Once again we had a great class. We were lucky enough to have fellow Vera alum, Danielle D’Antuono, several donors and even the President of our school, Jeremy Travis, inattendance. After class some of us even made an unofficial trip to the new building. But back toour regular stationed program….
Ms. D’Antuono explained the cost of doing business in the nonprofit organization, mainly when it comes to keeping employees and losing employees. As the son of an accountant who works for a nonprofit organization (NPO), I took heed and had much understanding of what she was saying. NPOs are special types of organization that give services to specific populations. To properly service the needs of these populations nonprofits rely on donors. Donors are a necessary for NPOs But what happens when there are no donors? To make matters worse, what happens to an NPO when there is a recession? When people are out of work, losing homes, or when the future of their money seems bleak, they tend to donate less or nothing at all. Or when donors do give money, as Danielle D’Antuono pointed out, the restrictions could be endless. My father claimed that his NPO received a large donation, but he still did not get paid that week because a large sum of the money donated was restricted to purchasing computers. With respect to people’s bills, why should they stay at a job where their economic stability is questionable? This may create low retention rates and an unmotivated workplace, which in the long run will definitely hurt the participants that the NPO is meant for. To make ends meet and avoid the endless amount of restrictions put in donations at times, NPOs are forced to get creative. Whether an NPO relies on invisible costs, “lying” to donors, or even asking for donations from groups that are not necessarily compatible with the NPOs mission statement, that NPO must find money to service their participants.
As French philosopher Alexis de Tocqueville argued, NPOs are necessary for the stability of a democracy. To keep NPOs going, is it right to rely on certain tactics which may seem unethical? Just as Straker was battling with her morality with Stanley, this recent recession has created a different playing field, that may affect the morality of many nonprofit executives. Although morality is very important, should NPOs deny certain donors and different techniques which will keep them alive and the population they are servicing afloat?
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Great Post Roberto! I'm so bummed I couldn't make class last thursday.
I don't think that NPO's should turn down money as much as just being more strict as to how they need the money. Instead of letting donor's choose where their money should go, it should be just one basic donation subject stating that it will assist in areas needing help. Roberto's example of his dad not getting paid because of a donation being spent somewhere else is a perfect example. Employees should not be getting paid because someone wants to puff up their feathers and say they paid for computers for the needy. I think pride and the idea to somewhat show off sometimes gets in the way of truly donating (not with everyone but it does happen).
I'm doing a Grant Research project for NYC Homeless and AIDS Foundations and I've noticed that banks limit donations to only the "operation of the non-profits" and individuals trust funds always have a specific, but general concept they want donated to like "to help the homeless of New York." I mean, what the heck does that even mean...I think if NPO's 'nicely' put that there is only one donation and no specific requirements are allowed then they could have a fighting chance...
Dani, I think Danielle would disagree with you (if I understood what she was trying to tell us during class). What I understood from her presentation was that she summed up and calculated everything that the NPO requires to work better. This way, there are no invisible costs and the donors can see how much the NPOs really need. Of course, if the donors are not willing to pay the NPOs the amount of money they need, the NPOs will have to readjust how much money should go to where in that case.
As for Roberto's question about the stance the NPOs should take in regards to their donors, I think they should take the money most of the time. The exceptions would be when the purpose of the donated money is meant for a purpose that has nothing to do with the mission of the NPO. At Safe Horizon, when they recieved a budget cut this last year, 4 Children's Center were shut down. It might have been 5, but 2 of them became half-day centers instead of 9:00AM to 5:00PM. I think this is smart reallocation of resources, because even with the lack of money, Safe Horizon did it's best to make sure the people who are receiving the benefits get the most out of what they currently have.
The latest grant my mentor wrote for was new computers. Even though it might not reopen the other 4 centers, it can still improve the current ones. As the current ones improve, there is more to write about to the donors for grants and hopefully the time will come when they decide to donate enough money to reopen the other 4 centers. My point is that even if the money is not directly in line with the mission of the NPOs, I think they should take it as long as it can be useful for them to have.
I agree that it was a great class. Danielle is doing some serious stuff, and I don't know about you guys but I feel like we have a lot to live up to! I also liked hearing the donor's story of how he worked on the project that started it all: The Manhattan Bail Project. We read about it in the book, but it was cool to meet someone who was there in the trenches.
