Many students in our class were hesitant to donate to groups
that simply needed the funds for overhead costs and some seemed completely
opposed to donating in order to pay salaries. While my group was selecting our
finalist organizations, we briefly considered eliminating organizations that
stated our money would go towards paying salaries. We reconsidered, though, and
I am glad we did.
At first, I was very concerned about what an organization
would use the money for. After all, $10,000 is a lot of money and I want to
make sure it will be used effectively. However, during my group’s debate, my
position changed. Should we even consider how the money would be spent? My view
specifically began to change as we discussed the Wilson Children’s Center of
Deposit. This group provided a specific outline of what they would spend the
money on in their application. Among other things, their list included a “Bye
Bye Buggy four seater”. No one in my group had any idea what this specific
piece of equipment was (after searching online, it appears to be a type of
stroller), but many members thought we should donate elsewhere because our
money could be better spent. It was brought up in debate, though, that we are
not experts in any of the fields that the organizations are serving. If a
childcare center, like the Wilson Children’s Center, believes it needs a new
stroller in order to improve its services, who are we to say that they should
use the money differently? The leaders of the groups have a much better sense
than we do of how they can use the money efficiently.
After coming to this realization, I reconsidered my stance
on donating to help pay salaries. I found a very interesting TED Talk in which
this idea is discussed. (http://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong
I realize it’s a bit long, but you only have to watch the first six minutes to
hear about salaries!)
Dan Pallotta, the speaker in this TED Talk, brings up some
very interesting points. In the for-profit sector, individuals are rewarded for
producing more value by earning more money. However, people are opposed to the
idea of using the incentive of money in the non-profit sector to encourage
people to produce more in social service. Pallotta explains that we have no
problem with people making a lot of money by NOT helping others, but we do not
like the idea of individuals making a lot of money while working to help
others. When phrased that way, it seems ridiculous.
Because individuals are not able to make a high salary in
the non-profit sector, people must choose to work in the for-profit sector and
do well for themselves or work in the non-profit sector and do good for the
world. Pallotta states the decision is mutually exclusive; there is simply no
way for people to do both. The lack of opportunity for a high salary
discourages many incredibly bright and talented people from joining the
non-profit sector. Instead, they often choose to earn lots of money in the
for-profit sector, donate a bunch to charity, receive a tax deduction and be
labeled a philanthropist because this is the cheaper and more personally
rewarding option. Those who do chose to become CEOs of non-profit charities
make an economic sacrifice, as they receive significantly less in compensation
than their counterparts in the for-profit sector.
I am now completely supportive of donating to help pay the
salaries of those doing good through non-profit charities. These are honorable
people who chose to sacrifice the chance to make a large sum of money in order
to help those who need it most. They deserve to be rewarded for the good they
are doing. Without them, how would these non-profits accomplish their goals? If
leaders and CEOs in the non-profit sector were paid higher salaries, a larger
number of people would be willing to work in this area. Perhaps more talented
individuals would join the non-profit sector and more effective techniques
could be applied to make changes and solve the massive social issues non-profit
organizations target.
I want to make sure that our money is being used effectively
to help the causes we choose to support. I believe paying salaries is supporting the cause. Employees are
passionate about making change and charities in the non-profit sector would
fall apart without them. These workers need to support themselves and their
families, though, before they can successfully help others. Receiving an
appropriate salary will encourage them to continue working hard in order to
make change.
How do you guys feel about organizations paying salaries
with our grant money? Did your view change at all after watching the TED Talk?
When making our decision, should we even consider how organizations are going
to use our money or should we trust that they would use it effectively and
focus more on the cause they are supporting?
This is a tough question Emily, and it was something I struggled with when looking at VINES and their application. I asked the same questions of was giving money to pay salaries justified? and is that the best use of the money?
