Leigh--You're right on.  I actually intended to place the blame for that low overhead emphasis squarely on the shoulders of the donors.  In my subsequent editing, that bit came out. The post was originally titled "All donors should read this raging debate" because I think most donors don't understand the broad consequences of their funding choices.  Thanks for clarifying that--I'll edit my post to say "the current emphasis among donors on 'low overhead'..."

As long as I'm over here, Nathaniel, I've got a post up about microfinance.  Seems like your peeps' sort of thing:

http://uspoverty.change.org/blog/view/learning_from_microfinance_in_the_us

/threadjack

So, I have to put my two cents in here about the role of for-profit mission-driven companies. One of their plusses is the ability to attract talented, idealistic young people and keep them as they grow up, have families, mortgages and so on, or just to attract top talent in general.

I give you this example. The founder of Sungevity, a Berkeley startup that runs a portal for solar-energy contractors and customers, started out as a Greenpeace activist. He decided to go the for-profit entrepreneurial route for a few reasons, but one is that he's been able to attract really top, experienced talent.  (I wrote about this in my blog, Not Only for Profit,  http://trueslant.com/annefield/2009/05/08/from-greenpeace-activist-to-solar-power-entrepreneur/).

 

You recently linked to a post "Re-Thinking Charity" that I read and commented on.  I disagree with others on this post.  First, I think you can make a decent living with benefits at a nonprofit.  If you look at all the job postings here on change.org since they added this new feature and then again at www.commongoodcareers.com I think you will find that there are opportunities for great careers.  There are far less opportunities to make a financial fortune though, yes, and to that I will quote my post from the "Re-Thinking Charity" because I believe it equally applies here:

"How about we re-think the business sector and ask it to retain the same ethics and expectations we have for charities?

Why is it acceptable and promoted through our society's culture for top talent coming out of the nation's best business schools to go directly into the for-profit sector? By equating doing well with high financial worth we make doing poorly in order to be wealthy the norm, but I disagree that this is something we want to sustain and grow. Why spend more on employee salaries for employees that want to do well but care more about how much they earn financially? An inexperienced but dedicated and passionate employee or volunteer for a cause is better than an educated but financially motivated one and for many reasons.

Doing well and doing good without making a financial fortune and consuming more than one's share of resources is sustainable. In fact, it is the path to sustainability. Word of mouth, change in family values, expectations within culture and society's direction will pave scalability. The result?--Doing well by doing good."

I think the problem is the lack of innovation as opposed to pay.  If you are not going to pay as well, atleast foster and inspire the minds of talented employees as well as their hearts.  This takes funds as well, but can atleast be a solution.  We need more organizations or companies that collaborate, test and prove new ideas for nonprofits.  Here is why:
 
While in college, I started in the fundraising department.   Bottom line, and there is no way around it:  A very large percentage of donors would ask about the percentage of overhead before donating- no matter how much they loved the cause or knew about us.  Our 6% would swing the donor.

Even if nonprofits evaluate impact differently it will take a seizmic shift for society to change the overhead comparison before donating.

But something needs to change.  The administrative turnover was massive.  A more common complaint than low pay was that the strict numbers game of 6% offers no room for the variance of innovation.  The risk for change is very high and there is no piggie bank to launch creative ideas.  I can only imagine what nonprofits could accomplish if they could pay their talent to stay and cover this.

In thinking about this, I'm wondering why you are equating a salary to equal overhead within nonprofit accounting anyway?

For example, if I'm writing a grant for a new program and I need to pay a New Program Director and then also need New Program Other Positions in order to make this program work then those salaries in large part count towards program expense and not administrative or overhead expense.  The only percentage of admin expense in regards to those salaries would come from how much time those particular positions spent in doing admin work for the organization or benefits paid directly to the employee.  Although I admit the later can add up it'd have to be very substantial, even by for profit standards, to really have an impact on the overhead of an organization.

Wow this is very interesting.  I am currently a young supervisor with the United States Postal Service and I was recently offered the position of manager which pays around $75,000/yr.  Well I am at a serious crossroad because I am completly feed up with the way the organization operates in greed from top to bottom.  Before accepting the position I needed to take extended leave in order to weight my options.  I am a military veteran, a former college football all-american, a husband and the father of 2 with a house and a dog and a masters degree in business administration and I am very seriously contemplating turning the offer down and forming a non-profit organization because this is whats in my heart and I've been struggling with this decision because I don't know if I will be able to support my family and form a non-profit organization from the ground up even though most of the pieces are all ready in place. Please give some insight what does everyone think??  What would you do?

Interesting post, although there is less of a disparity in the UK.  The positive comments about young people, their drive and enthusiasm alongside the benefits of social enterprise are absolutely spot on.  To the extent that we've recently decided to develop a Social Enterprise version of our mainstream 'Company' Programme that has served Young Enterprise so well for so many years.  

I couldn't agree with Leigh more. I am an Executive Director of a non-profit and right now, I can't even pay myself.

The sentiment among donors - people who give $5 to foundations that give thousands - is that your expertise, time and effort isn't worth funding, only your direct program costs.

But programs obviously don't run by themselves and when staff aren't paid a comfortable standard of living and made to work long hours, the burnout is high and the level of success for that non-profit becomes stagnant.

I think social enterprise is a better long-term answer. As this field grows, non-profits will go through a difficult period but my hope is that in the end, donors and foundations will begin to understand that their dollars must cover overhead and pay for staff time and expertise.

Until then, I continue to work for scraps until something big breaks...or until I become burnt out.

