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Your protip is naive. I'm not saying there isn't any excessive pay in some charities. But the management needs of an organization are not determined by the go

by ska 7y ago

Your protip is naive. I'm not saying there isn't any excessive pay in some charities. But the management needs of an organization are not determined by the goods or services being supplied by that organization so much as by the complexity of the organization. It's not somehow fundamentally easier to manage a charity than it is a product company of similar scale and size. Now, there can be unwarranted complexity of course, but some of this is a natural outgrowth of scaling and reach. So just like in private sector, charity organizations have a huge range of needs. Running MSF is very different than running a local independent food bank. From my limited personal experience, charity sector executives tend to be paid a fair bit less than they would in private sector work, but still at a reasonable scale for experience an skills. This is exactly what you want: someone capable of doing the work well, who demonstrably cares enough about it that it as made a financial impact on them. Otherwise you are effectively suggesting that it is better for the organization to be inefficient and waste its donations, so long as the people heading it are also "donating" their time. You can hope for somebody good who is financially secure and doesn't need the salary, but it would be foolish to count on. There is one other issue, which is the question of whether or not larger scale charity organizations are (or can be) more efficient at delivering meaningful impact than smaller, localized one. That seems like a good target for some proper research. If the answer is that larger organizations are better at it, then clearly there is a benefit to having them run well. And caring about the impact is nowhere near enough qualification to do that.

aeternus 7y ago
Most of the larger charities simply spend more of their budget on marketing. Is that desirable, and should the charity leadership be compensated handsomly for that? It's a tough question as they may just be redirecting money away from charities with less marketing spend.
- ska 7y ago
  > Is that desirable, and should the charity leadership be compensated handsomly for that? It depends on the overall efficiency, doesn't it? I'm not saying this stuff is easy to evaluate. I'm saying there are vastly more important qualifications than "I care about this work", and if we have decided large charities are effective then clearly we want competent people running them. I'm perfectly ok with the answer being: "no, the best bet is very small, very local, entirely volunteer organizations". The worst case to me seems to be poorly managed large organizations, which will then just bleed resources at every level.
Retric 7y ago
It's not somehow fundamentally easier to manage a charity than it is a product company of similar scale and size. This is empirically false. Companies fail far more frequently than similar charities do. The core reason for this is companies operate on a much smaller margins. A charity that distributed 90% of it’s donations last year could distribute 80% if it’s donations this year if they collect half as much. Combined with often significant endowments and failure is rarely a major concern. Companies on the other hand are almost never in those situations.
- ska 7y ago
  I've tried, but I can't see what you believe you have falsified here, can you elaborate? There are certainly issues with inefficiency in charities stemming from the fact they don't have the same market pressures on them as private sector companies do (or at least, not as much). However, this doesn't have anything to do with the difficultly of managing complexity in large organizations. Or were you objecting to the hand-waving about efficiency? I agree measuring impact of charities are difficult but what else would you look at? Executive pay rate is obviously a silly one without extra context. Year-over-year changes are good, but I at least alluded to that. I guess I don't know quite what you are objecting to. While it is true for the reasons you mention that a badly managed charity may last much longer than a badly managed company, that has no impact at all on my statement. It is not somehow easier to manage the charity, it is just less immediate that the negative consequences impact you. But note, I'm not suggesting we support badly managed charities. I'm saying that to manage it well requires similar skill to that of a similarly scaled private sector company, and you will have to pay for those skills. This is entirely separable from the issue of evaluating whether or not it is being effectively managed.
  - Retric 7y ago
    I object to the assumption that equivalent sized organizations are equally difficult to run. Compare the rate of companies that existed 5 or 50 years ago and don’t exist now vs the rate of midsized or larger charities that existed 5 or 50 years ago and don’t exist today. If they where equal you could argue running them was equally difficult. However, because utter failure is not equally likely clearly it’s not equally difficult. You can use other metrics like the rate CEO’s are replaced and they also show it’s just a much easier job. So, if the org is more likely to survive and you’re not as likely to be fired that’s clearly an obvious threshold for success at the job. Unless you’re going to suggest only more capable people run charities or something. PS: I then tried to suggest why this was the case, but that’s not central to the argument.

by ska 7y ago

aeternus 7y ago

Most of the larger charities simply spend more of their budget on marketing. Is that desirable, and should the charity leadership be compensated handsomly for that? It's a tough question as they may just be redirecting money away from charities with less marketing spend.

ska 7y ago
> Is that desirable, and should the charity leadership be compensated handsomly for that? It depends on the overall efficiency, doesn't it? I'm not saying this stuff is easy to evaluate. I'm saying there are vastly more important qualifications than "I care about this work", and if we have decided large charities are effective then clearly we want competent people running them. I'm perfectly ok with the answer being: "no, the best bet is very small, very local, entirely volunteer organizations". The worst case to me seems to be poorly managed large organizations, which will then just bleed resources at every level.

Retric 7y ago

It's not somehow fundamentally easier to manage a charity than it is a product company of similar scale and size. This is empirically false. Companies fail far more frequently than similar charities do. The core reason for this is companies operate on a much smaller margins. A charity that distributed 90% of it’s donations last year could distribute 80% if it’s donations this year if they collect half as much. Combined with often significant endowments and failure is rarely a major concern. Companies on the other hand are almost never in those situations.

ska 7y ago
I've tried, but I can't see what you believe you have falsified here, can you elaborate? There are certainly issues with inefficiency in charities stemming from the fact they don't have the same market pressures on them as private sector companies do (or at least, not as much). However, this doesn't have anything to do with the difficultly of managing complexity in large organizations. Or were you objecting to the hand-waving about efficiency? I agree measuring impact of charities are difficult but what else would you look at? Executive pay rate is obviously a silly one without extra context. Year-over-year changes are good, but I at least alluded to that. I guess I don't know quite what you are objecting to. While it is true for the reasons you mention that a badly managed charity may last much longer than a badly managed company, that has no impact at all on my statement. It is not somehow easier to manage the charity, it is just less immediate that the negative consequences impact you. But note, I'm not suggesting we support badly managed charities. I'm saying that to manage it well requires similar skill to that of a similarly scaled private sector company, and you will have to pay for those skills. This is entirely separable from the issue of evaluating whether or not it is being effectively managed.
- Retric 7y ago
  I object to the assumption that equivalent sized organizations are equally difficult to run. Compare the rate of companies that existed 5 or 50 years ago and don’t exist now vs the rate of midsized or larger charities that existed 5 or 50 years ago and don’t exist today. If they where equal you could argue running them was equally difficult. However, because utter failure is not equally likely clearly it’s not equally difficult. You can use other metrics like the rate CEO’s are replaced and they also show it’s just a much easier job. So, if the org is more likely to survive and you’re not as likely to be fired that’s clearly an obvious threshold for success at the job. Unless you’re going to suggest only more capable people run charities or something. PS: I then tried to suggest why this was the case, but that’s not central to the argument.