ReplyDeleteAfter reading this post and listening to the TED Talk, I think I've come to a decision of somewhere in the middle. I think donations to pay for salaries are beneficial if the salaries aren't too high. I understand the argument about how the higher paid the employee, the better work will be done and the more incentive other people have for getting involved in the non-profit sector, which I agree with. But I think people aren't are willing to donate to pay for salaries because of a couples reasons, which I also agree with. I think when people give, including myself, they want to have the most direct impact on society as possible and they don't feeling like donating to pay salaries is going to give them the direct impact they are looking for. I think the other reason is that it is a non-profit organization, and while the employees need to be paid to live, most of the money is supposed to go to the cause and helping society rather than going to paying for salaries.
So, I'm somewhere in the middle on this question. I think money donations that go to salaries are good, and sometimes needed, as long as the salaries aren't too high. Unfortunately, the salaries of non-profit employees will never compare to employees in the for-profit organizations, so there will never be that monetary incentive for people to get involved. This is because non-profit means non-profit. Every penny of excess money goes to the cause and improving process rather than to raises.
When evaluating non-profits and deciding whether donating money for their salaries is the best use of our money, we should take into account what the real need of the organization is and how much of their money is already spent on administration costs. This evaluation will tell us if the organization really needs the money for salaries in order to continue to provide their services and it will also tell us where the donations go and how efficient the organization is with their money.
I completely agree with you, Emily, Mostly because I was in your group and like you I was convinced that where the money goes is not as important as what the organization does and how effective it is. The reasoning I have is that I know that I will never be as much of an expert on an organization as the people in the organization themselves. Therefore I could never truly judge what they need.
ReplyDeleteNow there are extreme downsides to this. The major downside is one can never know when an organization is using their money corruptly or using it for no real purpose.
To combat this one must look at what they are using their money for and look at their budget and decide. However, in this grant we neither have the time nor the energy to read 62 bank statements to make sure the organization is not paying the bosses more than they deserve and spend less money on the actual project and activity costs. So for this grant I think that we can assume those applying are not corrupt organizations, because while I am sure corrupt organizations must exist I do not believe they are in abundance just because it seems impossible for there to be many companies who use donor money without helping the community their fair share.
Therefore If we assume that all of the organizations are honest, and are using their money wisely as they probably are. Then we have to look at what the organization's goals are with the money, and whether they have the means or the ability to accomplish these goals.
So in a nutshell one should always look at where the money goes just to make sure the organization is not just using it purposelessly.
Now, there is still the fact that when one gives to an organization they should assume that the organization uses most of the money for operating costs, yet I believe that operating costs includes the cost of people working.
Emily you also bring up the idea that people who work for non-profits should be paid more. in this i completely disagree. Those who work for non-profits should be paid a decent wage, but people forget that the rest of the economy is for-profit and provides goods and services on a free market.So when trying to compare the two types of organizations one for profit and one non-profit, the non-profit should not be paid at a higher amount because the free market always needs to take priority, if it ever happens the other way around then the free market itself will lose its value. when people can make more money by working for organizations whose priority is the people than an organization whose priority is profiting than the entirety of the system stops making sense. Furthermore in organizations that are non-profit is can be assumed that all money not given in salaries is used to help the people even more, and therefore paying them more would be helping less people, and that is the original point of the organization. So in conclusion the organizations should have full discretion on where they spend there money as long as they are not corrupt, but at the same time workers should not be paid as much as they could be in the for-profit sector, because of the way a capitalist economy works and the fact that ever dollar given to a worker is a dollar which could have been used to help those in need and while it is necessary that they be paid, it should always be the amount that maximizes the aid given without sacrificing good employees.
Emily, this is something I've thought a lot about. While I understand completely that employees of non-profit organizations work incredibly hard and don't receive the compensation they might necessarily deserve, I still believe that we should be giving to organizations that give most of their money to the cause. We really need to think about how we reconcile our need to give to well-deserving employees while making sure that the organization actually does a lot for the cause it supports.
