Nonprofit Executives Alert: It Takes Money to Make Money
A couple of years ago, I wrote an article about the need for nonprofits to invest in their people and operations. Over the past few weeks, I’ve been approached by a major vendor to try to align my thought leadership with them. As of this writing, we’re still in discussions, but stay tuned, and I look forward to writing and talking about them soon.
However, when I was discussing collaboration with one of my team members, I told him that I wanted to make it clear that I wasn’t interested in doing things the way they’ve always been done. I told him I wanted to make it clear in everything we did together that we needed to focus on business as usual, growth, scalability, and sustainability.
A few months ago, I ran into my friend, Dan Pallotta, at a conference. We caught up on how things were going and got back to talking about issues about how to alter old thinking in the philanthropic industry. On the plane home, I remembered the article I wrote about money, which also mentioned Dan’s job.
I wrote in my 2014 article:
Since 1970, the number of nonprofit organizations that have generated at least $50 million in revenue has been 144, and the number of for-profit organizations that have crossed that threshold during the same period has been 46,132.
We expect, and some senior executives within the industry believe this thinking, that nonprofits need to do great things with a little money. They approach donors and talk about how little they are spending and wear it like a badge of honor. Being careful about how you spend your money is smart business. Finding ways to keep the budget as incredibly minimal as possible and doing everything for years and years on a shoestring budget with minimal or fixed growth is not smart business.
Then a couple of weeks ago I was talking to an industry professional and he told me that he was having a really hard time getting a raise. I asked this fundraiser if he had achieved his fundraising goals and he replied that he had not only achieved his goal, but had exceeded the metric by almost 14 percent.
He told me, “Wayne, I’m over target, but the CEO has told me that we have to be careful to show that overhead is very low to maintain the trust of the board and major donors.”
So I had to ask: “What is your salary and what is the organization’s budget?”
He replied, “$75,000 and the budget is $5 million.”
Then I asked the percentage of expenses from the development office.
He told me it was 5 percent of the total budget.
Want to guess what this fundraiser was thinking of doing?
If you assumed he was thinking of moving because he worked long hours (10 hour days was typical) and knew he wasn’t making anywhere near what he could be making, then you’d be correct. The Internet is an amazing technology because it puts things like salary surveys at their fingertips that help everyone find out what is a competitive salary in their particular geographic area for their job role.
Can we stop the madness now?
I thought when I wrote the article that we were at a turning point. I would have thought that after the 2008 recession and recovery, the nonprofit sector would have consolidated and began to seriously consider investing in operating expenses. I also thought that if for-profit companies were to align their business plans to include social good, it would bring about a fundamental change in the nonprofit sector.
I’ll admit, I’ve seen some change, and I certainly see the discussions and debate, especially on social media, but entrenched old-school thinking runs deep and change hasn’t happened fast enough.
Let me ask you a question, which do you think is smarter: giving the fundraiser who is exceeding the goal a raise or allowing him to go out and end the additional expenses and potential risks of a new person at work? Which one would you choose? If I were the CEO or CEO of a non-profit organization, I know which one I would choose.
I’m going to keep pushing, and I know many others, like Dan Pallotta, are also pushing the envelope and saying that collectively we can’t make the differences we want to make in society if we keep thinking small. What I have seen since 2014 is that more voices are speaking up and while I am impatient and want faster change, I also recognize that an ingrained attitude takes time.
Let’s keep challenging the old guard.
