5 ms·

The Sin in Doing Good Deeds

46 points by eugenejen 18y ago

tome 18y ago
Renumeration is tricky for charities. In a public company, and to a large extent a private company, the bottom line is the bottom line. Investors invest, and they want money out of it. As long as it's legal, anything goes to get that profit. In a charity the bottom line is providing some much less tangible benefit to someone or something. The bottom line is a much fuzzier concept. The benefit is harder to gauge than when you're just looking at a number of currency units.
- cabalamat 18y ago
  Indeed. People give money to charities because they want to help a cause, not because they want to help the chief executive get paid lots of money.
  - patio11 18y ago
    I don't know -- I think a major portion of the experience is the feeling you get from the donation rather than the experience of seeing an objective indicator of your cause improving. Who the heck cares if Charity CEO A owns a Leer and parties with Paris Hilton every weekend if his charity has triple the ROI on donations as compared to Charity CEO B. (Not hard at all to imagine, incidentally -- private companies have that sort of difference in competence all the time.)
  - trominos 18y ago
    No. That's exactly the point: people don't give money to charities to help a cause, they give money to feel good. If they gave to help a cause, then they would support whatever (reasonably ethical) methods best helped that cause. The fact that so many donors bitch about frankly miniscule CEO compensation proves that the majority of them are not in it to improve the world -- or at least that there are other things they want out of their donation.
    - h34t 18y ago
      I don't know anyone who actually gives just to feel good. Feeling good is a by-product of giving, but only because you've done something worthwhile (or so you believe). That people bitch about CEO compensation doesn't mean they don't want to improve the world. They bitch because they want to improve the world, and they believe that high CEO compensation (as they perceive it) is a modern evil that stands in the way of improvement.
      - netcan 18y ago
        I agree. Also, they bitch because it's hard to measure performance directly. The best we can do is often look at the % of administration vs programs vs fund raising. Even there you can have a lot of funky accounting. If you really want to get into it, we can look at the names & brochures of the individual programs. Going all out, we might news search the names of the programs to see what news references we come up with. We know that charities are inefficient. But we can't work out who or how. Charities don't have ROI or p/e. So we look at things like CEO salary.
gyeh 18y ago
I think part of the fear regarding for-profit aid organizations is this: the pursuit of profit will create an incentive for organizations to follow the money. As a result, more resources would be allocated for the problems in more wealthy nations (ie. cancer), while problems in poorer regions would be neglected (ie. maleria). The same problem would exist even within a nation through existing class divisions. While this schism already exists today, an increase of for-profit aid organizations/charities will probably exacerbate this divide. In the end, this discussion opens a whole host of ethical issues and philosophical questions. Life is rarely simple.
ars 18y ago
It's not that complicated: If you are collecting donations from people (i.e. they give you something for nothing), then you must not make a profile. If you are getting your money in other ways, then go for it.
- nirmal 18y ago
  They're aren't giving you something for nothing. They are giving you something so you can help the people that the charity benefits. That's the service he (Pallotta) provides.
  - ars 18y ago
    Missed the point. Obviously they want you to use the money that way, but that's the only thing you should use it for, you should not use to get more money. But if you provided a service (not something for nothing), then it's like any other business.
- jd 18y ago
  It's not that obvious where to draw the line. Executives of charities need to get paid. And because charities deal with large amounts of money, mismanagement can be very costly. By increasing the salary of the executives you can get more qualified people. As a result, the charity becomes more efficient and effective and everybody's happy. Often charities have billions (?) of capital. If they hire a local private bank to look after the money they will have to pay for it, and the bankers will be driving porches. But if they manage the capital in house they suddenly can't compensate people for it similarly, because they're still a charity? Charity. Raise money: OK Spend money: OK Save money, use part of savings as bonus: Evil? I haven't really thought this through, so my logic could be flawed. Still, I think that most charities should become more business-like. (Good) Businesses are, after all, all about creating value.