Roberto, I wanted to comment specifically on your point about how NPOs are reliant on donations, which makes their funding subject to the vagaries of the market. I remember when the economic collapse happened and one of the first casualties in the donor world was the Jett Foundation, which had supported numerous NPOs doing social justice work across the city. They were caught up in the Madoff scandal and ended up having to close their doors. This problem goes back to HIlfiker's point about charity v. justice. A justice approach would make housing, for example, a right. Since it's not a human right, we rely on charity to house the unhoused. This model is certainly better than no model, but the problem you bring up is inherent in it.
And just to quickly weigh in on the Dani v. Simon debate: I think you guys are talking about two different things. Dani's talking about how donors specify what their grants can be used for, and Danielle did agree that this was a problem, although mainly because it encouraged NPOs to hide costs from donors in order to get the grant. Simon's talking about the hidden costs themselves, of which the grant-related ones were only one type, and this was one of the big things Danielle felt needed to be addressed. I agree with Dani, and I think Danielle might too, that donors could be more flexible in terms of what their grants are able to be used for. Danielle mainly attacked the problem from the NPO side, arguing that NPOs need to be more "honest" with donors, but the impetus to hide the costs is a direct result of restricting grants to specific uses.
"Healing is acheived through giving." That's the message I received from the generous donors as they spoke of the distress of caring for their son who is suffering from Lyme disease. In some way, they may feel a sense of personal healing and comfort by supporting an organization that services other individuals who are also in an unfortunate situation. Now if only the employees of NPOs can inherit a similar sense of morality; there would not be such a huge turnover process. Imagine employees and donors of these NPOs engaged in their contribution (whether it is time, effort or money) because they enjoy helping others and for self gratification instead of monetary gain or to "puff up their feathers" as Dani put it.
Robert, I'm glad you used the word "debate" in regards to Dani and Simon. I tend to associate the word "argument" with anger and unfriendly (which that itself is another debate for another day).
My take on this is that donors should be allowed to fund whatever specific area of social change that they choose. I feel that it is up to the NPO, not to put restrictions or stipulations on giving, but try to creatively connect other areas of the agency that needs to be addressed with the area in which the donor wishes to fund; hopefully satisfying the donor. In other words, the NPO's job would be convincing the donor that by using the donated funds for other various areas will reduce the likelihood of the individuals becoming in need of the services in which the donor wishes to support. For example, if the donor wishes to only fund the food program for the homeless, the NPO should attempt to persuade the donor that financial support for the educational program (the better the education-the better chances of employment for income) and the job preparation and placement (people who have jobs are less likely to be homeless) will undoubtedly help reduce the chances of homelessness in the first place.
Roberto, your final question is an ethical one. From my view point, the answer I can give for now is that sometimes good people do the wrong thing for the right reason!
It is crucial to recognize the turnover rate as an invisible cost. It is invisible because donors tend to think money for an employee’s salary is a cost that is unnecessary for the organization to run. The salary becomes a material good that no one believes benefits the society as a whole. I do not think when people quit their job at a non-profit organization it is necessarily because they do not care about the society or are “greedy”. In reality, the rent is high, the price of food is getting higher, and the cost education is sky-rocketing. Especially in New York City, rent has been consistently increasing every year and many people are suffocating in their school loans. It is unreasonable to demand employees with better credentials and then pay them the same amount of money for someone who is less experienced. In Danielle’s paper, she gives a breakdown on just how much an organization can benefit from hiring more qualified individuals, paying them well, and keeping them with the company. The cost of training an employee really shocked me, but when I evaluate the time it took for me to learn the computer programs at my internship, I can understand how the costs could get so high.
Can we shift the staff of non-profit organizations to older individuals, who we assume have time and money to work for lower wages? Part of how the corporate ladder functions is the process of hiring new graduates to do all the rigorous paper work. Internships that are unpaid are also part of that process. The idea of hiring people straight out of college is that they do not have experience. When the new employees do not have experience the company can pay them less than the experienced worker. If organizations stopped hiring new graduates, how will new graduates find jobs and gain experience?
Is it possible to find a way so that the non-profit organizations do not rely so much on donations, but are rather self-sustaining?
