non profit

There are a lot of good and decent non-profits out there, but ...

I once had this powerful philosophy about how non-profits are the right way to get things done. And then .... lots happened. And I just learned more and more about specific non-profits and what they have done, how they were funded and mostly, about people making huge profits with a non-profit.

One day I was putting in another 14 hour day with my company "Banana Programming". Demand was high and I was connecting people to millions of other people through modems. Making the world a better place through communication. Some of my employees made more money than I did - but I had big vision and some day I might be able to take home more. So, on this one day a guy called me from a non-profit. He wanted my product for free. Plus he wanted me to do thousands of dollars of custom programming for free. And he wanted this just because he worked for a non-profit. "Support the cause" he said. Frankly his cause sounded really stupid. And it sounded like this non-profit had lots of employees and, to top it all off, I was really sure that every last person at the non-profit was paid. So the individuals profited.

How can they call it a non-profit?

The thing that really bugs me is that the general public treats a non-profit as some grand/glorious thing - far better than some guy with a business. The people within the non-profit point at the people working at for-profit organizations and call them money grubbers. When it has been my experinece that most people working for a non-profit get paid more than people working for a for-profit.

My impression is that within every non-profit, the people would not put their time in there unless they were getting paid.

So for the guy that wanted the free software: why should I work for free for a cause I think is weak when the guy won't even work there for free?

I suspect that i'm probably pissing a lot of people off. My position is probably a minority position. Are there any others that can validate my observations?

Can I start off with "it depends"?

I've volunteered and worked for various non-profits. I've written a bunch of grants for non-profits. All non-profits are not the same. And being a 501C3 does not mean you can't make a profit - in fact, you can have your tax exempt status removed after a certain period if you don't show a "profit" (ways that you are being self-supporting).

Young non-profits are mostly start out as volunteer efforts. Eventually, SOME people might get a little money. There are grants out there specifically geared towards young non-profits - usually the grantor defines this in some way (less than $100K revenue, less than $250K revenue, etc). Non-profits have certain tax filing requirements whereby you should be able to look them up and see the revenues and who's getting paid what.

More mature non-profits can be quite...profitable - at least for some people. A lot of times, there is a calculation done to compare the % money going towards programs and % money going to salary and capital funds. You can also find this information on places like Charity Navigator. Some non-profits are almost like "fronts" to (IMO) launder money through. I feel like this is most abused by some faith-based orgs and medical orgs. And the way most of these are set up, it is legal. Shady, but legal.

So it's hard to generalize.

Out of respect for the "Be nice" rule, I will just say I agree 1000% with what Paul said.

Joe Braxton wrote:Out of respect for the "Be nice" rule, I will just say I agree 1000% with what Paul said.

I'm with this guy ^^^

Non-profits are a total sham 99% of the time.

In my experience they are a sham 65% of the time.

Jennifer Wadsworth wrote:In my experience they are a sham 65% of the time.

Split the difference? If you go 82% on the 'sham-factor', I'm all in.

I have actually helped form a nonprofit a lot of hours, no pay, all money going to local causes/organizations. It all depends on how and what they are set up for. I think I might give it a 60:40 split bad v good.

Adam Klaus wrote: Split the difference? If you go 82% on the 'sham-factor', I'm all in.

Bargainer beware! I grew up hustling in arab suks!

Seriously though - I'm not a fan of absolutes - but I can appreciate that non-profits can be total shams in many cases. As can corporations..... Dell makes more money playing calls and puts on its stock than it does selling computers - HOW is this not "insider trading"?? just because they're playing with options instead of stocks themselves....

To be fair, it takes talented people to run big corporations, but:
http://www.charitywatch.org/hottopics/Top25.html

To be fair, it takes talented people to run non-profits too.

That list includes mostly medical and religious-funded groups - I'm not surprised they make this list.

Usually doctors run medical non-profits - and many expect to make what they would as a doctor plus some for the added headache of admin. One of my friends is a cardiologist (not a surgeon) - he pulled in over $600,000 per year. Heart surgeons make $1.2 million and up once they've been in practice for awhile. Non-profits with a huge religious base are extremely well-funded as well. (note, many small religious non-profits get by on shoestrings). Don't get me started on the NRA....

Uh oh. Paul - this forum is aptly named! I think I'm getting an ulcer!

Or it could be bad cheese...