  - ars 18y ago
    No, they are paying people to make more money with investments or whatever - that's fine, do what you want - the money comes from the investment income, it doesn't matter if it's inhouse or out. But if you pay people from donations directly then it's not OK to pay a lot. Are you paying people to get more donations (no good), or are you paying people to make more money in some other way - including by saving you money (...more efficient and effective....), then it's fine. Basically if by paying people you will end up needing to collect less donations - or you use those more effectively, then I'm fine with it. But if you pay people to work on methods of getting more donations in the first place, then I'm not OK with it (if it's excessive, more then a few %) - even if it means you have more money in total.
newt0311 18y ago
Wow. An editorial on the NY that makes significant economic sense and goes against the liberal ideology. This is a first. On the op-ed itself. I don't understand why anybody considers profit evil if said profit is not gotten through fraud or coercion. Exactly what is so evil about making money? Furthermore, all donations to charity are completely voluntary and private. Whether for-profit charities are evil or not is not something to the public at large to decide. We have no business passing judgment on any charity unless we happen to be one of the donors (and even then, clauses from their contracts apply). Lastly: if I was donating to a charity, I would not be concerned by how much they got in profit or how much their chief manager was paid. I would be interested in what I was giving them money for: how effective they were is helping the people they claimed to help.
- gyeh 18y ago
  Give NYT some credit, in the sense that not all their opinion pieces must adhere to some liberal ideology. As you mentioned, it is an "op-ed", not the NYT editorial board. The very fact that they have William Kristol as a regular columnist says a lot.
- anthonyrubin 18y ago
  There are two unresolved issues that I see. Contributions to for profit companies are not tax deductible. This may cause some to give to other charities instead. Not for profit charities are required to disclose financial information. Sites such as Charity Navigator allow you to investigate such charities. For profit charities are not subject to such regulations.
- qqq 18y ago
  > I don't understand why anybody considers profit evil if said profit is not gotten through fraud or coercion. For example, Marx said that more capitalism logically leads to subsistence living conditions for the workers. He gave arguments for this. I think they are mistaken, but if you are wondering why people think profit is evil, that's a reason. Marx said that without fraud or coercion, and just free trade, most people will have very bad lives. And, yes, obviously one can live in the US for a lot less than minimum wage, and be doing a lot better than the subsistence conditions Marx had in mind from his own time period. So Marxism is blatantly, factually inapplicable to the US (whether that's b/c Marxism is false, or b/c the US has been saved by it's non-pure capitalism with govt intervention is not obvious just from the plain facts). Why people are blind to this is a tough question.
GavinB 18y ago
If an organization is turning a profit for its owners or shareholders then it's a business, not a charity. That's a definition, not a moral judgment. There are lots of businesses that do good work for people. The tricky part is when you're soliciting for donations, you just need to be extremely transparent about where the money is going. What we need is not a rethinking of what a charity can be, but a rethinking of what a business can be.
- trominos 18y ago
  From answers.com: "Charity: An institution, organization, or fund established to help the needy."
- netcan 18y ago
  There are problems pretty much inherent in types of organisations. These are a consequence of the forces creating them, growing them & making them thrive. Businesses as a complex are great at some things & problematic at some things. The defining characteristics are the drive to make money, responsibility towards shareholders, legal obligations etc. The ones that survived, had others modelled on them where those that made money, those that got big, etc. Pg & others talk about vestiges piling up, but that assumes traits being useful at some point. Businesses that go bankrupt, stay small, get sued to pieces... do not have much of a lasting impact. Positive social impacts is only a surviving trait inasmuch as it aids the others. Governments & government organisations have other issues. A big part of what makes them survive is looking good to electorates/media etc. They're not as scrutinising as shareholders, but they know when a neighbouring country has better roads, lower taxes, or if things have been getting worse. Charities have issues to do with the fact that 'survival,' growth & such are mostly to do with fund raising