A couple of years ago, I wrote an article an article, which addressed the need for nonprofit organizations to invest in their people and operations. During the last few weeks, I was approached by a major vendor to see about aligning my thought leadership with them. As of this writing, we’re still in discussions, but stay tuned, and I expect to be writing and talking about them soon.
However, when I was discussing with one of my team members about the collaboration, I told her that I wanted to make it clear that I was not interested in doing things the way they’ve always been done. I said to her that I wanted to make clear in everything we did together that we had to focus on not doing business as usual, growth, scalability, and sustainability.
A few months ago, I met up with my friend, Dan Pallotta, at a conference. We caught up with how things were going, and we talked again about themes on how to disrupt the old thinking of the philanthropic sector. On the plane ride home, I remembered the piece I wrote about money, which also mentioned Dan’s work.
I wrote in my 2014 article:
Since 1970, the number of nonprofits that have made at least $50 million in revenue has been 144 and the number of for-profits that have crossed that threshold during the same period has been 46,132.
We expect, and some senior executives within the sector buy into this thinking, that nonprofits need to do great things with a little money. They go around to donors and speak about how little they are spending and wear that as a badge of honor. Being careful about how money is spent is smart business. Finding ways to keep the budget as impossibly minimal as possible and do everything for years and years on a shoe-string budget with flat or minimal growth is not smart business.
Then a couple of weeks ago I was speaking to a professional in the industry, and he was telling me how he was having a tough time getting a raise. I asked this fundraiser if he had made his fundraising goals, and he replied that not only had he made his goal, but he had exceeded the metric by nearly 14 percent.
He said to me, “Wayne, I’ve gone over the goal, but the executive director has told me that we have to be careful to demonstrate that the overhead expenses are very low so that we maintain the trust of the board and the major donors.”
So I had to ask, “What’s your salary and what’s the budget of the organization?”
He replied, “$75,000 and the budget is $5 million.”
Then I asked the percent of expenses for the development office.
He told me it was it was 5 percent of the total budget.
Want to guess what this fundraiser was thinking of doing?
If you guessed that he was thinking of moving on because he was working long hours (10 hour days were typical) and he knew that he wasn’t making near what he could be making, then you would be correct. The Internet is an incredible piece of technology because you have at your fingertips things like salary surveys that help everyone know what a competitive salary in their particular geographic area is for their job function.
Can we stop the madness yet?
I thought when I wrote the article that we were at a tipping point. I thought after the 2008 recession and the recovery that the nonprofit sector would have consolidated and would begin to look at investment into operational expenses earnestly. I also thought that with for-profit businesses aligning their plans of activities to include social good, it would cause a fundamental shift in the nonprofit sector.
I’ll admit, I have seen some change, and I certainly see the discussions and debate–especially on social media–but the entrenched old school thinking is deeply rooted and change hasn’t happened fast enough.
Let me ask you a question, what do you think is smarter: giving the fundraiser who is surpassing goal a raise or allowing him to walk out the door and end up with the added expenses and potential risks of a new person on the job? Which one would you pick? If I were a nonprofit CEO or executive director, I know which one I’d choose.
I’m going to keep pushing, and I know a lot of others, like Dan Pallotta, are also pushing the envelope and saying that collectively we can’t make the differences we want to make in society if we keep with the small thinking. What I have seen since 2014 is that more voices are speaking up and although I’m impatient and want quicker change, I also recognize that an entrenched attitude takes time.
Let’s keep challenging the old guard.