justified, but it is incredibly frustrating when people talk about an NPO worker and how “they make a really good living” as if the individual is somehow committing a criminal act! I am often on a “soapbox” explaining how nonprofits often fail because they under-invest in themselves and so they under-perform. The concept of first making ourselves strong before we help others is applicable everywhere, why not for the nonprofit sector?

    I am surrounded by skeptics and critics so it’s always nice to find like minded people.

  • Sherry Beeson

    Some of the best and brightest work for non-profits and it annoys me that because a non-profit will take Class B office space over Class A, accepts used equipment and furniture, and anything else to keep overhead low, employees are perceived as substandard and their boards use the non-profit status as an excuse to pay less than competitive wages. I am grateful that I have excellent benefits and make a competitive salary. We have a board and executive director who believe you get what you pay for and we continue to grow and improve because of this insight into providing a strong infrastructure.

  • Eric Duchinsky @EdisonSol_llc

    Many of the financial woes for a non-profit stem from an internal culture focused on services. Service NPOs start with a passion for clients “at all costs”. All excess pours into service. Other professional (concentrating on issues and education for one workforce) and service NPOs suffer from unenlightened boards with the perspective that if they run the organization as a volunteer then staff should have similar motivation. One board member of an organization, where I was staff, commented that staff saw the organization as “just” a job and volunteers have more motivated for the group’s success.

    As late as the 1990’s, the words “profit” or “net revenue” was frowned upon at many NPOs. Zero-based budgeting, favored by NPOs, meant zero excess. NPOs still struggle with the idea that net revenue can serve the long-term mission. Members, clients, etc. expect sustainability. Living “hand to mouth” threatens sustainability.

    Business concepts are often foreign ideas. Staff are so focused on constituents they overlook spending money on system efficiencies, staff training, livable wages, etc. because their understanding of continual internal improvement is discouraged. The “we’ve always did it this way” mantra lives strong in many NPOs. Many board volunteers fear failure more than hope for growth. Nothing bad will happen on their watch.

    Fortunately, certain trends, like shrinking fund sources, decreasing member numbers, technology, etc., force a live or die future. NPOs must adapt to “modern” organizational development concepts or fade away. Some groups identified this trend early and changed. Just because a group serves a greater good, it does not give them license for poor management. Competition for resources forces new thinking.

    The percentage of the donation dollars going to services can’t be the only important ratio for judging what group receives your donation. As donors, imagine the work done when investing in corporate stock. A donation is an investment in the NPO as a service company, so treat it that way. Remember non-profit is a tax status, not a way of doing business. 100% of excess revenue is reinvested. How many companies can say that?

  • Eric Duchinsky @EdisonSol_llc

    Now is the perfect time to have this wage discussion, because if budgets are cut with the expectation of the same output then this will become the new normal for Boards. Most NPOs can become more efficient in their operations. Unfortunately, discussions about staff output are not based on real numbers. Get in the habit of measuring calls handled, applications processed, and the like. Measurement does not need to be complex, just consistent.

    Now, implementing changes include how much output improves and conversations with the Board show ROI for software, website, marketing, etc, investments. Measuring how expenses tie to output means cutting expenses will effect output.

    As for compensation of Executive Directors, it is amazing how this is the one lesson NPOs learned very well from for-profits. Since the new 990s list executive pay, compensation disparity is more obvious. Until real numbers back up the ED’s contribution to output, I find it difficult to accept the sometimes exponential difference in salaries compared to the senior staff. The same amount of money invested in infrastructure or front-line staff almost always produces higher returns than the same amount of ED compensation.

  • Barbara Saunders

    Religious vows of poverty are very different: religious orders typically provide for your housing, retirement, and basic expenses like food. Nonprofit employees must supply those things for themselves.

  • Timothy Hershey

    It is unfortunate that many non-profits are seriously underfunded. Including Giving Back Hope, one that I have worked hard at for over 6 years. Getting it off the ground at my own expense, it is a labor of love, the hour sometimes long an dhard. But I have watched as the larger non-profits that are largely funded by public money waste money creating too many jobs that breed a culture of laziness among their employees. Worse than this, while most of the employees work for low wages, the agency spends funds lavishly on hotels and trip. Look at the Salvation Army as a good example of wasted money. I noticed while working in Minot ND, they claimed to have spent millions on the relief efforts, yet the Southern Baptist prepared all the meals that were served and the Salvation Army was there with a few vehicles for xuch a short time. Where does all that money go? We see the same thing in Joplin Missouri, Bastrop Tx. and other areas as well. The Red Cross is the same way. Using mostly volunteers that serve the areas, yet claiming it took millions to accomplish? Things that make you go hmmmm.

  • Michael

    Chambers of Commerce are not-for-profits, too, but seem to have done a better job with salary and resources (at the metro level…still in a similar dilemma at the smaller-town or suburb level). Is it because they are viewed as organizations that should have a “for-profit” mentality because they are serving for-profit clients? And would it help if not-for-profits in a region had a single “administrative hub” to provide basic admin (accounting, data base management, governance, etc.) allowing the core skilled staff to concentrate on the mission issues? Just some thoughts…

  • Juanita Ignacio

    Thank you so, so much for your article! It’s the truth and I’m happy that someone is saying it. I can only hope that more boards realize what they’re losing.

