5 ms·

In most non-profit organizations, costs never go down. Once a budget is set for programs, staffing, etc, they don't just go away and in fact, they often continu

In most non-profit organizations, costs never go down. Once a budget is set for programs, staffing, etc, they don't just go away and in fact, they often continue to grow without bound. See any government budget ever for evidence. So if donations don't continue to grow to match or at least keep pace, they could start running a deficit to eat away those reserves in no time. And once a non-profit organization starts running at a deficit, some contributors will question their contributions and they may shrink accordingly. Those reserves could disappear in just a few years.. unless there's a change, two years should show the direction and another couple years, the course will be set one way or another.

JackFr 9y ago
> And once a non-profit organization starts running at a deficit, some contributors will question their contributions and they may shrink accordingly. That's backwards though. It's not unusual for a non-profit to run a deficit. A donor will question a non-profit that's running a surplus - why am I giving you money you don't need.
- mattnewton 9y ago
  Apparently not in the case of WMF.
- narrowrail 9y ago
  How many people that give to charities look at their balance sheets before hand?
  - caseysoftware 9y ago
    Most don't as long as everyone is getting paid, the galas and events continue, and outward appearances are fine. Once invoices or paychecks are delayed, people stop and question why the leadership is "making so much money" and the ROI on galas and events. And once a few donors see the deficits, the questions get harder and money slows down.. making the next round of invoices a little harder.
ordinaryperson 9y ago
> In most non-profit organizations, costs never go down. And your evidence for this is...? I've worked in the nonprofit space for 10 years and leaders, like for-profit companies, cut costs when they're facing a deficit. If costs go up at WMF they'll either raise revenue or cut somewhere, like virtually any other mature business.
- caseysoftware 9y ago
  > like virtually any other mature business That's the problem. A non=profit is not a "mature business" because it's not a business at all. In fact, in most non-profits any effort to "run it like a business" will be met with opposition. Once again, for evidence look at any government agency, budget, etc. But even if it was a "mature business" the idea that any organization knows when and how to cut costs after its past its prime is dubious at best. For evidence, look at any company bankruptcy. Their costs outpaced their revenue and they didn't react fast enough or in the right ways. And that's assuming there were "right ways" to react.
  - count 9y ago
    It's a Non Profit Corporation - it is a business, but a business who's job is not to return value to shareholders, but to server the public good. As far as cutting costs and institutional maturity: sure, your all look at any company bankruptcy. You can also look at the millions and millions of non-bankrupt companies, and realize that you're overgeneralizing.
    - caseysoftware 9y ago
      Once again, I'm talking about the time after a company starts to lose.. and the time it takes them to "correct" if there is a "correct" path. Or as the top commenter put it "the institutional imperative" - https://news.ycombinator.com/item?id=14287430 https://news.ycombinator.com/item?id=14287430 - as described by Warren Buffet.
    - Arizhel 9y ago
      >but a business who's job is not to return value to shareholders, but to server the public good. Is this some kind of Freudian slip?

JackFr 9y ago

> And once a non-profit organization starts running at a deficit, some contributors will question their contributions and they may shrink accordingly. That's backwards though. It's not unusual for a non-profit to run a deficit. A donor will question a non-profit that's running a surplus - why am I giving you money you don't need.

mattnewton 9y ago
Apparently not in the case of WMF.
narrowrail 9y ago
How many people that give to charities look at their balance sheets before hand?
- caseysoftware 9y ago
  Most don't as long as everyone is getting paid, the galas and events continue, and outward appearances are fine. Once invoices or paychecks are delayed, people stop and question why the leadership is "making so much money" and the ROI on galas and events. And once a few donors see the deficits, the questions get harder and money slows down.. making the next round of invoices a little harder.

ordinaryperson 9y ago

> In most non-profit organizations, costs never go down. And your evidence for this is...? I've worked in the nonprofit space for 10 years and leaders, like for-profit companies, cut costs when they're facing a deficit. If costs go up at WMF they'll either raise revenue or cut somewhere, like virtually any other mature business.

caseysoftware 9y ago
> like virtually any other mature business That's the problem. A non=profit is not a "mature business" because it's not a business at all. In fact, in most non-profits any effort to "run it like a business" will be met with opposition. Once again, for evidence look at any government agency, budget, etc. But even if it was a "mature business" the idea that any organization knows when and how to cut costs after its past its prime is dubious at best. For evidence, look at any company bankruptcy. Their costs outpaced their revenue and they didn't react fast enough or in the right ways. And that's assuming there were "right ways" to react.
- count 9y ago
  It's a Non Profit Corporation - it is a business, but a business who's job is not to return value to shareholders, but to server the public good. As far as cutting costs and institutional maturity: sure, your all look at any company bankruptcy. You can also look at the millions and millions of non-bankrupt companies, and realize that you're overgeneralizing.
  - caseysoftware 9y ago
    Once again, I'm talking about the time after a company starts to lose.. and the time it takes them to "correct" if there is a "correct" path. Or as the top commenter put it "the institutional imperative" - https://news.ycombinator.com/item?id=14287430 https://news.ycombinator.com/item?id=14287430 - as described by Warren Buffet.
  - Arizhel 9y ago
    >but a business who's job is not to return value to shareholders, but to server the public good. Is this some kind of Freudian slip?