ReplyDeleteI was especially struck by what the quote from Dan Pallotta, the speaker in the Ted talk who shows us the weird paradox of how we have no problem with people making a lot of money when they don't help others, but we don't like the idea of people being paid a lot of money to help others. This seems really strange: why is there a huge issue with paying people to help others but no issue with paying people ridiculous amounts to not help others? I think there must be some sort of balance when considering this and when considering how organizations spend their money. I do think that given the amount of money we have to give is a huge concern because we don't want all of our funding to go to providing for the salaries of employees. At the same time, it seems so unfortunate that there is an almost disincentive for people to go into nonprofit work and into careers that aim to help others due to the financial disadvantages of doing so. I still am not swayed enough by this argument to think that we should donate to causes that need our money to pay the salaries of their employees simply because I don't think 10,000 dollars spread across one or more organizations is enough to make a big dent in terms of salary. While I do think that our money should go to more directly helping those in need given how much we have, I absolutely agree that this mindset that Pallotta describes is a huge problem and that there is nothing wrong with giving to those organizations that need money to pay the salaries of their employees.
This TED Talk really changed my perspective on how a non-profit organization should use its money. I was one of the people in class who were very concerned with charities spending money on salaries and overhead costs. I want to see my money making a direct impact. However, after watching the video, my opinions have changed.
ReplyDeletePallotta makes a good argument for increasing the salaries of non-profit workers. If providing a monetary incentive gets the brightest people to come work in the non-profit sector, then why should I have a problem with that? Don’t we want our charities to be as effective as possible? These intelligent people will help the organizations maximize efficiency.
I was so intrigued by the TED Talk that I found myself watching the entire video. One of Pallotta’s quotes in particular stood out to me. Pallotta says, “When you prohibit failure, you kill innovation. If you kill innovation in fundraising, you can’t make more revenue. If you can’t raise more revenue, you can’t grow. And if you can’t grow, you can’t possibly solve large social problems.” Though the speaker is addressing government regulations on the non-profit sector, I believe that this quote is applicable to anyone’s view of a charity. We have often said that we want to donate our money in the most effective way possible. We want to know that the organization is stable and will use our money in a way that will absolutely have an impact on someone else’s life. In this way, we are actually limiting the effectiveness of a charity and, as Pallotta would say, prohibiting failure, thereby eliminating the possibility of solving large social problems.
I think that this idea applies to giving money to an organization to pay salaries or overhead costs. These costs simply allow an organization to expand and be more successful. Any donation to a charity is an investment in the cause. Pallotta warns us not to “confuse morality with frugality” and to ask about “the scale of [an organization’s] dreams” rather than their overhead rate. We need to have faith that whichever organizations we choose will use the donated money in the way that is most effective for their cause.
I just want to take a moment to applaud you on this post. As one of those people that chooses to work in the non-profit world and do good for the world at the expense of my own economic security, this topic really hits home.
ReplyDeleteYou are exactly right, non-profit organizations cannot provide their services without good quality staff members. This is especially true for organizations that operate in human services, providing therapeutic / counseling type services. Not just any person has the appropriate skill-set necessary to provide these things (I mean this regarding personality and ability to interact with other people in a compassionate and respectful way more than in regards to level of education). Those that enter the non-profit sector and prove to be effective workers should be paid a wage that is not extravagant, but in line with the work they do and the qualities that they bring to the table. Without paying competitive wages, non-profit organizations will eventually lose valuable staff-members. Doing good for the world is great, but let's face it, bills need to get paid.
Thank you all for your responses! I love the variety of opinions. Itai and Sharon both challenged my ideas in some sense, Martha and Courtney generally agreed with me and Charlie was undecided. Hearing all of these different views is very intriguing.
ReplyDeleteCourtney, your experience as an employee in the non-profit sector is unique. Obviously, this may make you a little bias, but I totally understand your example. Those working to provide forms of therapy and counseling must posses a certain skill set and they should be rewarded for their efforts in the non-profit sector just as they would be rewarded in the for-profit sector.
I do not necessarily believe that leaders of non-profit groups should be paid the highest wages in the nation. In fact, I am not even necessarily sure non-profit employees should be paid more than for-profit employees. Yes, non-profit workers should be rewarded for doing good and helping others, but it would be ridiculous to pay them extremely large sums of money. Most people working in the private sector now are doing so out of a passion for helping others. While I believe the idea of helping others should be the principle reason individuals choose to join the non-profit sector, I would support incentivizing them with higher salaries.