Alexis, I addressed this in a post above and I'm hoping you will too.  Aren't salaries for the most part considered program expense and not overhead expense?  I'm not seeing that grantors or government agencies don't want to fund salaries, in fact from my experience, many grantors and government agencies expect and would like to see salary costs built into grants.

I hear you on the individual donors wanting to fund actual projects though.  I think this is because individual donors are giving on a more emotional basis and they are giving because they do want to make a direct difference but are putting their trust in already developed solutions to make a greater perceived impact.

Thank you, thank you and once more thank you for this post! I couldn't not agree more being a "victim" of this situation. This is not to say that I regret having been in the nonprofit sector for the past five years, pretty much since the my graduation. Anything but, I've enjoyed working for a couple nonprofits (I'm on my third one now), one of them pretty well know in the Social Entrepreneurship arena, that, yes, severely underpay its employees, especially those fresh out of college. You simply cannot live on $30,000 in a city like DC for example.....and yet I did it, don't ask how, I don't know! ;) I'm surprised that noone here mentioned Dan Pallota's book the Uncharitable, this one of the intergral points he makes in his book - http://www.uncharitable.net/



And YAY for Social Enterprise - be sure to put April 28-30 on your calendar for the 3rd Social Enterprise World Forum/Summit 2010 in San Francisco, CA.

Sharon, thank you for the response and the link it was an interesting read.  I think we agree that overhead expenses is a trivial way to rate a charity or nonprofit.  I think we disagree that salary expense is the big issue. 

CEO salary would be considered majority admin expense but this actually makes sense if you think about it.  It keeps the CEO's salary relative to an organization's gross receipts and the CEO is doing a lot of admin work.  For example the American Red Cross CEO makes $565k a year whereas my local chapter of Habitat for Humanity's CEO makes only $48k a year.  I don't think attributing a program director's salary to program expense is a game.  It is a reality and it works.

I've had two experiences where program funders came back and asked our organization to specifically build in a program director salary into the grant. So it's possible that I'm coming from a different angle on this and I admit I have limited experience.

I really don't want to see the nonprofit industry reflect the for profit industry.  This would be worse case scenario for me.  I think we should ask for our donors to be more understanding of the big picture, yes!--but not plead to run like a for profit.

While I agree that its important to have paid positions at nonprofits and that those employees should make something resembling a living wage, it seems strange to me that someone just getting out of college would expect to make something in the 50k ballpark. Since when is 30k a year "too little money to live on"? That maths out to 2,500 a month, and somewhere between $15-16 an hour, which is almost double federal minimum wage. I'm still a year away from graduation, and when I look at job postings I get excited when I see things that I'm qualified for in the $10-12 an hour range. 50k is my sort of "goal salary" for when I'm middle aged, unless I'm able to get into law school. 30k a year right out of college sounds like a dream to me, and in Seattle, the ridiculously over-priced city where I live, it would be pretty easy to save (rather then overspend) on that salary.

The better the pay the more results and the better the employees.

I think that in addition to donors, leaders making the hiring and salary decisions need to read this post. 

However, what this post doesn't discuss is the burnout factor -that the average nonprofit career is between 3-5 years.   Unfortunately, for so many us not only are we being paid half the salary of one person but we are being asked to do the work of 2 or 3 people (if you are lucky) often with no paid support.  I know far too many Development professionals, in particular, that are the entire department tasked with raising $3M + each year.

While volunteers are GREAT, often they are not engaged enough to have a profound impact on your work load.  And if they do not make a long term committment, you are training new volunteers every few months.  And let's be honest, managing volunteers is a job in of itself.  I have found that organizations that make investments in Volunteer Managers get the most out of their committed volunteers.

In my last position, I was responsible for eight major job functions with no support.  At the very least, I should have had a team of 2 to assist.  Fortunately, the person who was hired after me actually has 2 part time people to assist her. I'm extremely happy for her because I know she should be able to accomplish far more than I ever could...

So for new graduates idealistic enough to give nonprofits a shot, many are committed and passionate about the mission, but they are overworked and underpaid.  Work life balance is out the door; and eventually they will wonder, why did I choose this career path again?

Fortunately, many of us are able to find better situations in nonprofit and we stay in the sector.  Though my next position will be very challenging, I will have a staff of four (so I can delegate and collaborate and not shoulder the burden by myself).  I will also be paid a competitive salary, which means my financial life will be more stable.  Since I will spend less time worrying about my personal finances and far more time raising money for the organization for which I have been hired.

Nonprofits have a long way to go and just because a person is concerned about their basic needs and perhaps wants to buy a house, it doesn't mean they are money focused.  Not everyone wants to live a life poverty nor should you have to be.  I don't think you should have to live the life of a pauper to make a profound impact on the world around you.

As the non-profits depend of govenment funding for the majority of their income, and charitiable contributions are unlikely to rise due to the state of economy and the huge number of worthy causes, the non-profits need to concentrate their efforts in some areas where they have been generally lax:

* Many non-profits don't recognize productivity or innovation when doling out pay increases. Yes, some do give out "best practices" awards, but few give out pay increases beyond the ordinary to employees that ROUTINELY maintain productivity and/or quality levels that are significantly beyond the norm.

* The larger non-profits don't encourage versatility and often end up in situations where only one or a few people can do a task and when that person or persons is ill or leaves the agency that task either doesn't get done, or others are scrambling to learn it.

* Many non-profits still have 19th Century top down management systems and do NOT encourage their front line workers to freely express ideas for the improvement of their programs. Many supervisors are afraid of recognizing and developing talented subordinates for fear of losing their own positions. They fail to realize that the more tightly they hold on to power, the more likely it is to slip away. The converse is that they more one empowers ones employees, the more they empower you and the better your department runs. One of the greatest achievements for a manager is to see ones employees move on to better positions, either within or outside of ones agency.