I have worked for and been around a good deal of non-profits in my day. I really like the idea. But the reality seems to be that often their is an upper tear that makes a very comfortable living doing not much work while the people on the street making it happen volunteer their time. I think Paul has actually called this one pretty spot on. Its unfortunate because I believe that profit should not be the motivating factor in how one spends their efforts - but seeing the real world work distribution to pay in these organizations can be frustrating and even infuriating. The people getting payed are often not even very competent. Or they are competent at grant writing but not much else. That being said there are some non-profits that are in it totally wholeheartedly; My local Tilth organization comes to mind. I think the highest salary there is 80 dollars a month, which is basically an offset for gas and office supplies. Many non-profits also do beneficial work - but I still think that if the salaries went into the pot they'd do way more beneficial work. I would be somewhat skeptical and have to spend a good bit of time getting to know the ins and outs of any non-profit before working for one again. They do often do good - but it's not often the most good. IMO


Edit: I agree with what most people have said here - like so many things it depends on the organization and the individuals involved

It may be important to distinguish between a "charity" and non-profit.

Smaller & local is mostly better. I just sat in on the local library board meeting - only two people there were being paid, the librarian and me, the book keeper (it's a small stipend). The rest were just volunteers and they were doing their bit to help the community. There were some interesting discussions on censorship (the librarian doesn't monitor computer usage if as long as certain rules are followed) & on the value of being open during slow times.

I think they are an excellent example of a non-profit 501(c)3.

paul wheaton wrote:My position is probably a minority position. Are there any others that can validate my observations?

I don't suppose you've heard Jack Spriko rant about the Red Cross & Haiti? Pretty sure he'll validate your observations. When I mentioned "charities" in the above post, that's what I was thinking about.

Eeek y'all, this is ulcery indeed. I'm currently on the board of a really brilliant fantastic non profit that runs a summer camp for international understanding between children all over the world. Nobody is getting rich, not even close. Almost all the work is done by volunteers. There are loads and loads of small non profits that are like small businesses, not a sham at all. My husband works for a big non profit and their ratio of overhead to program is quite good, although it can't touch my awesome summer camp. They treat their employees better than most for profit business do, not that they pay a room off money but the benefits are good and the organization is supportive. There are huge scammy non profits out there yes but I wouldn't hazard a guess at the percentage. Buyer beware with your philanthropic dollar but don't throw the baby our with the bathwater either.

This thread has a lot of offhand opinion in it. I'd better go to bed. Grumble grumble.

Truly, there are many good non-profits out there doing a lot of good with their limited income.

However, it is the scammy ones that always seem to make it to the evening news. This taints our view.

It's my feeling (and to some extent based on my experience) that the lesser number of employed people in a non-profit and more the number of volunteers, the more credible and more focused it is to the cause. The moment more people get paid and employed for the cause, it starts losing the focus and intensity towards the cause and instead the focus slowly starts shifting to others things. That's one of the reasons why (so far) I have decided to stay a volunteer in some of the things that I do.

Let's say a prayer for all the For-profit businesses that end up with no profits . Non-profit unintentionally ! Been there . Anyway , I worked for a large non-profit hospital system in Phoenix . They were making quite a bit of money . The rules mandated they reinvested those "profits" into expanding their services . The employees were hoping they would expand some services in their direction such as a child day care center . There was a token effort at that . Most of the "profit" was reinvested into services which made alot more money and achieved larger bonuses for the top few . I thought it was a good company to work for . No complaints . It seems discerning For-profit and Non-profit at times involves splitting hairs . If they are going to compete with For-profit entities and act like For-profit entities then the playing field should be level . At least give the unprofitable For-profits some of the same breaks .

There are those that use it as a tax loophole and for marketing--just like adding adding "green" to a label. Very shady.

I have a friend of a friend. He works at a big company with a really good matching contribution charity program--the company will match up to $20k(!) of anything he gives to a 501c3. His wife is the only paid employee of a 501c3 they formed. They track all the time and expenses they donate to the charity. Completely legal. The cause is one she would work on anyway. She donates back almost all her pay. They are able to do a lot more good because of it. Between the matching funds and itemized deductions of the original donation and all the expenses, they have an extra 50k a year to do good. Is that shady? It isn't a secret, they cleared it with his company and good tax attorneys. I see this as similar to what Grant Schultz was talking about with .gov grants to build permaculture mainframe. Use the tools at your disposal in the best way possible. Yes it is a tool often used for evil, but it can be used for good. But you need to have the moral fiber to handle the tool correctly and not be corrupted by it.

..

I'm watching the Dan Pallotta vid above.

He's talking about the double standard in how we view compensating people who work for non profits.

So in the for-profit sector, the more value you produce the more money you can make. But we don't like non-profits to use money to incentivize people to produce more in social service. We have a visceral reaction to the idea that anyone would make very much money helping other people. Interesting that we DON'T have a visceral reaction to the notion of people who make a lot of money NOT helping other people. You want to make 50 million dollars selling violent video games - go for it! - we'll put you on the cover of Wired magazine.