My group discussed paying salaries after we read Binghamton Regional Sustainability Coalition. This specific organization wished to reward their executive director with half of whatever sum of grant money they received. This man has been volunteering his time for this cause for 3 years. While I doubt that he would stop simply because he didn't get paid, a stipend would encourage him to keep working hard. In addition, the group guarantees that no more than 20% of their funds go toward operating/administrative costs. With this strategy, we can be confident that the vast majority of the organizations funds are put directly towards the cause. With this in mind, I would support donating to them, even if it were to pay a salary.
Perhaps Sharon is right in stating that with $10,000, we would make a relatively small contribution to an employee’s salary. However, in cases where individuals spend their time volunteering with no expectation of compensation, they would appreciate even a small amount of money.
The TED Talk changed my opinion, but after reading these comments, my view was challenged again. The variety of responses really made me think. I have come to the conclusion that I support increased wages for non-profit employees, but do not expect their salaries to be higher than those of for-profit employees because that is simply unrealistic.
Well...I am certainly torn with this issue. Hopefully rambling in this blog comment will help me decide.
ReplyDeleteFirst of all, I think we all can agree these employees need to get paid something. If they work full time for a non-profit and have no wage they simply won't have money to live. I also don't think this point by Pallotta really makes sense though, "Pallotta explains that we have no problem with people making a lot of money by NOT helping others, but we do not like the idea of individuals making a lot of money while working to help others." If you take a simple example: Let's just say a pharmacist (because this position in a nonprofit came up in class discussion) could make $100,000 in a pharmacy. However, working for a nonprofit, they would make $85,000 (I have no idea how accurate these salaries are for the average pharmacist but they'll do). The reason this isn't a problem is that the salary cut is essentially equivalent in economic terms to donating to the charity from your usual salary. The nonprofit knows a pharmacist should make $100,000; so whether or not the pharmacist donates $15,000 dollars to charity or works at $85,000, the net benefit for the charity is a gain in $15,000. This gain is simply manifested differently. This is why I don't think it's a disservice to a nonprofit employee if they're being paid less, because their net philanthropic contribution is the same.
In terms of our $10,000 specifically, I tend to take Charlie's cautionary view here. If the salary is for a clearly needed employee earning a fair wage, I have no problem with the charity using our money for it. However, if the employee is overpaid or unnecessary, I do. It's a common misconception that adding another employee always helps. Truth is, when you keep adding employees, you eventually hit a point where decreasing marginal utility sets in. If all tasks can be covered efficiently with 10 employees...adding an 11th is wasteful for the current amount of tasks at hand. They would have to expand the size of their nonprofit for that hire to make sense...and in the short amount of time we're investigating these charities, that won't happen. So the key here is to make sure the administration of the charity is efficient. If it is, and the employees they have make fair wages and fill needed positions, they definitely should be paid and our money can help with that.
To touch on the point brought up with attracting the best minds to the nonprofit sector. My one problem with this is you can't guarantee that impact will be positive. First of all, the increased salary could be more than the economic benefit the employee brings. Secondly, if the employee would only come to work for the nonprofit for more money, they probably aren't passionate about the cause. It doesn't matter how smart or skilled someone is...they aren't going to put their full passion and effort in if they don't want to be there and only do it for the money. I would take passion over a slight supposed skill boost that may or may not help any day, because passion and dedication overtake intellect alone every time.
So it looks like in the midst of my rambling I did decide. Awesome!
I agree with your point, Emily.
ReplyDeleteWhen deciding which organizations our group wanted to donate to, many of these organizations fell in the category of paying for salary's workers. I understand why people might be against giving our $10,000 to salaries, but I look at it in a different light. If there is no money to pay the workers of these various organizations, the organization will stop running effectively and shut down, thus making the organization disappear altogether. If the salaries help the organizations continue running and helping the community, I believe our money would be spent in an effective way.