* There needs to be a balance between chasing after funding streams, and worrying about billing, budgets and audits and living ones mission statement. If an agency doesn't doesn't address the financial issues and pass state audits, it can go bankrupt and not be able to deliver services, despite the most noble of missions. But, if an agency becomes so caught up in the paper and money chase that they don't develop meaningful programs that keep abreast of the latest developments in the field, the agency loses sight of its purpose and become a failure in this regard. If an agency lives its mission statement in terms of delivering services and documents this and bills for this on a daily basis, the rest follows and there is no need to scurry around like cockroaches when the state auditors arrive.

* Some agencies take pride in staff retention and point to their statistics regarding this. But, to achieve a good score on this, some of these agencies retain employees that they would have been better off to let go. The bottom line should be both the bottom line and living ones mission statement.

* I have yet to work at an agency that offers a buy back or gives out prizes for employees with perfect or close to perfect attendance and punctuality. This leads to many and sometimes most employees leaving no sick day unused and results in increased overtime costs for those agencies. Plus, the agencies that have a lot of sick days and where the managers don't require doctor's notes for patterns of absenteeism attract the poorest performing workers. Similarly, managers that allow consistent tardiness or "illness" create a demoralizing condition for the workers who would otherwise have good attendance and punctuality records. And, many agencies don't use time clocks or more tamper proof systems, such as fingerprints or ID cards, of determining time on the job and thus end up paying for workers who aren't even present.

* Many of the younger workers coming into the non-profits have the prison (or police) mentality of not "ratting out" a coworker for such things as abandoning ones post to go on a personal errand and sometimes using the agency's vehicle to do this. And, many of the managers (particularly in group homes where there isn't the degree of staff oversight) complain that in such situations it often becomes their word against that of their employee or employees and that HR doesn't support them. This type of mentality needs to be rooted out especially in situations where the lives of vulnerable people receiving services are put at risk.

* I could write a book about this, but will close with the need for there to be more a sense of team. This means that the managers and their employees need to be on the same team. The people working different shifts need to be on the same team and realize that when they don't do their job, they aren't hurting some faceless entity, but their coworkers and the people they're suppose to deliver services to. And, there needs to be more of a sense of team when multiple agencies are involved in delivering services to a person or people. And, team means that there needs to be free communication between workers and volunteers at all levels and less of a sense of entitlement among managers, who sometimes become too impressed with their titles.

Sharon - I've found that local foundations like banks and companies, will NOT fund salaries, even if the salary is directly program- related.

For instance, I run the Barnaba Institute, a non-profit against modern-day slavery and sexual exploitation. Our outreach director and President work with victims of commercial sexual exploitation and trafficking. In the outreach program, working with this population requires countless hours of staff interaction in order to gain their trust and hopefully walk them along the path of escaping exploitation. This is a direct program cost because when can't just drop off brochures and basic living supplies and expect that this will do the job. BUT- many local foundations STILL won't cover this!!! They expect us to get this money from other fundraising initiatives.

SO that leads us to having fundraiser after fundraiser but by law, we're limited on the number of fundraisers we can hold (only 5 per year) so that means that we have to encourage volunteers to host their own fundraisers on our behalf which doesn't count toward the 5.

And as Trineka very well pointed out, managing volunteers is a job unto itself!

In my organization, we have about 20 active volunteers, 2 full time employees and 1 PT employee. We all manage some of the volunteers and when we get requests from nice people who want to volunteer, I have to be very strict and careful with whom we allow to directly work with us. Because volunteers- while essential and well-meaning - can be time wasters.

I know this sounds horrible and I do volunteering for 3 other organizations outside of work so I'm on the other side of it too - but it can be true.

In order to reduce the time drain, I tried to find a volunteer to coordinate volunteers but that didn't work and in fact, the woman was quite spiteful about it because she expected me to be there helping her every step of the way (while I have about 4 different full-time jobs to perform myself!)

What does work is to hold monthly volunteer meetings. That way you're not meeting with a bunch of people individually and the group meetings spur ideas that you wouldn't get otherwise. And its quite fun too. We have a lot of high school volunteers and they're great to work with.

Going back to foundations, I've found that national foundations are better at supporting salaries but you have to have a national-focused program or a pilot project that you're "testing" and will go national with after a testing period of several years. We've found this to be the best so far, but we haven't been able to get enough grants to sustain our current programs to their capacity, which leads to cutting salaries to below the poverty level so we can continue the programs.

Another issue with grants that I haven't see addressed in this post yet is that funders not only specify not to use the money for salary, but often times end up telling your non-profit how to change its programming to fit THEIR agenda. And this isn't friendly advice to better your organization, its downright bullying sometimes.

The reason I helped form a non-profit with three other individuals on our Board is because the federally-funded npo we came from basically gave the President an ultimatum (based on his advanced age and the potential danger of the work) without any regard for the fact that he was the founder and without regard for a Board's decision on the matter.

We were close to refusing the funding and restructuring, but that would have meant laying off several individuals and we couldn't bring ourselves to do that because they had families to care for. So we both left and started our own but it hasn't been remotely easy.

Julian, you bring up a good point about starting salaries. Can you expect to leave college without much working experience and make $50K, in a non-profit no less? Its tough to live on starting salaries in big cities especially, but I think that a starting salary at a non-profit weeds out folks who are only looking for high pay. High pay definitely does not always equal good performance. The solution really is finding a balancing between offering a decent standard of living of finding folks who are truly committed to the greater good.

But this brings us back to the fact that donors and foundations often don't even allow for decent wages, so there goes the cycle again.

