In terms of finances, the real money is in fundraising. From the perspective of the charity, spending $999 on fundraising to raise $1000 dollars in donations is a net positive and huge amounts of money are "wasted" on fundraising efforts. If you want a lucrative career in the industry, being a freelance fundraising consultant is definitely the way to go. You can ask for nearly as much as you can raise and you get none of the scrutiny the CEOs get.
If I ran a charity and had an exclusive choice to either spend $X to raise $Y or spend ($X + $0.99M) to raise ($Y + $1.00M), why wouldn't I choose the latter, assuming the charity has a use for the additional net $10K?
Having friends working in charities, it was eye-opening to see the divide between "development" and "programming" in charities. Development (fundraising) rarely struggled for money, so long as they could show a positive RoI. Programming (the actual, intended work of the charity) got whatever was left over, but that seems like the natural and intended way to run a charity.
For what it's worth I also tend to avoid products that seem to spend a lot on advertising.
If you instead kept that $100 to spend on yourself, you would give the government $40 and you could spend $60.
In the case you give it to charity, the development/executive staff pays income taxes on that $90, so if their marginal rate is the same as yours (assuming they're highly paid), they pay $36 in taxes, have $54 to spend, and $10 goes to programming. If it goes to staff paid under $147K, they pay their (lower) marginal rate on it, but the full 15.3% amount for Social Security and Medicare is paid on those funds.
It seems like the government is only out ~$4 ($40 less from you; $36 more from someone else), with ~$10 available for programs.
(The largest loss is that you lost $60 of spending power in exchange for only $10 in programming while development staff got an extra $54 of spending power. You lose way more than the government loses.)
The common criticism of this hangs on how elastic the supply of donor dollars are. If you spend $1M to divert funds from another charity to yours, then the system overall is worse off.
This isn't a perfect model because donor dollars are not fixed, and all charities are not equivalent. reality lies somewhere in-between.
That said, it is all pretty irrelevant because there are lots of groups that evaluate charities on their overhead to benefit, so it is pretty easy to find one with low overhead if that is a concern.
Everyone wants to donate to program work, but never to operations.
Even grants that carve out for operations aren’t always realistic.
Major gifts is one of the best ways to get unrestricted donor funds.
You can get a lot of information from the 990 filing of an organization.
In other comments, I agree that in many non profit organizations there are people who might not last in for profit.
Most of those people however are working in roles that are $30,000 , maybe $40,000 a year and there wouldn’t be someone in for profit who would take that role, for that amount of pay.
Overwork and burnout in the field is very real.
Unrelated to that staffing, I would again go back to operational expenses - rent, electricity, payroll etc. Depending on the nonprofit, this may be a huge percentage… but if you have an organization that has a $250,000 a year revenue, two staff to accomplish what their mission is…. What actually goes to program work might be very little.
I just know that im not interested if I see a non-profit with 50% marketing expenses, 30% in other operational expenses, and passes through 20% to the beneficiaries (e.g. medical supplies, research grants, or whatever the stated purpose is).
I would call that high overhead.
This sounds extreme, but some large non-profits actually have numbers like this.
And here’s the weird philanthropic angle: as an NGO head you only get access to the government cash spigot if you can show “co-finance”, typically private, which will 3x a philanthropist’s funding and give them huge power in resource allocation.
Now that he's died, it might not be the same though
The Effective Altruism movement aims to direct money towards these activities with maximum impact. But to do this they actually need charities to collect data to measure their impact, which I guess may require some degree of professionalism.
Working with many non-profits, they're very careful to keep expenses below a certain percentage of their donations. Otherwise sites likes these cause them to lose donations.
Unfortunately this results in low salaries for employees which means the employees gain skills but can't afford to keep working there. The non-profit loses talent they helped build.
I know of some non-profits who have gotten around this by creating a 2nd non-profit where they receive donations just for business & administrative costs. Than use their 1st non-profit to say 100% of donations goes to our causes.
In reality, you should get to know your non-profits. Volunteer & help them out. Then you'll have a better understanding of how they use their money. Sometimes those high administrative costs result in a lot of value being achieved, even if the percentages don't look great.
Personally I'm a huge fan of a lot of community non-profits like local YMCA's if anyone is looking for a good place to start. I also tend to work with other small, local non-profits.
I think one ends up down a deep rabbit hole comparing different non-profits. In the end I think you need to find a mission you care about & a group that you believe does it well. I think the most important thing is that you are invested in the non-profit.
A local YMCA can provide very cheap after school child care & activities that keep kids safe, out of trouble, maybe a small meal & allows their parents to work. This can end up having very huge benefits directly & indirectly in the community.
GiveWell shows a lot of cost effective ways to distribute things like medicine & safety items. Plenty of awesome non-profits there.
I work with some small non-profits that pick & fund specific research at universities on childhood cancer.
I'm not sure how you compare different non-profits like that. Especially if you want to see the impact they have over N years, how that impact is spread or if some other larger issue needs to be addressed that's making a non-profits work pointless. GiveWell itself says it doesn't try to be a charity evaluator. They try to find a small number of really good donation opportunities for people.
There are an awful lot of rubbish charities but there are at least a few worthwhile ones so it’s not an excuse for not donating.
Surely you can see that "get the best person you can for $40k" has limitations as a hiring strategy.
I don't have anything against a non-profit CEO paying themselves well if they also pay their employees well. Many do not, with some unspoken culture of employees needing to accept meager compensation so that resources can be directed toward the core mission whose objectives are fluid and progress often difficult to measure.
A charity that just passes money straight through by sending envelopes full of cash to a war torn country is much worse than one that spends a ton of money on analyzing first what the most effective way to help is.
The lower down payed employees get the "you don't get much but you work for a charity" speech and get abused as much as the volunteers.
Let the CEO do it out of charity and take a 1$ salary and see if it all goes to hell. I very much doubt it.
No it’s not, the charity status is a massive burden and it’s about the stupidest thing you can do if you’re forming a corporation with the intent to make money.
> the most work is done by volunteers
No, that’s not true. Much of the work is done by the suppliers charities buy supplies from and employees of the charity. Doctors get paid in Doctors Without Borders.
> Let the CEO do it out of charity and take a 1$ salary and see if it all goes to hell. I very much doubt it.
This is just the standard ignorant “I don’t think CEOs do anything” view dressed up in a comment about charities.
High pay bringing high competence and passion seems a rather poor assumption.
And it is. Most free software projects never go anywhere. Those that do commonly have UI/UX that is far inferior to most consumer software produced for people willing to pay for it. The extreme right tail of open source software is great and most people who work on it are paid to do so. If you want reliability and quality paying for it works a lot better than hoping for people to do so uncompensated.
Is it unreasonable for a charity CEO to merely be paid a bit closer to the median for their kind of work?
Otherwise the FSFE when it's an option in Europe since their Public Money, Public Code campaign is great.
Have you ever seen a corporate marketing department?