“Overhead…the word itself is disparaging.”
What’s the public opinion on “overhead”? People tend to judge overhead on how they see nonprofits in general: that 100% of donations should go directly to the problem it seeks to help, and that workers are essentially volunteers. As Manny said, the word “non-profit” makes you think there’s no monetary profit expected. So we’re taught to separate overhead (like having decent lighting, rental space, ability to hire talented individuals to run the programs) from the cause. While it’s bold to say we should trust that 100% of donations go to the best interests of the organization, the alternative is that we see someone like the receptionist as having NOTHING to do with bettering the social problem an organization seeks to eradicate. Very simply, a receptionist keeps the organization of an organization. If she does her job well, everyone else can do their jobs that much more efficiently: the program directors are kept on top of their meetings to advocate for the cause, potential clients and funders hear the pleasant voice of the receptionist on the other end of the phone line, instead of the caseworker running between clients and phone calls.
If you want to be a social entrepreneur, working in the nonprofit sector is a most viable objective. But we know we’re entering a field that gives us mutually exclusive choices. Individuals in the NP sector are paid 11% lower on average, for someone in similar position in the for-profit sector with similar qualifications and this discrepancy is larger at higher positions. All 10 of us have high GPAs and we’re connected to professionals (our “references”) who vouch for our talent and knowledge base – without either of these things we wouldn’t have gotten this Fellowship. Still, we have to concede to the notion that the need for our skills in the helping sector will provide us a paycheck 11% lower annually than we would get if we worked for Budweiser or Loreal. Others before us have realized it: three-fourths of non-profit executives say that they’ll be leaving their position in the next 5 years due to anxiety over shaky financial stability. Why do you think it’s so easy for for-profit businesses to validate administrative costs, and not non-profits? Repeating myself from class, what do you see at the connection between “overhead” and maintaining the status quo?
Here are my thoughts on that question: When the pressure to “make the numbers” for a funder’s requirements become priority number one, an organization finds it inconvenient to pay attention to its own needs. Furthermore, they have no real incentive to. When we are forced into using efficiency measures that reduce hard work to either a “success” or a “failure” – THAT is disparaging. Efficiency measures such as these prevent charities from investing adequately in infrastructure. As Dan Pallotta states, this act “institutionalizes what [we] seek to eradicate.”
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Thank you Danielle, for bringing up a topic most of us would ignore and for igniting it as an exciting area of inquiry (who woulda thunk?).
Here's my question: Why are we/people in general (although we're really not sure what people in general actually think--perhaps it's just an assumption) so quick to be suspicious of "where the money is actually going"? What are the roots of the suspicion? I think we touched on it a little in class, but there's something about it that's bugging me and I can't quite put my finger on it. Somehow, if we know what the sources of suspicion actually are then perhaps nonprofits could better pitch to donors the full load of their needs.
I too want to thank Danielle for leading us in one of the most illuminating conversations of the semester.
I'm not sure that I can answer Professor Waterston's query about the roots of suspiciousness but I have observed, in multiple contexts, that people who feel that they have little control in the scheme of things, try to control whatever they can. We feel we have no control over misguided spending, waste and fraud concerning our tax dollars (and these days, our investments, too) so we become hypervigilant about monies we can control.
This tendency is accentuated in uncertain “treatment” modalities where myriad variables may impinge on outcomes. Almost every Vera organization, for example, is floating a program that addresses one discreet variable (education, employment, drug treatment, etc.) in a circumstance where something more holistic (as some other Vera programs prefer) might be able to demonstrate a greater treatment effect. Given the fact that they are at the mercy of so many uncontrolled variables, funders become understandably obsessed with getting the biggest bang for the dollars they spend.
I would maybe tie solutions back to the issue of transparency, as paranoia increases exponentially the more things are hidden. I wonder if there is not a way that organizations can begin documenting-in the same way they do recidivism rates or time gainfully employed for their clients-the direct benefits of an advertising budget, a research assistant, a company lounge or other “indirect” costs incurred in the amalgamated process of delivering services to the population whom they are trying to assist. Organizations could even hawk the attractiveness of donating directly to such costs (“Help put a punching bag in our employee lounge so we don’t assault the clients!”) so that donors feel more in control of the spending. Obviously, I’m kidding with that pitch, but some variant of it might be appropriate and could help donors feel part of the process instead of potentially hoodwinked by it.