I agree with Dani, donors may at times “pride …. [And] show off sometimes”. But I cannot stress that there are a lot of people who have the innate capability and do not see their donations as a means of boasting. To avoid restrictions donors should have trust that the NPO know what to do with their donation because it is their job. If donors don’t trust NPO’s with their job what the point in donating the money at all. With the morality of the NPO’s an issue is it fair to question the morality or the motivation of the donor.
Simon’s personal experience at his agency is insightful, for I have had similar experiences of an NPO becoming a victim of the world economic world collapse as well. A non-profit organization I worked for the past three summers, I have witnessed the cause of what a recession could do to peoples will to give. I use to work as a summer youth site monitor, the first year I worked there we had about fifteen other employees all who each had about fifteen work sites we were responsible for. A summer later there were only seven employees and each of us had about twenty sites to oversee. Last summer there were only two site supervisors myself and a coworker we had almost thirty sites each for that summer. After a few days our supervisors realized that the only way we could do our job efficiently was for her to take some sites from us as her own. Not only was this extra work for me, my coworker and my supervisor, but the amount of jobs which were available in summer youth decreased every year. In this case allocation of funds were smart because it allowed for the survival of these programs but how about the people who didn’t get that service which they previously depended on.
What Danielle offered was a creative solution to this issue. As she said instead of NPO’s competing against each other for grants and donations working together to fulfill the need of the participants is more efficient in fulfilling task. The best way to combat decreasing resources in my view is to work together to come forth with new ideas. Despite reduced economic resources different agencies working together will increase that particular NPO’s ability to bring about innovation.
Simon-I think we are talking about two different things. I was attempting to agree with Danielle's essay that it's super frustrating sometimes how donors give money but giving is giving and there's a catch 22 to it all. I missed a fantastic class last thursday, but it sounds like she was saying ways for NPO's to better sum up costs..??? Which I also was saying in my own interpretation. With a little more "realistic" with donation subjects, then money can be put towards areas needing help, like the neglected employees sometimes (i.e. Roberto's father)
This discussion has made me go and come back up to try and see where I stand. Working with an organization that clearly depends off the resources of the government, it is hard to not take the donations especally at these times. I attended a DV conference this week and many people that doante money to the organization were there. The type of donors are other NPO's that have grown within hospitals and centers that help the LEAP program and domestic violence victims. I haven't been exposed to the way the organizations drives the donations because LEAP is only a branch within the Urban Resource Institute, but there is a big need for donors from other programs because the resources for housing and employment are scarce as a result of the economy.
Yes, the economy... And what are the options on the table for "fixing" things? AUSTERITY measures, CUT spending, SHRINK government--the opposite of the New Deal reforms passed in the wake of the Great Depression. This from Bill Moyers (The Nation, Nov. 21, 2011):
My parents "were tenant farmers when the Great Depression knocked them down. The year I was born my father was making $2 a day working on the highway to Oklahoma City. He never took home more than $100 a week in his working life, and he made that only when he joined the union in the last job he held. I was one of the poorest white kids in town, but in many respects I was the equal of my friend who was the daughter of the richest man in town. I went to good public schools, had the use of a good public library, played sandlot baseball in a good public park and traveled far on good public roads with good facilities to a good public university. Because these public goods were there for us, I never thought of myself as poor. When I began to piece the story together years later, I came to realize that people like the Moyerses had been included in the American deal. 'We, the People' included people like us."
As we debate how the NPO universe might work more efficiently and how charity might function better, let us also consider the larger structures that foster the inequality and injustice that make charity so urgent, and let us remember that reliance on the private sector is not the only way. We need MASSIVE public investment in public goods--yes, deficit spending--not privatization and certainly not AUSTERITY.
"If you can't beat them, join them"....that would be the solution for NPO's during a recession (Agreeing to what Roberto said). There are so many NPO's that aim to help the same population (e.g. HIV patients, the homeless/poor, people with disabilities, abused children, drug addicts, etc). What is the purpose of having separate NPO's instead of joining into one and asking donors for money?
According to my agency's mission (CJA), they are basically saving the city money (cutting transportation, correction officers, and housing for the defendant to not be sent to Rikers) by assigning bail to certain defendants. I do not know if my agency ask donors for money since they are receiving money from the defendants if they are given bail.