This is a fantastic conversation. Thanks to everyone who's participated, regardless of where you fall in the debate.

One thing I'd caution against is placing too much stock in easy, emotionally gratifying but frankly, intellectually vacuous critiques. Saying that there is a "for profit" mentality that is driven by greed is about as simplistic as saying that anyone who works for a nonprofit is an idealist who doesn't understand how the real world works.

Both of those sentiments ring equally hollow, and frankly, I don't believe we have time for a debate that stays at that tone.

One of the things that I think is really productive about this conversation is that it's expanding on the question of salary to ask how to build a staffing experience.

One of the things that I've seen, to echo some of the points above, is that people are willing to deal with low pay, but it's the rot of bureaucracy, the pressure of the constant grant-to-grant life cycle, and the lack of professional development opportunities.

Do people have experience with nonprofits that do a particularly good job addressing these concerns and making the organization work well?

Thank you so much for this blog post. I started a job out of college for an international non-profit and made $25,000. I had to leave mostly because I was not willing to pay only my minimum payment for student loans every month and live in poverty. I relocated and earned $40,000 but cost of living for that area was much worse. I'm now trying to get a job aborad so that my cost of living is less and I can pay my loans off before they double. The financial stress affected my work and personal satisfaction and lead me to burnout after only 2 years! The worst though is that my family won't stop telling me to get a "real" job. I agree with Leigh that the work we value as a society is totally out of whack. I think employers should help pay for outstanding employees with student loan debt. I also think the government should reallocate some of their war money to help professionals, especially entry-level, pay off their student loans. Something needs to be done.

I agree with Nathaniel Whitmore regarding oversimplifying the so-called for profit and non-profit mentalities.

There are many in the for profit sector who improve their communities through their endeavors. There are such obvious examples as green entrepreneurs and less obvious examples as restaurants or garden centers who try to create art, rather than just trying to shell out mass produced pedestrian products.

And, there are many in the non-profit sector because of the pay, benefits and often easy work. Many have moved to the direct care field, because it pays better than being a home health aide. Plus, the benefits are better than many entry level positions, which in many small for profit enterprises simply don't exist.

And, while in an ideal world, residence counselors (to give one example) serving people with developmental disabilities would be good cooks, good at planning activities, safe drivers, good at documentation, good at maintaining relations with the public, and accurate and knowledgeable about medication, many are not good at many of these things, and some aren't good at any of these things.

One would think that given the poor economy and high unemployment rate that the HR departments of the agencies and managers of the group homes needing help would be selective regarding job applicants, but whether it's poor interviewing and/or training skills or a rush to fill a slot, poorly performing direct care workers continue to be hired, though many only become poorly performing after they have finished their probationary periods.

The cushy thing about many of these residential placements is that other than some laundry and cleaning (which often the residents have been trained to do as part of their chores) and transportation and administering medication, much of the time spent by group home staff is spent watching TV, sometimes with the residents, sometimes not. Often the residents are engaged with the TV or in their rooms, or another staff is with them, so the remaining staff can blab on their cell phones, watch TV on the office TV, read, play on the computer, pay their bills, and if nobody is watching or cares, sleep so they have the energy to work a second full time job. On outings, they get to eat with the residents in restaurants at agency expense and often the staff eat the house meal that the residents eat. And, if the management is lax, they may do their laundry at the house, or cook their own meals with the house food.

And, when the managers are away, they may go on personal errands, if the remaining staff will cover for them, especially in houses with residents that don't communicate well and/or don't know the rules.

This scenario exists, because there needs to be sufficient staff do deal with such emergencies as illnesses, fires, residents fighting, or residents running away that are unable to orient themselves in the community. When a staff member abandons their post to go on a personal errand, there is always a slight chance that such an emergency could occur, but the liklihood it that it won't, or the remaining staff will cover the situation and the next time the staff covering will be the ones playing hooky.

I could go on and on, but the bottom line is that there are many entry level staff earning in the $50K range through either working two jobs, or by getting substantial overtime. An 80 or 100 hour work week may sound like a lot, but it isn't when some of the time is spent sleeping, doing personal chores, watching TV and chatting on the phone.

This is the reality in many residential programs in many agencies that people don't want to talk about. However, there are also exceptionally hard working and caring people in the field and doing direct care in either a scattered site apartment setting, or in a group home with residents having many medical and/or behavioral needs can be quite a bit of work, though even in these situations, there are often staff members just "skating by."

I saw your post after I wrote mine Trineka and I applaud your outlook and wish there were more workers in the field like you. I am also an idealist regarding what I hope for, but try to be pragmatic regarding what to expect and am willing to tell it like it is regarding some of the abuses I've seen in various agencies on both the management and direct care ends.

I just wish that there was some easy way to separate the "chaff" from the wheat. The biggest problem is that management and/or HR is often part of the problem, rather than part of the solution.

Nathaniel, I can understand and appreciate that it is oversimplistic to say for profit is driven by greed and non profit is driven by ideals.  When I think about it I realize this you are correct and Andrew comes up with some great examples to back up your point.

Trineka your post on poverty was powerful and resounding.

I wonder if we have answered the question posed.  Do low non profit salaries drive young people to social enterprise?  I think the answer is that it depends on the young person.

I also want to add that non profits are free to begin for profit ventures as a way to support their missions.  An example of this would be a charity that invests in a franchise such as Dunkin Donuts in order to provide employment opportunities and training to the population it serves.  I'm not sure how this works tax wise and I'm sure it is a difficult undertaking that's not easy for most organizations.

While we may not have answered the question regarding whether low non-profit salaries drive young people elsewhere, many other good questions have been asked and it's clear from Trineka's posts that many other factors are driving potential workers away from the non-profits.

