Nonprofit Newswire | Readers Respond to The Difference Between For-Profits and Nonprofits

September 28, 2010; Source: | In yesterday’s newswire we passed along an essay, which was unflattering to nonprofits by Walter Williams, a professor of economics at George Mason University. I guess he rubbed some of you the wrong way entirely with such incendiary prose as:

“The fundamental difference between nonprofit organizations and their profit-making counterparts is that nonprofits tend to take a greater portion of their compensation from easier working conditions, more time off, favors and under-the-table payments. Profit-making organizations take a greater portion of their compensation in cash, except those that are highly regulated. In the profit-making world, there is much greater monitoring of the behavior of people who act for the organization. Profit-making organizations have a financial bottom line they must meet, or sooner or later, heads will roll. Not so with nonprofits, which have no bottom line to meet. On top of that, incompetence for nonprofits means bigger budgets, higher pay and less oversight.”

We got a kick out of the comments we received. So here they are for your easy reading pleasure:

Dear Prof. Williams: I just read your comments (cited above) in The Oklahoman. Given your ignorance and arrogance, it’s amazing to me that you could be a professor of anything, let alone economics. Please go soak your head. —Sincerely, Bob LaVallee

Dear Prof. Williams: No bottom line to meet? Darn! I’ve been working for all the wrong organizations all these years! It might have been fun to spend the last couple of decades in one of Williams’s Bizarro World nonprofits, but I’ve been too busy balancing organizational budgets, working for 10% less than my corporate counterparts (at least), and following strict reporting and regulatory requirements to take advantage of any of the “under-the-table payments” or favors. Unfortunately, this attitude does not surprise me. While much of the far-right rhetoric comes in the cloak of “smaller government” it’s the same old culture war attempting to look like financial prudence. And, on average, nonprofits tend to be on the wrong side of the culture war for the Hoover/Cato/Tea crowd. —Ken Goldstein

Dear Prof. Williams: I chose to change from for-profit top management in the garment industry to non-profit Executive Director in the arts. As a result: My salary was cut in half. I haven’t had a raise in 7 yrs. I work 10-12 hr days … 7 days week. My annual vacation is 2 weeks of sleep. My job description really does include the kitchen sink. I work with (inspire and guide) a volunteer force serving 500-1000 hours per month. I work with a very real double bottom-line: I’m responsible for earning money by providing services to the community, providing services to the community that don’t earn money, and asking for money from the community to pay for those services. I work with a cash flow that demands hard choices on a daily basis. I do this by choice. I do this with a sincere smile and pride in what we (the big we) manage to accomplish. I remain committed to serving others and improving my community’s quality of life. I don’t expect anyone else to like or do my job. I like and do my job. I never forget that everyone I work with is here, with me, by choice. Both for-profits and non-profits are important and integral parts of our economy and society. They don’t have the same goals, use the same resources, require the same commitments or serve the same roles. Why oh why, is it so damned hard to get the differences and appreciate the values of each? That’s the part I don’t get. —Debra Owen, Executive Director Frank Bette Center for the Arts


  • Emily Furlong, Sr. Program Mgr. Rollins College Philanthropy & Nonprofit Leadership Center

    Dear Prof. Williams,

    I am afraid that in your effort to make a sweeping generalization, you have managed to offend the majority of people who work in the third sector of our economy. What you don’t seem to understand is that nonprofit is a tax status, not a business style. The nonprofit sector does the work that the for-profit and government sectors either can’t do or won’t do.We are the fastest growing sector of the economy and employ about 1 in 8 workers. That means you have insulted a lot of folks. We represent a huge economic engine that greatly effects our quality of life. We educate people, heal the sick, feed the hungry, inspire the souls, produce and preserve cultural treasures, and fight to save the environment. If we are not able to operate effectively and efficiently, we go away just like any other business. I hope that you will choose to do a little research and learn more about what the nonprofit sector really is. If you are a classroom professor, I would be happy to put you in touch with some of my colleagues who teach in the Rollins College MBA program. I am sure they could enlighten you.

  • Margot Knight

    I would be angry if I weren’t so busy laughing! Making another sleepless night as I worry about the cause I’ve devoted my life to a little more interesting! The management and oversight of the sector is as imperfect as the management and oversight of the for profit sector. I am of the firm opionion that the non-profit status has indeed been abused by those with political, social-climbing, and get-rich-quick ambtitions. And while I DO believe that more government oversight of non-profits by IRS and state governments may be warranted, I also believe that the vast majority of non-profits are doing the best they can. They are underresourced, understaffed and undercapitalized. Their shareholders are the publc they serve–the struggle is both heroic and Sisyphean.
    I would add to the point that Ms. Furlong makes so eloquently–Non-profits were created to mitigate the damage to society by the excesses of capitalism, pure and simple. Without the rise of the third sector, animals would still be beaten on city streets and children would be working in our factories.
    Walter Williams would be wise to heed the advice of a political friend of mine–you can have all the opinions you want, but you can’t change the facts. Non-profit organizations, though not perfect, are vital to the welfare and well-being of this nation and its citizens.
    and p.s. where can I get ME some of this under-the-table compensation!