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There's a huge fallacy where people believe that non-profits are supposed to be inherently more equitable and nicer than for-profit companies. And people who be

There's a huge fallacy where people believe that non-profits are supposed to be inherently more equitable and nicer than for-profit companies. And people who believe this fallacy get upset by executive pay at non-profits and turn to sites like Charity Navigator to find charities where 99 cents of their dollar goes to charity. But the fact of the matter is that paying salaries to people who bring in more money than they make is a good strategy for everyone, that's why non-profits do it. Even if MegaCharity A only spends 60 cents of its income on charity but MiniCharity B spends 99 cents of its income on charity, MegaCharity A is still doing better for humanity if their annual income grows every year due to the strength of their marketing. MegaCharities can raise awareness exponentially and actually change the outcomes of some of the problems in our worlds because they have the power to raise enough money in one place with one cohesive plan to actually fight these things. I grew up next to St. Jude Children's Hospital. Everyone has heard of them. They bring in billions every year. They have an entire marketing wing and a well-compensated C-Suite (compared to other non-profits). They have way way way more impact because of all these things than most other medical charities for children. No other non-profit in the world can offer completely free medical care to children from anywhere in the world and fly their families to live near them while they're cared for without spending the kind of money they do on marketing and executives. Non-profits need executives, and people with the credentials to be executives have to choose between non-profit jobs that pay 1/8 of what for-profit jobs do. Sure they make more than a living salary while their employees struggle to make ends meet, but that's true of every type of organization. And in the end, they won't join non-profits at all if the money they sacrifice to do so is too high.

namdnay 6y ago
The money a charity raises doesn’t come out of thin air. It comes from the hard work of the people who donate. Charity A may do more, but it’s taking a lot more money from people to do it.
bradleyjg 6y ago
> can raise awareness exponentially Is there anyone left that isn’t aware of breast cancer? What is more awareness spending getting anyone at this point (aside from non profit executives)?
- chii 6y ago
  Is anyone left that isn't aware of the coca cola brand? It's the same for charity.
  - bradleyjg 6y ago
    The call to action for a Coca Cola commercial is go out and buy Coca Cola. What’s the call to action for NFL players wearing pink gloves?
  - account42 6y ago
    Coca Cola advertisement is as much about making sure you don't spend on Pepsi. Should a cancer charity try to divert your environmental charity donations?
samvher 6y ago
I think there are different parts to this though. Paying large salaries to personnel that do fund raising can be frustrating as a donor because to an extent this is a zero sum game: funds for one NGO mean less funds for another, in many cases. So it doesn’t feel like you’re paying for social good. Another is that while, sure, it makes sense to pay good people well, another part of the discussion is that others among the employees are underpaid. Not-for-profits are to an extent expected to stay outside of harmful side effects of capitalism/economics (I’d say it’s even in the name) and cutting costs on part of your labor seems somewhat in conflict with that. Of course all of this is the result of pragmatism and a focus on whatever it is that’s being optimized for (some aggregate impact measure which is unlikely to include employee welfare to a large extent).
cortesoft 6y ago
While I get this argument, it does leave out some details that might not make the value calculation as cut and dry. One, sure, your particular charity might be able to spend more on actual charity by increasing marketing, but what is the opportunity cost? If there is a person who donates $100 after you spend $60 convincing them to donate to you, it might seem like that is a good use of the $60... you have $40 extra! As a business, that calculation is certainly correct. But as a charity, you have to think about what the donor would have done otherwise... maybe your $60 in marketing actually just caused the person to switch their $100 donation from some other charity to yours. Now instead of charity B getting $100, charity A only gets $40 after expenses. Even worse, you can start an arms race. Now charity B has to spend marketing money to try to win back the donor who switched their donation to charity A, and now they spend $70 to get them to switch back (still worth it from charity B’s perspective, $30 in gain)... now we have two charities spending $130 for $100 in donations. There is always an opportunity cost.

namdnay 6y ago

The money a charity raises doesn’t come out of thin air. It comes from the hard work of the people who donate. Charity A may do more, but it’s taking a lot more money from people to do it.

bradleyjg 6y ago

> can raise awareness exponentially Is there anyone left that isn’t aware of breast cancer? What is more awareness spending getting anyone at this point (aside from non profit executives)?

chii 6y ago
Is anyone left that isn't aware of the coca cola brand? It's the same for charity.
- bradleyjg 6y ago
  The call to action for a Coca Cola commercial is go out and buy Coca Cola. What’s the call to action for NFL players wearing pink gloves?
- account42 6y ago
  Coca Cola advertisement is as much about making sure you don't spend on Pepsi. Should a cancer charity try to divert your environmental charity donations?

samvher 6y ago

I think there are different parts to this though. Paying large salaries to personnel that do fund raising can be frustrating as a donor because to an extent this is a zero sum game: funds for one NGO mean less funds for another, in many cases. So it doesn’t feel like you’re paying for social good. Another is that while, sure, it makes sense to pay good people well, another part of the discussion is that others among the employees are underpaid. Not-for-profits are to an extent expected to stay outside of harmful side effects of capitalism/economics (I’d say it’s even in the name) and cutting costs on part of your labor seems somewhat in conflict with that. Of course all of this is the result of pragmatism and a focus on whatever it is that’s being optimized for (some aggregate impact measure which is unlikely to include employee welfare to a large extent).

cortesoft 6y ago

While I get this argument, it does leave out some details that might not make the value calculation as cut and dry. One, sure, your particular charity might be able to spend more on actual charity by increasing marketing, but what is the opportunity cost? If there is a person who donates $100 after you spend $60 convincing them to donate to you, it might seem like that is a good use of the $60... you have $40 extra! As a business, that calculation is certainly correct. But as a charity, you have to think about what the donor would have done otherwise... maybe your $60 in marketing actually just caused the person to switch their $100 donation from some other charity to yours. Now instead of charity B getting $100, charity A only gets $40 after expenses. Even worse, you can start an arms race. Now charity B has to spend marketing money to try to win back the donor who switched their donation to charity A, and now they spend $70 to get them to switch back (still worth it from charity B’s perspective, $30 in gain)... now we have two charities spending $130 for $100 in donations. There is always an opportunity cost.