My mom always told me that to be smart is to know how things work (institutions, society, people, cars). This has been such a helpful perspective, because it makes you feel as if you are not a victim of The Unknown. You can always figure out how to go forward if you can figure out how something works. Such a perspective also prevents the kinds of suspicions that Professor Waterston talks about. For example, I would naturally want the money I donated to Haiti to help people in a direct way. But understanding the way that organizations, such as Partners in Health or the Clinton Foundation (two places I sent money), work, I understand "helping people" in a broader sense. I totally get the need to pay the receptionist so that a researcher doesn't have to answer her phone because you explained so well how that works. If I want to help in a more direct way, there are places (soup kitchens, clothing banks) where that can happen, as well. What seems best is a combination of knowing what you need personally (to help an big organization do its good works or to hand a cold person a coat) and understanding how things work so that you feel the sense of control Professor Stein talks about.
Thanks to Danielle -- I raised the conversation at dinner this week about salaries and the whole question of needing to pay top dollar to the best people. I dug up the story about Ben & Jerry's to show my kids: it is in their mission statement that the CEO can only make 10x what the lowest-paid employee can make. It hasn't always been easy for them to find CEOs, but unless my A&P freezer section is an anomaly, they seem to be doing just fine.
I think that a vast majority of the people who donate money, to any cause, feel entitled as to where EXACTLY it should go. People would rather say "my dollar paid for the soup that fed a homeless man," as opposed to "my dollar paid the person who fed a homeless man soup." Many people are unaware of how their donation can both directly and also indirectly effect a cause. There are many indirect ways donations help causes prosper. These, as we discussed in class, include funding the pay of volunteers and advertising. I believe that awareness should be brought about as to how and why donations are being spent the way they are. If people are aware that donations are a way for causes to help others as well as themselves, they would be more willing to give and be satisfied with how the money is spent.
I think that all three professors have offered a great explanation as to why people are so suspiscious to give money to non-profit organizations. It seems that these organization need more transparency and to inform the public of just where their money is going and why.
I felt that this topic is really interesting and should be discussed early in the semester. This way we understand how things work and are aware of financial restrictions. We cannot improve anything if we do not know how institutions work.
I think there is a certain indignation we feel when we believe that a non-profit organization that claims it is helping people, is actually scamming people out of their money for their own benefit. However, the critique of non-profits obviously goes beyond this. I was looking up sites that distinguished between "good" and "bad" charities and found an MSN article (http://moneycentral.msn.com/content/Savinganddebt/consumeractionguide/P58021.asp) that described how "even the good guys screw up." It discusses how the American Red Cross came under fire when it tried to use money from a September 11 fund for other causes. Clearly, we are not just worried about being scammed out of our money, but we are also particular about which cause our money is being spent on.
I think some of the reasons why we are so suspicious about non-profits are: 1. we don't consider non-profits to be a business, 2. we often hear and read in the news and media about charities that scam people out of their money, and 3. (I don't know if this makes sense or if I can explain this idea clearly but here goes) when we give money to charities, it is our good deed of the year, month, day, etc. We are counting on someone to use OUR money to help someone or to help a cause. Maybe we think of it less as "I'm giving money to help Partners in Health to help people in Haiti" and more like "I'm giving money to help people in Haiti" (don't people usually say things like "I donated money to fight Breast Cancer" rather than I gave money to Komen to help fight Breast Cancer"?) and in the latter case, Partners in Health or whatever organization becomes our tool for helping people and to feel like we made a difference. If we believe we are being scammed out of our money, not only were we fooled into giving money to the organization but our good deed doesn't count. We didn't make a difference after all and we can't pat ourselves on the back for it. And honestly, if we were more concerned about our money actually making a difference rather than just the idea of it, wouldn't we all look up the financial records of the non-profits we give our money to?
I believe that the source of our distrust about the funds given to non-profits is ignorance about how non-profits work. I guess that many people do not see the important role the receptionists play. I think that educating the public about how non-profits work might prevent or diminish public distrust.
I also believe like Marling that this subject should be addressed early in the semester. I would have liked to learn how the agencies where we intern function at the administrative level.
There's a lot of suspicion as to where the money goes because ultimately, the person that's donating wants to make sure that it's going directly to the cause. They never think about the what it takes to run these organizations. And I agree with Manny that when we hear the word "non-profit" we wouldn't think that there's any profit involved in these organizations.
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