This whole argument about profit/non-profit reminds me of the mindset many people have around permaculture. Permaculture is promoted as this awesome thing that can provide for our needs while simultaneously healing the planet. People get torqued when someone ACTUALLY MAKES MONEY off permaculture. WTF??? People badmouth Paul, Geoff, Sepp etc. for being successful doing what they love and helping a bunch of people at the same time. Yet many (most?) of these same people are totally hooked into the consumerist system and can barely get off their butts to go plant a tree or open their wallet to support someone else's work.

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And to a different point - I do a lot of volunteer work for both non-profits and for-profits. It is my choice and I take responsibility for that. I also live at 160% of the federal poverty rate being on disability - and I live alone - there is no "other" income. Disability sucks. Both the rules of disability and my own physical limitations impact the "work" that I can do. Somehow this often makes my work efforts seem less "worthy" to others. This is a major complaint of volunteers and often why there is so much attrition in volunteer organizations. It's hard to get work done by relying on volunteers - there is often little incentive. In some cases there is NO incentive.

Case in point. in 2008 I was responsible for moving our local permaculture group from a yahoo list (total people 267, 12 classes/tours per year) to a Ning-based social media site. Over the next 8 months, I sat on that site and made sure it grew and succeeded and content was added etc. When I left that org 8 months later, we had over 1700 members and had offered 120 classes/tours. For the first time ever, the org had an income. The support I got from the founder? He repeatedly told me that how much he didn't like the Ning site (the org still uses this today - they have almost 6000 people - not bad for a local org). He complained about buying more chairs for the (free) classroom space I negotiated because our classes were attracting so many people. And on and on - he got the profit and the "glory" and I walked away. He was fired by the board from his own org about a year later.

I'm not saying I want glory from my volunteer efforts but to receive no pay and have someone totally disregard your efforts - efforts that clearly made a difference to that org - what sane person would endure that? I endured it as long as I did because I believed in the cause and what I did mattered to 1700 people.

Compare this to the "meaningless drivel" work I did as a systems analyst for a Fortune 500 company prior to having to take disability. I was very well compensated for helping this huge organization make even more money - my boss and I developed a financial analysis tool that was patented by this company and which every project they run still uses to this day. I was incentivized and applauded for....I'm not even sure what. I was "valued" in a way I could take to the bank. And I was, in many ways, "spiritually vacant" doing this work. (which is why I volunteered at the same time).

Meh....an ulcer is clearly forming......I talked myself into a sore spot.

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Edit: No - this post is not intended to be interpreted as "Jen feels unappreciated on permies" - I was speaking to past experiences.

In fact, I want to thank Paul for mentioning the posts I wanted to call attention to in the Daily-ish. And.... in an effort to spread permies.com love, I might at some point ask for a donation of a deck of cards to incentivize the folks at that same site mentioned above to become Permies members - if that's something that is of interest. I am already posting the book give-aways there and mentioning permies in some posts.... I intend to re-establish my connection to this group now that the ick factor is gone from it.

Also - the Watershed Restoration project was funded today! THANK YOU.

This whole argument about profit/non-profit reminds me of the mindset many people have around permaculture. Permaculture is promoted as this awesome thing that can provide for our needs while simultaneously healing the planet. People get torqued when someone ACTUALLY MAKES MONEY off permaculture

Thanks Jennifer! You said what I meant in my head. I think I was feeling grumpy already when I first read this thread because all the talk about chickens in another thread was making me despair a little of ever being able to put my chicken vision into place without spending a lot of money and having my chickens eaten by predators anyway. Sigh.

paul wheaton wrote:

My impression is that within every non-profit, the people would not put their time in there unless they were getting paid.

This is the big criticism lobbed at permaculture all the time. Along the lines of "If what they're doing is so good why do they want to get paid for it?"
My husband is the sole paid employee in our state of a big national nonprofit. Volunteers put in a lot of hours doing all sorts of things, but he has to help coordinate them. He fields a mountain of emails. He writes legislation and very importantly he lobbies lawmakers for good laws and against bad ones. "Lobbyist" has a negative connotation in our country, somewhere below "lawyer". Many people don't realize that some lobbyists are decent human beings representing human beings and not evil corporate/corrupt union interests. He is a farmer who dresses in a suit and goes off to the city to talk to politicians to advocate for things like public transit, small scale sustainable agriculture, walkable bikable communities, renewable energy, etc. He keeps track of where road construction is coming up and leaves his family at home some evenings to go to town council meetings in town after town to advocate for smart development that is safe for pedestrians, bicycles and public transit riders. Many folks support the idea of this work but how many of them take days during the week to go to the dang city and wait around in conference rooms in the state house to make testimony? How many people go out to town and city council meetings and wait around for line items to come up? He would rather be at home doing the good work we have to do here on the farm or reading bedtime stories to the kids. If someone is going to do this work, it's ok for members of a non profit to donate money so that he can get paid to do the footwork.