ability. Proficiency in whatever they're stated purpose may be helpful for fund raising. But it is not in itself a guarantee of success. At first glance you might think, businesses may make brilliant products & go out of business. But that misses the point a little. A charity's job could be to help relieve rural poverty in remote P&G. OK, where do we go from here? Well, raise money & run poverty relief programs in P&G. Done. Of the 10 charities, which did a better job? Similar working out who created the best portable music player, best sneakers, best film. You can argue that 'Alexandra Leaving' is far superior to 'Oops I did it Again'. You could argue the contrary. Not much fun arguing who made more money. If your goal is make money, we have a clear winner. We can't tell who relieved more poverty per dollar. We can tell who raised more money. We can tell how (on what) they spent it, but we can't tell how well they spent it. Governents are charged with the opposite. 'Educate Youth'. That is the goal. But since they have responsibility for the entire job, you can gauge their success. You can tell how educated the country is. Better then 20 years ago? Worse? Charities don't even have that. All they have is spending. I'm sure there are many cases where charities could break through from the constraints of the conditions on their grants, donor public & thrive. But there is also a danger of charities overspending on fund raising or hitting all sorts of tragedies of the commons in spending over chasing an existing amount of money. It's really hard to tell. So we shoot from the hip. What can you do?
anthonyrubin 18y ago
Obviously people aren't very aware of how much the CEOs of various not for profits make. The CEO of United Way for instance makes over $500K. All of this can be investigated on Charity Navigator.
quoderat 18y ago
The problem is that there are many qualified people in charity work who make barely-subsistence wages who would likely do an as-good or better job with far less pay. So, for the most part, my guess is that $500,000+ salaries are a form of rent seeking, and are not justified in the so-called marketplace. It'd be nice if someone could crash together the stats and see if this intuition bears out. You know, look at percentage of donations used to actually help their stated cause, and see if having a super-star CEO actually results in a more well-capitalized charity. I doubt it, but I depend on evidence, not ideology.
- sokoloff 18y ago
  Did you read the article at all? Take the case of the breast cancer charity which, from the article, was pulling in $71mm from charity walks using his services. They stopped using his services and continued the walks and are taking in $11mm now. You might argue that several other variables might have also changed, but a 6.5x factor is hard to ignore.
  - quoderat 18y ago
    I read the article. I wouldn't call one anecdote data, though it's about 1/10,000 of a good start.
    - albertni 18y ago
      That's a little harsh. It was a pretty significant anecdote - a 6.5x decrease with the only clear change being Pallotta's company-charity being forcibly stopped from continued involvement. Is there room for other plausible reasons to have caused the drop? Definitely. And of course if, hypothetically, Pallotta's company-charity was involved with sufficiently many causes, you would even expect there to be at least one anecdote with such a substantial drop. But to call it "1/10,000 of a good start" is much more unreasonable and illogical than thinking the anecdote might be of worth.
      - DabAsteroid 18y ago
12ren 18y ago
In the aftermath of a wave of criticism, his company collapsed. One breast cancer charity that parted ways with Mr. Pallotta began producing its own fund-raising walks, but the net sum raised by those walks for breast cancer research plummeted from $71 million to $11 million. But because his company collapsed, the true comparison figure that Mr. Pallotta raised became $0 million. As a business, it didn't succeed. And he's blaming the world. People often give to charities to feel charitable, and having a profit-motive undermines that - even if the result is that less money is raised. This is because people making donations are often fulfilling a need to give and help people - not by what is best for those being helped. The latter requires a kind of ruthless saint, quite different from the human motivation of brotherly love. In contrast, ordinary businesses helps people, or else no one would give them money. A fantastic example of this is Grameen Bank "microcredit": http://www.grameen-info.org/index.php?option=com_content&task=blogsection&id=8&Itemid=170 http://www.grameen-info.org/index.php?option=com_content&#38... Usury (interest for credit) has got to be pretty much the opposite of charity, yet it seems to do tremendous good.
mleonhard 18y ago
http://www.amazon.com/Uncharitable-Restraints-Nonprofits-Contemporary-Perspectives/dp/1584657235 http://www.amazon.com/Uncharitable-Restraints-Nonprofits-Con...