Very informative post Roberto! I definitely agree with your stance on the grounds of when funding is cut it may create an unmotivated workplace and low retention rates. As a result, it will gradually have an impact on the population the organization serves. As far as funding goes, I agree with Dani, I don't think it would be a good idea for NPOs to turn down funding. I say this because, NPOs rely on donors to continue functioning, if donors stop giving or organizations start rejecting money, I think in both situations the NPOs are at loss. I always say, something is better than nothing.
Working at a non-profit organization myself, the pay is very low. In my opinion, those who work for non-profit organizations are often overworked. However, as an after school instructor for the 6 years (before I got promoted to adminisrative assistant), I really enjoyed working with children with academic needs. The organization I work for, Sunnyside Community Services, serves populations of all ages. I know the pay wasn't the best, but no amount of pay can compare to the amazing people I met on a daily basis. At the end of the day, it was always more rewarding for me to see my participant's grades improve than my wages.
Thanks, Roberto, for a thought-provoking post, and thanks to Danielle (if you are reading) for visiting us last week. I think this discussion will lead very nicely into this week's seminar with Professor Waterston. As Roberto suggests, the weak economy has very granular effects on NPOs (individuals laid off or having increased work loads); as Robert suggests, we need to think about both the individuals and the larger economic choices that somehow get represented as natural or inevitable.
Before I get into the post I want to address what Timothy mentioned about associating anger with debating. I too struggle with this dilemma. I have come to realize that when I am very passionate about a certain subject, I mistake that for being the only viewpoint. This isn’t the reality however and in time I have learned that persuasion and backed up facts are the main players in debating. My frustration to get my point and view across is where the anger comes from. Having said this, I must admit that I quite enjoy our feisty discussions over what we disagree on. In regards to this week’s post, I must say, Roberto great job. When funders donate to NPO’s they are donating based on how their needs meet the needs of the NPO’s on a self interested level to some degree. Their main interest is getting whatever plan or idea fulfilled by that agency in exchange for their check. Like Danielle’s pointed out, it’s imperative to be realistic with the donors because if their ambitions are unrealistic towards what the agency can accomplish, then not only is the credibility of the agency tainted but the potential donors of tomorrow would be less inclined to donate. In my agency, funding is a huge problem because the just like Cynthia’s and many other of your agencies, it is solely based on government funding that is never enough. Like many of you said, the turnover rate is a bit high and the work load is increasingly overwhelming. In an agency where the employees are supposed to give one on one counseling and support to the participants, how are they expected to still have time to finish their work, stay involved with the participants and still squeeze a lunch break (which by the way many of the employees work while eat because there are never enough hours in the day). This in a way to me seems like exploitation but then again when we sign up for a job in public service, I guess the unsaid expectation is that anyway.
Thanks for having me in class last week, and a big thanks to Roberto for his very thoughtful post. I feel fortunate to be affiliated with all of the Vera Fellows.
First, I want to address the confusion I’m seeing over what is a hidden or invisible cost. The invisible cost is also called opportunity cost (the cost of output forgone). It’s the answer to the question: "If we maintain the status quo, how much money and productivity are we going to continue to lose in turnover?" If the answer is not supportive of your mission, you have a case to present to donors.
To Roberto's question, I think it’s extremely rare to find a funder who won’t at least listen to ideas on making your organization perform better; no one wants to be so rigid that they undermine the goal. In this way, I don’t see your question as moral or ethical, but an economical one: how we can use our dollars to be more cost-effective? If current funding is restricted to program-only activities, as many government grants are, diversify your funding streams. Diverse funding streams help provide funding for the benefits, such as sick and vacation time, that help compensate for the workload of direct service workers and the low probability that you’ll ever make the higher end of a six-figure salary and This is also a key toward a self-sustaining non-profit.
Aim for “enlightenment” of your peers and mentors (think of Dr. Stein's lightbulb when it was stated that turnover is not a universal problem for non-profits, and for-profits and some non-profits use tools to control their turnover, so why assume high turnover in the non-profit sector is determinate?) and for the “enlightened self interest” of those who help fund your non-profit. Some might say think “outside the box”, but as stated in the HBR article linked below, it’s really understanding the box, having real insight and embracing it, before you can be released from it.
http://blogs.hbr.org/pallotta/2011/11/stop-thinking-outside-the-box.html?referral=00563&cm_mmc=email-_-newsletter-_-daily_alert-_-alert_date&utm_source=newsletter_daily_alert&utm_medium=email&utm_campaign=alert_date
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