The most important reasons I've seen cited are poor management (or even worse mutual admiration societies in some agencies among the poor managers), agencies not living up to their mission statements, poor hiring practices, and poorly performing and unmotivated team members dragging down their teams.

While there is no cure I can envision for the money situation, there are solutions for the other issues, but they take hard work, training, and people in high positions willing to be humble.

Quality managers and recruiters are not born, they need to be trained. There are many good books and courses available on hiring, training and motivating workers, but often CEO's and managers become either too busy or too complacent with their titles and situations and fail to see as most for profits do that to be successful any enterprise needs to constantly improve.

Michele makes a good point and suggests a possible solution regarding enlisting the help of the Board members, who in many cases have these skills and the time and motivation. An additional motivaation for Board members is that they are legally responsible for much of what they sign off on, so this would give them better oversight regarding the agencies that they "oversee." However, this would require CEO's/ED's and senior managers to be willing to more frequently take a subordinate role to their Board members and be willing to accept more oversight and constructive criticism.

It all really comes down whether the ED's and senior managers can understand and accept that there is no "I" in team and that all parties would benefit, if their agency used all the resources at its disposal.

I had to take a moment from working all this weekend for oiww.org, where I am the Ex. Dir. (unpaid) to look up whether your whole article was a red herring or a straw man...and decided that it was a moot point. Out of 250 applications, I chose 23 unpaid interns and volunteers to work here  this summer, and we are all trying to get the work done, and they will be here for 3 months, and I will be here after that, and all of us are just trying to keep our orphans fed. And you are debating salaries to what end?
No one is stopping anyone from getting a paying job, and spending some of their salary on a social good. Or starting a for profit business and spending the proceeds anyway they like. Does this process require a special name? Social Entrepreneurship? Is this something new?
You will be judged on your effectiveness. And we don't care if you decide to quit your job and see if you can fundraise both your living expenses and a reasonably high percentage (80%) to the charity which is your professed work. However, and this is where the salaries come in, most people giving to a not for profit and taking a tax write off to boot, are not impressed if a huge percentage of your overall intake is being spent on just the staff of the org. This you, of course, understand.
So what is the debate here? Charities pay low salaries because they, from time to time, fail to achieve their financial goals and yet the human need continues, and the needs of those being served continue unabated... and now is a good example of the issue. Just because the US financial world collapsed, out kids still have to eat. So around here we ask for volunteers, work much harder and our founder, Jim Luce is back at a day job for as long as it takes to have our miniscule budget recover. What about not-for- profit work do you not understand? 
Our advice to all people wanting to work in the not for profit sector is: use your best skills in any sector, don't lean too hard on a NFP organization to support your lifestyle aspirations, and money is fungible...it flows just as easily from the profit and the not for profit world. Some of the most effective people we know have "regular" jobs and invest their donations directly into charitable work they understand.
We also tell people NOT to start their own 501 (c) (3), but to work for an existing one long enough to find out what the reality is in the world. This is because long time not for profits do have hard earned knowledge, which we share with those who want to learn. And lots do, and will work 3 months for zilch, which is all we have available this year.
And if next year is better, we will spend it on salaries overseas, on talented local workers who are working and learning right now... salary or not. If you are a US student, welcome to the real world. 

I agree that Linda makes an important point about how a life of commitment to social change/improvement doesn't require full time employment in the field. However, I've found in my experience that I can do more to effect change as a full time employee for a non-profit than when I was a volunteer and on the outside and sometimes given "busy work."

And, I am willing to forego a degree of compensation to work for an organization that has a meaningful mission that is backed by the commitment of the management and front line employees to this mission. But the degree of commitment and professionalism within an organization, can vary widely between departments and programs and change significantly over time. So, with so many worthy causes, compensation, commute, physical facility, financial stability of the organization and the opportunity to do the things that I do best are the factors I look at along with the history of the organization, department and program. 

As for the question whether for profit social enterprises can replace the current non-profit system, there are many questions that need to be answered regarding this before I'd be ready to sign on.

For instance wouldn't almost any for profit social enterprise need government funding just like the non-profits? And, would government fund them enough for them to make consistently large enough profits to attract investors or at least be financially stable? I feel that if these social enterprises became consistently successful enough, then government would cut the funding levels for various services, hence choking off the golden goose. 

Michele gives the example of a mixed enterprise where a social enterprise invests in a Dunkin Donuts to pay for program costs and I know that this is just a quickly thrown out hypothetical example, so forgive me Michele for picking on this example. 

Would the profit be enough? Would the employees of the organization be good at this new business and would this business take away the focus from the organization's mission? Would the people working at this Dunkin Donuts feel as if they were contributing to the agency's mission in the same way that the other workers are? Would this for profit fit in with the moral climate of the organization - for instance I work at an agency serving people with developmental disabilities, many who are on diet plans.

At the risk of stating what many know, recall that the non-profits gradually took over what charities (generally religiously based) once did and are still called "public charities." There isn't enough support from donations to support the vast majority of these causes. But, it would be socially irresponsible and morally reprehensible to abandon many of the people served by these "charities." 

I'm not saying that a new system couldn't be or won't be developed, and I'm very interested in any ideas regarding this, just that I'm going to try to make what exists work better until I see a more fleshed out alternative that appears viable.

Andrew, I read a case study about a non profit investing in a Dunkin Donuts franchise to provide job security and training to inmates who were re-entering the population which is why I offered up that example.  In the case of this non profit, the franchise failed and actually ended up costing the organization money until they closed it and returned to more traditional standards.