  • Ranjeet Gadgil

    True.. you have rightly pointed it. but would you like to suggest any solution to it?
    I too work in a ngo. my peer’s working in different fields – different industries have 4 fold pay scales p.a. any way if i have chosen to work in ngo then i cannot blame or i alone cannot expect more pay … there is always a bitter option that the ngos suggest as solution – it is – ” you may find something much better outside ”

    so working in ngo is like work and keep your mouth shut when it comes to remuneration … for other things you are groomed to bark publicly “as SOCIAL ACTIVIST “.

  • Frederic Claus

    Simone, You are absolutely right and I have looked at the same issue but from the angle of why many non-for-profit organizations in Europe tend to also use outdated management tools and are reluctant to align onto the for-profit systems and processes which may enhance overall management and therefore implementaion capacity and boost delivery rate. To my great suprise rounds of discussions exposed that many of these organizations have been created on the basis of volunteer movements, inspired by a family and/or a small group of people, etc. Although many years have passed and organization and operations sizes have tremendously increased, many of the employees continue to cherish the “volunteer” model and to see themselves as the followers of those who inspired a movement and sometime built the organization. The introduction of new management tools and approaches used in the for-profit sector are sometime fiercely opposed and the “amateur” model continues to strive. In addition, there are many organizations which have built their operations on the basis of a very small core group (management and operations) and use part-time experts/professionals for projects. In the area of humanitarian assistance for example, medical doctors who are usually well paid in their private practice will accept to dedicate reasonable amount of time to work overseas, free-of-charge. The same has increasingly been expected from other areas of expertise. It may work for an engineer and/or an economist, but they are also practionners in other areas who may not make the same amount of money. However, peer-pressure plays very well and as mentioned by you no ones complains but is true that non-for-profit organizations need to pay decent salaries and even provide competitve packages to attract the best and operate more effectively.

  • Lindsay Nichols

    Thanks so much for your insightful article, Simone. It should be noted that GuideStar’s strives to provide detailed information that focuses on transparency and impact within the nonprofit sector. We do not evaluate or rank charities. We recently published research called Money for Good II where we looked at what types of information donors and funders want to see from nonprofits, and our nonprofit reports now display all of those pieces of information – including financials, transparency, reputation, and impact – so that people can make their own choices. We know that people come to the giving decision with a variety of values, so we’re careful not to choose values for them. At the end of the day, we want to provide people with all the necessary information so that they can make better, more educated, and confident decisions. In full disclosure, I am GuideStar’s communications director.

  • Scott Wells

    Thank you so much for this article. It’s time to see non-profits thrive and not just survive!

  • Abby

    I started as a Marketing Assistant at a non-profit in the beginning of 2009, at a rate of $10 per hour. This was an extremely low pay rate considering all of the tasks and responsibilities that I was handling (including, but not limited to: writing and distributing press releases, website design and maintenance, customer service through phone calls and e-mails, fundraising for a multi-MILLION dollar capital campaign, event planning, running a sales floor, scheduling, etc.) Since that time, my pay has increased a lousy $2.50 (this was after I had put in my 2-week notice and my manager fought for a raise so I would stay) while my responsibilities have increased ten-fold.

    At one point, I had (2) managers: one male and one female, both equally competent, hard working, equal responsibilities. The male manager was earning a salary that allowed him to take frequent vacations, join a food co-op, multiple club memberships, activities for the kids, etc. The female manager was earning a salary that was so low, she was on food stamps, could not pay her bills, had her electricity cut off several times, and could barely afford the basic necessities for her children. I’ve never been able to figure out the discrepancy.

    This was an excellent article and hit on several points that I absolutely agree with. It’s a sad reality, for those who are smart, hard working, competent, and passionate about our positions and the organizations we work for – but paid so poorly that we regularly wonder whether or not it’s all worth it.

  • Timothy Hershey

    Go to http://www.facebook.com/GivingBackHope and take a look at the work I have been doing. I am the director of Giving Back Hope. Im also the one rocking the chainsaws and skidsteers, putting programs together, managing the rebuilding process, supervising the work etc etc, all while running a prison ministry and a crisis pregnancy program, and a drug additions and alcoholism treatment program. My salary is 300.00 a weeks. I work 6 days a week 42 weeks a year. My reward inst in this life….I have to learn to be content with that or go back to the corporate world or take a larger salary and cut the amount of money our charity puts out. I’ll think I am just happy that God is allowing me to serve, I have 3 meals a day(thanks to food stamps) and a home to come home to.
    Sometimes the sacrifices that we make in this life are not rewarded in this life. If we cannot live with these facts, then we need to go to the public sector and look like the rest of the world.

    P.S. If you ever need a job, look us up….lol. I could use 10 of you!

  • Barbara Saunders

    I think religious orders are different. If you are a nun or priest, your housing, old age health care, and retirement are taken care of. Completely different situation.