46 points by eugenejen 18y ago

tome 18y ago

Renumeration is tricky for charities. In a public company, and to a large extent a private company, the bottom line is the bottom line. Investors invest, and they want money out of it. As long as it's legal, anything goes to get that profit. In a charity the bottom line is providing some much less tangible benefit to someone or something. The bottom line is a much fuzzier concept. The benefit is harder to gauge than when you're just looking at a number of currency units.

cabalamat 18y ago
Indeed. People give money to charities because they want to help a cause, not because they want to help the chief executive get paid lots of money.
- patio11 18y ago
  I don't know -- I think a major portion of the experience is the feeling you get from the donation rather than the experience of seeing an objective indicator of your cause improving. Who the heck cares if Charity CEO A owns a Leer and parties with Paris Hilton every weekend if his charity has triple the ROI on donations as compared to Charity CEO B. (Not hard at all to imagine, incidentally -- private companies have that sort of difference in competence all the time.)
- trominos 18y ago
  No. That's exactly the point: people don't give money to charities to help a cause, they give money to feel good. If they gave to help a cause, then they would support whatever (reasonably ethical) methods best helped that cause. The fact that so many donors bitch about frankly miniscule CEO compensation proves that the majority of them are not in it to improve the world -- or at least that there are other things they want out of their donation.
  - h34t 18y ago
    I don't know anyone who actually gives just to feel good. Feeling good is a by-product of giving, but only because you've done something worthwhile (or so you believe). That people bitch about CEO compensation doesn't mean they don't want to improve the world. They bitch because they want to improve the world, and they believe that high CEO compensation (as they perceive it) is a modern evil that stands in the way of improvement.
    - netcan 18y ago
      I agree. Also, they bitch because it's hard to measure performance directly. The best we can do is often look at the % of administration vs programs vs fund raising. Even there you can have a lot of funky accounting. If you really want to get into it, we can look at the names & brochures of the individual programs. Going all out, we might news search the names of the programs to see what news references we come up with. We know that charities are inefficient. But we can't work out who or how. Charities don't have ROI or p/e. So we look at things like CEO salary.

gyeh 18y ago

I think part of the fear regarding for-profit aid organizations is this: the pursuit of profit will create an incentive for organizations to follow the money. As a result, more resources would be allocated for the problems in more wealthy nations (ie. cancer), while problems in poorer regions would be neglected (ie. maleria). The same problem would exist even within a nation through existing class divisions. While this schism already exists today, an increase of for-profit aid organizations/charities will probably exacerbate this divide. In the end, this discussion opens a whole host of ethical issues and philosophical questions. Life is rarely simple.

ars 18y ago

It's not that complicated: If you are collecting donations from people (i.e. they give you something for nothing), then you must not make a profile. If you are getting your money in other ways, then go for it.

nirmal 18y ago
They're aren't giving you something for nothing. They are giving you something so you can help the people that the charity benefits. That's the service he (Pallotta) provides.
- ars 18y ago
  Missed the point. Obviously they want you to use the money that way, but that's the only thing you should use it for, you should not use to get more money. But if you provided a service (not something for nothing), then it's like any other business.
jd 18y ago
It's not that obvious where to draw the line. Executives of charities need to get paid. And because charities deal with large amounts of money, mismanagement can be very costly. By increasing the salary of the executives you can get more qualified people. As a result, the charity becomes more efficient and effective and everybody's happy. Often charities have billions (?) of capital. If they hire a local private bank to look after the money they will have to pay for it, and the bankers will be driving porches. But if they manage the capital in house they suddenly can't compensate people for it similarly, because they're still a charity? Charity. Raise money: OK Spend money: OK Save money, use part of savings as bonus: Evil? I haven't really thought this through, so my logic could be flawed. Still, I think that most charities should become more business-like. (Good) Businesses are, after all, all about creating value.
- ars 18y ago
  No, they are paying people to make more money with investments or whatever - that's fine, do what you want - the money comes from the investment income, it doesn't matter if it's inhouse or out. But if you pay people from donations directly then it's not OK to pay a lot. Are you paying people to get more donations (no good), or are you paying people to make more money in some other way - including by saving you money (...more efficient and effective....), then it's fine. Basically if by paying people you will end up needing to collect less donations - or you use those more effectively, then I'm fine with it. But if you pay people to work on methods of getting more donations in the first place, then I'm not OK with it (if it's excessive, more then a few %) - even if it means you have more money in total.