It was a bad example but it came to mind.  Another more successful example would be The Doe Fund of NYC.  Here's an excerpt from the organizations history page (found at http://www.doe.org/about/?aboutID=2).

"The program mirrored what society would ultimately expect of those who graduated. Trainees relinquished welfare benefits in favor of $5.50 per hour in wages, paid $65 per week toward their room and board, and put $30 per week in savings accounts. In return, they slept in comfortable beds in semi-private rooms, and ate healthy, hearty meals prepared by trainees who expressed interest in food preparation as a possible career. As the program developed, there were caseworkers on staff, nightly 12-step meetings, life skills classes, and certified teachers to help those who needed them earn high school equivalency diplomas or, in some cases, to learn to read and write. What George McDonald had known all along proved powerfully true: "Work works." By 1994, 90 formerly homeless and drug-addicted men had entered the legitimate workforce. They were staying clean, doing their jobs diligently and well, paying rent, saving money, repairing old relationships and forging new ones and looking to the future."

I can also think of another example that I'm not sure would work but it was an idea that a friend and I had discussed about opening a non profit restaurant or other business that provided employment and job training as well as eventual business ownership to those it served.  The idea was that those who it at one time served would be successful business owners and serving others in their community.  We thought the concept was a great one because it could rely on the donated time of local chef's (in the restaurant example) and create partnerships between local grocers, cooking schools and more.  We never took the idea any farther but I remember it was reading about the amazing work of The Doe Fund that had prompted the discussion.
 
Other smaller examples I can think of are The Girl Scouts and their income generating Girl Scout Cookies.  One way to not rely heavily on a grant by grant cycle would be for an organization to generate income.  The organization I'm with now just began a project that allows youth volunteers to create upcycled products that they sell to raise funds to increase their ability to participate in philanthropy.  I was actually surprised that the items they've been making are selling very well locally and has allowed our youth volunteers to feel like they have earned the ability to invest in the causes and/or take action on the causes that are important to them.

I'm beginning to see that for profit ventures have something to teach non profits about when it comes to sustainability with the low salaries of the non profit industry perhaps being a symptom of inherent instability.

Michele, I like the idea of businesses that help their organization's clients become more successful and where I live in Brewster, NY is the Delancey Street Movers (named after the street of the original such program in San Francisco) where people leaving prison learn a trade and the other skills needed to be successful in the community, much as your Doe Fund example does. And, in addition to the income generated by such enterprises (and there are no guarantees regarding this) the success rate among the clients participating in such ventures is much higher than those of similar clients in other organizations that use more traditional approaches.

Along this line of thinking, some at my program suggested building a greenhouse and having an organic farming operation and income generating farm stand at the sheltered workshop where I'm employed. And, there are similar agencies that have done this. But, we have zoning laws prohibiting this and while such enterprises do provide useful job training for the individuals involved, they can end up being money losers, which is why Putnam Arc recently closed its cafeteria operation after some significant outside patrons withdrew their steady patronage, due to their own state funding cutbacks.

I feel that such ventures should always be explored on a case by case basis, as they can be beneficial to both the bottom line of the organizations and the needs of the organization's participants. However, rarely are such ventures able to make the difference between an organization needing or not needed some degree of government support.

I was also simplistic when I implied that all non-profits need government support. There are many organizations whose primary mission is advocacy and education that don't need such support. And, there are examples of agencies that have morphed from being independent of government largess to needing it, such as at the Fortune Society of NY, NY. This started as an advocacy and self-help organization for people in prison or leaving prison. In order to pay salaries for the social services for ex-prisoners, they applied for, obtained, and eventually became dependent on government support. Not everyone at Fortune was happy with this, as along with government money also comes rigidly structured programs to qualify for the funding that may not meet the needs of those that are being served. For instance, there was an employment program where someone had to go through a four day workshop in order to get assistance in job hunting, whether or not the person needed such help. In addition, for work-release inmates, they generally weren't out for the entire four day period, so weren't eligible for the program. Another issue among the staff was that by accepting government money, there was the fear of biting the hand that feeds one by being too strident regarding advocacy on prison policy issues.

For profit? Non-profit? A blend? There are so many complexities in the field and so many differences in the people or other entities (ie ASPCA, Sierra Club) served, the local demographics and the political climate that the best we can do is learn from one another, have open minds and do whatever the team one is on feels works best for the mission.

"For profit? Non-profit? A blend? There are so many complexities in the field and so many differences in the people or other entities (ie ASPCA, Sierra Club) served, the local demographics and the political climate that the best we can do is learn from one another, have open minds and do whatever the team one is on feels works best for the mission."

I couldn't agree more!

This is interesting.  An example from New York City and the hunger / food security world:

There are 1,200 soup kitchens and food pantries in NYC alone.  The majority are run by churches and places of worship on a volunteer basis.  Their operations are heavily supported by the public sector, BUT only for money for food.  Staff and volunteer time are not considered viable for funding.

Someone mentioned the tension between doing well for doing good work.  I think this should be the reality, but there is something else a little more negligent and dangerous at play when entire sectors of society are under or unpaid.  Namely, using this example, if we paid all these people to do the work they do, which is to make sure New Yorkers don't starve (very essential work!), the city and state government would go broke on these programs.

The moral: In the case of providing very basic human needs, we have been suckered into believing not only that volunteers can foot the bill, but that super essential work is not worthy of pay AT ALL.  These are externalized, i.e. hidden, costs to feeding our nation.  This represents an extreme imbalance, which must be reversed.  This is yet another example to show why we need to re-think charity, and in a way, we have a lesson to learn from the for-profit sector: have the courage to demand compensation for your labor and be able to show results!