He would certainly do some advocacy if he were not paid, I do advocacy on things and I am not paid, plenty of people do, but realistically, if nonprofits didn't hire people to do this stuff, almost the only people advocating in these arenas would be paid by big business. It would not be good.

Rule by committee doesn't always work out. It can take days to agree on the simplest things.

A non-profit ....

I work for a nationwide Christian Non-Profit right now. Last year I was getting into the elevator and some guy from upper management out-of-state slipped into the elevator with me. Nice guy. He started up a conversation "So, do you like working for this company?" Me - "Yes, pretty nice bunch." He :"It's a non-profit too , so that's a plus" Me: "I'm all for profit". He: "Oh". Luckily for me the door opened up before I said "And I'm all for the Flying Spaghetti Monster too."

Health care is unusual in that payment is determined by the largest "customers" - which are private insurance companies, or public Medicare/Medicaid. For-profit and non-profit receive the same payment for services per patient. Those folks successful in life enough to pay privately are stuck paying the same rates as the insurers. The fees are manipulated by the providers in a way that they try to recoup losses incurred through being underpaid for one service by hiking the cost of others. So, private customers often do not receive accurate billing for that particular service. For instance , outpatient M.R.I.s pay for nursing labor costs in the extended care unit. The infamous $6 Tylenol.
Taxpayers provide the funding for the public insurers . The public insurers keep cost down {supposedly} by keeping a ceiling on payments. Yet they are cumbersome top heavy systems that rely on taxes to cover the cost of their intrinsic inefficiencies. Subsidies, taxation, regulations, cost manipulation all effect the accuracy of information which is price.
In a system like this it is hard to imagine a way to determine the superiority of for-profit vs. non-profit.

- And then there are the two ladies with non-profit experience who have opened up a for profit Middleman supply service getting Solar lights , Crank Radios and other
much needed items to little Brick and Mortar Mom and Pop shops in the back corners of India, They find that the local business man can better judge what his local
people need and value Essmartglobal.com

http://globalchallenge.mit.edu/teams/view/240


Giving it away meant the locals didn't appreciate its value, or Look to get the item fixed when it broke, now there are repair shops and local people making good money,
This is much closer to From the bottom up than from the top down- It must be- IT WORKS !

Big AL

What do you call a For-Profit company that does huge things in a specific community because it lives and works in that community and wants to see it be better in every way imaginable?

Yeah, they make some money (they don't seem to be any richer than the office worker next door) and it seems that making money is not their only mission. You can talk to the people and they are credible and honest about what they do and where they would like to go and what they would like to see happen and it's something you can really get behind. But you can't donate money to them, because you have to buy things from them (because obviously they're a For-Profit), even if you really like what they're doing. Ho hum, maybe eventually the market dips and they go under and the community is lesser because of it.

Anyway, I think it might be helpful to draw a line between poor non-profits struggling to get buy and running on a shoestring budget with all volunteers (I know of a few) and the NON-profits with huge budgets, administrators riding around in BMW's, getting cozy with the opposition (I could name a few of those too). Not really the same animal.

I tried to go the route of a shoestring non-profit and it didn't work. Now I'm going the route of a shoestring for profit. It's working better. The mission is pretty much the same.

William

I have found the term "non profit" to be analogous to the term "organic". Both terms have been taken up by corporations for the intention of presenting a façade to the general public who are ignorant to how things work behind the scenes, and have been conditioned to react positively to these labels.

These corporations technically adhere to the current requirements that permit the use of the word, but do not uphold the original spirit and intent that the word represents in the public conciousness. It is a deception even if it is legal.

That said, both labels are also applied by many organisations in the true sense. It's really up to the individual to do their own homework, which we all know most people would rather literally die a slow painful death than take responsibility in this way.

I'm of the same opinion as Paul when he talks about abandoning the organic label all together because legit organisations unintentionally propagate the lie, and I would apply it to non profits as well.

I seriously don't see why a legit non profit organisation can't run equally well as a for profit company, and disperse a large percentage of their profits in charitable ways. It's far more transparent, and as a result most likely superior from a PR point of view.