newt0311 18y ago

Wow. An editorial on the NY that makes significant economic sense and goes against the liberal ideology. This is a first. On the op-ed itself. I don't understand why anybody considers profit evil if said profit is not gotten through fraud or coercion. Exactly what is so evil about making money? Furthermore, all donations to charity are completely voluntary and private. Whether for-profit charities are evil or not is not something to the public at large to decide. We have no business passing judgment on any charity unless we happen to be one of the donors (and even then, clauses from their contracts apply). Lastly: if I was donating to a charity, I would not be concerned by how much they got in profit or how much their chief manager was paid. I would be interested in what I was giving them money for: how effective they were is helping the people they claimed to help.

gyeh 18y ago
Give NYT some credit, in the sense that not all their opinion pieces must adhere to some liberal ideology. As you mentioned, it is an "op-ed", not the NYT editorial board. The very fact that they have William Kristol as a regular columnist says a lot.
anthonyrubin 18y ago
There are two unresolved issues that I see. Contributions to for profit companies are not tax deductible. This may cause some to give to other charities instead. Not for profit charities are required to disclose financial information. Sites such as Charity Navigator allow you to investigate such charities. For profit charities are not subject to such regulations.
qqq 18y ago
> I don't understand why anybody considers profit evil if said profit is not gotten through fraud or coercion. For example, Marx said that more capitalism logically leads to subsistence living conditions for the workers. He gave arguments for this. I think they are mistaken, but if you are wondering why people think profit is evil, that's a reason. Marx said that without fraud or coercion, and just free trade, most people will have very bad lives. And, yes, obviously one can live in the US for a lot less than minimum wage, and be doing a lot better than the subsistence conditions Marx had in mind from his own time period. So Marxism is blatantly, factually inapplicable to the US (whether that's b/c Marxism is false, or b/c the US has been saved by it's non-pure capitalism with govt intervention is not obvious just from the plain facts). Why people are blind to this is a tough question.

GavinB 18y ago

If an organization is turning a profit for its owners or shareholders then it's a business, not a charity. That's a definition, not a moral judgment. There are lots of businesses that do good work for people. The tricky part is when you're soliciting for donations, you just need to be extremely transparent about where the money is going. What we need is not a rethinking of what a charity can be, but a rethinking of what a business can be.

trominos 18y ago
From answers.com: "Charity: An institution, organization, or fund established to help the needy."
netcan 18y ago
There are problems pretty much inherent in types of organisations. These are a consequence of the forces creating them, growing them & making them thrive. Businesses as a complex are great at some things & problematic at some things. The defining characteristics are the drive to make money, responsibility towards shareholders, legal obligations etc. The ones that survived, had others modelled on them where those that made money, those that got big, etc. Pg & others talk about vestiges piling up, but that assumes traits being useful at some point. Businesses that go bankrupt, stay small, get sued to pieces... do not have much of a lasting impact. Positive social impacts is only a surviving trait inasmuch as it aids the others. Governments & government organisations have other issues. A big part of what makes them survive is looking good to electorates/media etc. They're not as scrutinising as shareholders, but they know when a neighbouring country has better roads, lower taxes, or if things have been getting worse. Charities have issues to do with the fact that 'survival,' growth & such are mostly to do with fund raising ability. Proficiency in whatever they're stated purpose may be helpful for fund raising. But it is not in itself a guarantee of success. At first glance you might think, businesses may make brilliant products & go out of business. But that misses the point a little. A charity's job could be to help relieve rural poverty in remote P&G. OK, where do we go from here? Well, raise money & run poverty relief programs in P&G. Done. Of the 10 charities, which did a better job? Similar working out who created the best portable music player, best sneakers, best film. You can argue that 'Alexandra Leaving' is far superior to 'Oops I did it Again'. You could argue the contrary. Not much fun arguing who made more money. If your goal is make money, we have a clear winner. We can't tell who relieved more poverty per dollar. We can tell who raised more money. We can tell how (on what) they spent it, but we can't tell how well they spent it. Governents are charged with the opposite. 'Educate Youth'. That is the goal. But since they have responsibility for the entire job, you can gauge their success. You can tell how educated the country is. Better then 20 years ago? Worse? Charities don't even have that. All they have is spending. I'm sure there are many cases where charities could break through from the constraints of the conditions on their grants, donor public & thrive. But there is also a danger of charities overspending on fund raising or hitting all sorts of tragedies of the commons in spending over chasing an existing amount of money. It's really hard to tell. So we shoot from the hip. What can you do?