A fair food system is too exciting and necessary a goal to be shrouded in the bad economics of charity past.

The current failures of the independent living movement and many other social service related agencies  are hugely because of salaries and therefore hiring standards that have fallen far below market place standards.
On the surface more are employed to do more for less, but in  this mh agency there is a plan for mh clients to train for a couple weeks and become outreach workers. Then they are off to deal with the complicated needs of people who homeless with every sort of disability!  Is failure guaranteed. YUP!
I had a legal aide lawyer who knew nothing about hud or fair housing ada 504? HuH?I was discriminated against by a fair housing agency and 2 ilcs. What?One ilc housing advisor suggested i, homeless and multi disabled, hire a rental search agency!  She ,of course, knew nothing about other charitable support services.  
When people who cant get other jobs are the only ones applying, all the charitable and gov't dollars are wasted on failure.  It's not a vicious circle; it's a downwards spiral.
I know there are good people out there too, as i finally found one 1000 miles away to help do enough repairs to get my section8 voucher back and me in inaccessible - but housing in a good locale...and it was a battle because of my disability related issues/needs. 
I say it over and over -Systems can be broke, but not broken, if all the cogs are in good repair. Our systems are broken.
How do we document ,replace and repair, attract more qualified talent? 
INTERVIEW Those THAT ARE DOING IT and DOING IT WELL.Look at incentives other than pay - awards and public recognition of being of service to society.
Do not allow standards to be lowered to match pay even if the position remains vacant for sometime.
Develop and encourage paths back and forth from profit to non profit, highlighting transferability of skills and experiences, to begin.

Thought I would pop back regarding the ecosystem of nonprofit funding.  I just had an interesting Twitter exchange with a business consultant that gave me a lightbulb moment.

One thing I do not see very often is nonprofits selling the qualifications of their staff as a core part of the value of their organization to donors.  But companies do this all the time that have the same type of positions.

Here is the conversation:
 
I suggested to Twitters CEO that nonprofits should have donation buttons on their profiles so we can "change the world." Granted, it was an idealistic notion.  I received a quick reply from a business consultant "You think all it takes is donations??"

I tweeted back that I think that better funding for nonprofits would be a monster change. They are experts in their causes: scientists, doctors, etc.

He replied: "Experts in their causes yes but they need expertise in business, marketing & they need volunteers"

I agreed with his point on volunteers, but my reply was: The experts in the cause are touch points for value on which to build business goals. If they are underfunded, no value= collapse.

All nonprofit positions, whether it is an administrator, a medic, a suicide prevention hotline worker, or a biologist, they all hold the knowledge of the cause.  They are a core value. It is not like administrators work in a box- they have a deep understanding of the community they serve.  But nonprofits only sell their impact on the cause or the cause itself.

It just struck me as odd that we want better pay, yet we do not promote ourselves as assets in the public eye.

Kendra, You make a very good point about non-profits highlighting their values of and the expertise and works of their employee to attract donations and many do to some extent through their websites and newsletters and a few have marketing experts to help with this. However, the non-profits pale when compared with the efforts of for profit companies, which know they need to sell themselves in order to survive versus the non-profits, whose main focus continues to be finding the most profitable government funding streams and then doing the necessary documentation to access these funding streams and pass audit requirements.

However, while doing this many organizations lose sight of their primary mission, which is to live their mission statement and provide the client services they claim to aspire to and their most powerful marketing tool - word of mouth. And, many also forget their primary asset, which is their workers, and fail attract the best workers in their field and then develop and recognize a significant percentage of their workers in order to motivate them in a more meaningful way than a handful getting occasional low budget "best practices" awards and no salary increases.

One need to look no further than the list of salaries to see that the CFO is generally the second highest paid employee in a non-profit and that the director of HR is rarely in the top five. Another telling point is that the plum positions go to individuals whose expertise is in chasing these funding streams and developing the needed documentation, rather than developing more meaningful and popular programs and managing, developing and motivating staff.

I know that this is a lot to ask, but the people in the leadership positions in the organizations need to be mindful of all of these things, including finding profitable funding streams and meeting audit requirements, in order to be successful and day to day live their mission statement in order to provide an ongoing reason for their existence.

"We do not promote ourselves" . That is true, usually, but my OIWW interns work to actively promote each other when there is an active, current goal. For instance, Zoe is going to Tanzania to volunteer for Orphans International  for 12 weeks. Our other interns set up a Facebook cause for her and start spreading the word: 
"We want Zoe to get to Tanzania with enough spending money so she can respond to the needs she may encounter. She is ______, has ___ experience, is funny and smart. Donate $10. today... I expect all of my friends to do this.... Zoe is making a big sacrifice, you can make a small one.. "
These appeals usually work to some extent... especially with Zoe's family and friends and then with whatever her friends/friends are willing to do.  The combination of direct knowledge and direct donation hits the right spot.
For the general admin, I'm afraid we have no choice but to have events and parties to get the GROUP to be pressed to donate for us as an entity... but I know this is lame, very grass roots and unstable. But as an emotional construct of giving, this seems to be the way it must be presented to the donor. Direct appeal with a clear goal.

I forgot to add that the appeal cited, did indeed raise the expense money, traveling money and substantial money for buying 100's of malaria bed nets that she wanted available  as she was doing her work. Equal to a salary.
Young people do a good job of packaging their project goals and looking for funders who agree with them. The same must be done on a larger scale... 

I have to admit that I haven't read through all of the comments here, so I apologize if I've taken this too far off topic.

I'm a web master for a liberal arts college, and although the salary is not what I would earn if I found work in the commercial sector, I find the work very satisfying. That said, I'm also attending grad school, with zero tuition support from my employer.