anthonyrubin 18y ago

Obviously people aren't very aware of how much the CEOs of various not for profits make. The CEO of United Way for instance makes over $500K. All of this can be investigated on Charity Navigator.

quoderat 18y ago

The problem is that there are many qualified people in charity work who make barely-subsistence wages who would likely do an as-good or better job with far less pay. So, for the most part, my guess is that $500,000+ salaries are a form of rent seeking, and are not justified in the so-called marketplace. It'd be nice if someone could crash together the stats and see if this intuition bears out. You know, look at percentage of donations used to actually help their stated cause, and see if having a super-star CEO actually results in a more well-capitalized charity. I doubt it, but I depend on evidence, not ideology.

sokoloff 18y ago
Did you read the article at all? Take the case of the breast cancer charity which, from the article, was pulling in $71mm from charity walks using his services. They stopped using his services and continued the walks and are taking in $11mm now. You might argue that several other variables might have also changed, but a 6.5x factor is hard to ignore.
- quoderat 18y ago
  I read the article. I wouldn't call one anecdote data, though it's about 1/10,000 of a good start.
  - albertni 18y ago
    That's a little harsh. It was a pretty significant anecdote - a 6.5x decrease with the only clear change being Pallotta's company-charity being forcibly stopped from continued involvement. Is there room for other plausible reasons to have caused the drop? Definitely. And of course if, hypothetically, Pallotta's company-charity was involved with sufficiently many causes, you would even expect there to be at least one anecdote with such a substantial drop. But to call it "1/10,000 of a good start" is much more unreasonable and illogical than thinking the anecdote might be of worth.
    - DabAsteroid 18y ago

12ren 18y ago

In the aftermath of a wave of criticism, his company collapsed. One breast cancer charity that parted ways with Mr. Pallotta began producing its own fund-raising walks, but the net sum raised by those walks for breast cancer research plummeted from $71 million to $11 million. But because his company collapsed, the true comparison figure that Mr. Pallotta raised became $0 million. As a business, it didn't succeed. And he's blaming the world. People often give to charities to feel charitable, and having a profit-motive undermines that - even if the result is that less money is raised. This is because people making donations are often fulfilling a need to give and help people - not by what is best for those being helped. The latter requires a kind of ruthless saint, quite different from the human motivation of brotherly love. In contrast, ordinary businesses helps people, or else no one would give them money. A fantastic example of this is Grameen Bank "microcredit": http://www.grameen-info.org/index.php?option=com_content&task=blogsection&id=8&Itemid=170 http://www.grameen-info.org/index.php?option=com_content&#38... Usury (interest for credit) has got to be pretty much the opposite of charity, yet it seems to do tremendous good.

mleonhard 18y ago

http://www.amazon.com/Uncharitable-Restraints-Nonprofits-Contemporary-Perspectives/dp/1584657235 http://www.amazon.com/Uncharitable-Restraints-Nonprofits-Con...