I've often wondered whether I'll be able to make my student loan payments after graduation without finding another (better-paying) job. As luck would have it, I don't think I'll need to.

A new program called Public Service Loan Forgiveness may make it worthwhile for me and everyone else to continue working in the public service sector AND cover my education expenses. See http://www.ibrinfo.org

I really hope this information is of help to those of us who (to quote Good Magazine) "give a damn".

One of the things that frustrates me most about nonprofits that claim not the have enough cash to pay good salaries, is that they don't make up for it in perks and benefits for the most part!  For example, I'd be willing to take a pay cut in exchange for being able to telecommute and get comp time for travelling.  There are so many "free" perks nonprofits could give employees to help add to their quality of life.

Take the good paying job, then work for nonprofits as a volunteer. Donate some of your well-earned cash, and you become part of the solution.

A few thoughts:

I found Nicole Rhoads' information regarding the Public Service Loan Forgiveness program to be useful and shared this with friends and coworkers.

Kendra Kellogg makes a good point regarding potential donors looking at management's qualifications. And, many agencies do list their senior managers' educational achievements, years of service and notable accomplishments with their agency. Plus, many agencies use photo ops to advertise significant events, programs or achievements. But, none of this tells me if the managers of an agency are good trainers, innovators, motivators, staff developers, or really care about the day to day lives of their staff or the clients that they serve.

Often this is only seen in "the trenches" where the direct care staff are either "everyday heroes" or just slide by for their paychecks and benefits.

I feel that the workers who really care would be willing to work for less pay for an agency that has a lot of true everyday heros versus just a few photo opp ones. And, the direct care workers and clients of these program often know the difference and word does get around.

However, the top level managers, particularly in large organizations, may only see what the mid level managers wish for them to see, if they don't get out of their ivory towers frequently enough. I would encourage potential donors to look at both management credentials and achievements and investigate what goes on in the trenches by volunteering to see that their donation dollars go to the agencies that are serving both their staff and clients the best.

Our society is strange.  It is odd that it readily accepts that doing good things for humanity requires a high level of sacrifice. Should there not be balance built into society for those doing good things for it?  Naive sounding question, but answer it. 

Nonprofits have a symbiotic relationship with everyone. People in the for-profit world rely on nonprofits to make their lives better, even people with plenty of money. Nonprofits research their diseases, rescue them during natural disasters, keep their public beaches healthy, etc.

But our society is set up for a large gap of sacrifice in time or pay for us to do that job.  After thinking about all of this for about a week now, the "lowest overhead" competition by donors is a form of society's imbalance. It makes no sense really.        

All this talk about 'good employees' and 'excellence' is off-putting. We are not a Lake Woebegone community where everyone is above average. Jobs are jobs, even nonprofit idealistic jobs. Designed properly, managed well, work will produce excellent outcomes even with average people. Designed poorly, work will produce awful outcomes even with excellent people.

Kendra, since so much sanctity is held in the mission itself I think the entire value system is different than the for profit value system.  For example, it's the job of a publicly traded business to make a financial profit for their shareholders.  On the other hand, the goal of Amnesty International is to protect human rights.  What our society accepts and invests in comes down to our society's priorities and majorities.  This is why I keep saying I think the for profit industry should mimic the non profit industry rather than the opposite way around.  Not that I'm advocating that we all live in shacks and eat ramen's noodles, but I am saying that our society is currently based around things and what things we can own and this is an injustice to our humanity and not doing anything to increase our collective or individual happiness.

Charles, I think many non-profits begin as the passion and vision of one or a few people based upon a problem they see that they want to address or fix.  I would never hire an employee or a volunteer that believed their work was just a job or if I knew they were doing it for the money alone.  This is my personal stance, but I think you'll find the non-profit industry more insistent that their employees and volunteers share in their missions and the passion behind the organization.  If you're working towards a mission or goal with an organization, passion and belief in the mission or goal should com first with financial pay being secondary.  Of course, I don't intend to say that your pay should keep you just above the poverty line, but that it should be the secondary consideration for the ideal employee at least for me.

We agree.

I agree, too. There is an imbalance between the expectations for non-profits and for profits, due to their different reasons for existence. In general, the non-profits should get more in touch with their missions and the for profits need to become better citizens. And, more and more, the for profits do talk about how green they are, or how they are good corporate citizens and don't exploit labor.

But, I find it instructive to look beyond the words to the day to day practices. Virtually every non-profit has an inspirational mission statement. But, is the focus of the agency on chasing funding streams, billing and budgets, or on its staff and the development of meaningful programs and services for its clients? The first is necessary for a non-profit to survive, as non-profits can go bankrupt. But, the second is necessary for the agency to continue to have a reason for its existence.

In the for profit sector, I find it curious that as many companies tout their green policies, they are part of America's and planet's continuing attempts to forever expand unsustainable mass consumption among us Conehead consumers. And, as the companies speak being good global citizens, they increasingly outsource jobs and exploit the workers, sometimes children, in the poorer countries.

And, one need look no further than our own government to see Orwellian doublespeak. The documentary "War Made Easy" showed how every president for the past fifty years, Democrat and Republican, spoke about war as a last resort, but was nevertheless "forced" to war with the support and saber rattling of Congress and the so-called free press.

If I have strayed a bit afar, it's because all of these things are interconnected. I am an idealist, but I am not so starry eyed as to not see the dark side. Inspirational mission statements and socially responsible strategic plans are a good start for the non-profits and for profits, but they are only that. It is up to each of us who strives to be part of creating a better world to do our part to make it better in our day to day lives, while advocating for accountability and social responsibility from the rest of the world.