A follow up to the question that your firm is looking to answer: “Does moving to a model that emphasizes community impact increase funding?”

The answer at United Way of America is YES!

United Way of America has been leading a charge for the roughly 1300 United Ways in the US to move from a community chest business model to a community impact model. Instead of taking corporate workplace campaign money and directing it to good organizations, United Way is now in the business of trying to identify the problem, create a theory of change and strategies around a solution, and measure impact.

Not all 1300 United Ways are shifting their business models, and so we have data on organizations that have chosen to implement a community impact model, and those who have not. Those who have chosen community impact raise 10-20 percent more than those who have not when compared to a common starting points.

I hope this provides evidence that moving to an impact model is supplying the product (impact) that the market (donors) want, adds value, and so increases revenue.

http://thenonprofitlife.wordpress.com/

What I am hearing in the underlying conversation is that there needs to be a societal shift either towards clearly understanding the difference between Needs and Wants and then supporting the Needs before the Wants. OR recognizing that North American culture and society is based upon consummerism (therefore Wants) and so non-profit organizations should be paying their employees based upon that mindset, whether or not the staff value the pay.
What we are seeing here in the midst of the oil boom and labour shortage of Alberta are companies and charities looking at other ways of compensation aside from pay. What the charitable sector has been doing for a long time because they couldn’t afford to pay the corporate salaries. In fact, (I believe Jim Collins touches on this in his book Good to Great for the Social Sector), businesses could learn a lot from the charities in employee benefit and compensation packages because they have had to be creative in showing value and attracting/retaining employees.

All the best,
Gena

I still agree that passionate employees are best. I’m just not sure that systematically underpaying your employees is a good way to attract passionate people.

I completely agree with you, I think it is very appropriate to pay well and offer bonuses (although they will never participate in an IPO/public-stock-market type payday).

However, my point is that I think the most passionate NFP employees might not take the money. It’s not the donors demanding it of them, it’s them demanding it of themselves. I’m not sure the CEO of our local humane society would take the bonus. I think he’d tell us to put the $100k into building some new dog enclosure or buying kibble. And that’s exactly the passion we want running the organization, as long as financial issues wouldn’t drive him to quit.

–David, San Diego SVP

Speaking of “big upside”, would that be so bad? What if the humane society offered a $100k bonus to the executive if they could double the number of animals saved? If they did it, would you really feel like they didn’t earn the money?

Great article, and I certainly agree. I asked a few local high-net-worth business leaders and philanthropists why they tend to pay at or above market rates in their businesses, on the belief that better people make for a more successful business, but why they don’t like to donate to non-profits with a high payroll. They didn’t really have an answer, just a sense that these people are playing with other people’s money and it’s hard to justify any outlandish pay. That said, there does seem to be a gray area between market-rate pay and too much. For instance, should the head of a $250MM non-profit be able to make $500k? That’s not outrageous for market rates, and there’s no big upside paydays, but it seems like a lot.

On the other hand, I’m wondering if one reason for this dichotomy is that we both expect and demand non-profit people to have extraordinary passion. And when you have that passion, you tend to put the success of your services ahead of your own salary. If you ran a humane society and loved animals and had a huge passion for the business, you might want to keep your salary as low as possible to save more dogs and cats. And that’s exactly who I’d want running that organization.

–David, San Diego SVP

Who are the best people? They aren’t neccessarily the ones at the ivy league career fair- what do they know about working with oppressed communities? I’ve heard countless stories where TFA teachers cry in front of their students because they can’t handle them, or because the experience is not matching their ideals of being a savior to poor black and brown children. Will greater pay make them better teachers? Probably not.

In my opinion, the “best” people are usually the people who already view the typically nonprofit salary as more pay than they ever made working at say, McDonalds. 6 figures is beyond imagination. Making $40,000 at a non profit with health benefits in an environment where they are respected and challenged is a dream job to a lot of people.

Why should nonprofits conform more to the corporate model, when corporations are the main source of the problems non profits were created to solve in the first place?

I would reccommend reading The Revolution Will not be Funded, an anthology by Incite! Women of Color Against Violence.

The first one is probably because I’m young and I/my peers aren’t yet looking at the top jobs, but I’m less concerned about salaries than I am about benefits and being able to hire people into full-time positions. Part of what makes attracting and retaining talent so hard and part of why there are concerns about the leadership pipeline in the sector is that the entry-level jobs pay little and are often part-time. I seem to see, on job boards, an endless stream of entry-level opportunities where you work 20-30 hours a week, at nonprofit hourly rates, and with no benefits. Who can afford to do that? If you have to support yourself (let alone a family), working 30 hours a week with no benefits just won’t do it. You almost have to be a student looking to supplement your income or a secondary household income to take such a job. I’d love to see change in this area.

I also can never decide whether programs like Americorps and even Teach for America work against us publicly on this cause. They tend to suggest that nonprofit/service work is a higher calling and that you discharge your duty with a few years of work. Thus the monetary sacrifice is seen as acceptable, because — after your stint with TFA or Americorps — you can translate the experience into a livable government or private sector salary. Public service is a temporary “life experience” for young people but not a career.

We could, too, get into a more academic argument about the subtle sexism of it. How the predominance of women in a sector (just like in teaching) tends to drive down wages and that there is a stereotype of nonprofit work as secondary incomes that don’t have to support a family.

All of which is to say that I think the forces driving this are complicated, but that we need some real change – especially at the bottom of the totem pole. Just some thoughts.

Andrea, this is something that I do for my client as well. I would be happy to share some of the resources that I use in evaluating impact (some of which are posted on my site – http://www.dexterityconsulting.ca).

Gena

Keep up the your great work!

Your last paragraph is an honorable charge to the foundation and nonprofit leaders of the world. If there was a university of philanthropic management, you would be the commencement speaker.

You issue the charge that “just as businesses turn investment dollars into profit, non-profits turn philanthropic dollars into social impact,” and my question is, who is measuring social impact and how are they doing so? Who are the current innovators and what can we learn from them?

The trend is clear: philanthropists want to give to organizations that are maximizing social impact, and performance measures are necessary. Yet it has been surprisingly difficult to find examples of anyone engaging in a systematic approach to collecting data on performance measures. No doubt the financial costs are prohibitive, but aren’t the potential returns worth it?

Our boutique management consulting firm is currently testing a theory that the mission statement of a nonprofit organization, if tangibly fulfilled, would bring not only positive social impact, but also increased funding and recruiting benefits. If I can look at a nonprofit and see data on how it is quantitatively and qualitatively fulfilling its mission statement—which usually includes something about effecting positive change in society—I will want to give financial support or, as a nonprofit professional, work at the organization that is realizing concrete results!

We developed (and are in the constant process of refining) a simple framework to test for measurable outcomes we would expect to see in service beneficiaries if a client was delivering on its mission statement. We’re learning a lot through the process, and it would be interesting to know if anyone else is doing something similar.

Thank you for giving us a great charge to go out and find the answers. And for those seeking the answers, may we work together to find them!

Andrea

Great article. Would love to see this happen one day.

P.S. Would love some feedback from you with the link I provided. We just launched a few months ago.

But that being said, my main point is that common sense suggests that if we pay people less for working in the nonprofit section we 1) will attract lower quality workers and 2) will achieve less good per dollar donated than if we invested in higher salaries.

Big thought though, for all who labor in the vineyards of equitable pay.

The most likely scenerio coming down the pike is not nonprofit folks getting paid more, but (as white collar jobs leave the US) more and more folks getting paid less. Maybe…just maybe, our task is to show folks that it’s actually not so bad down here–and that there are many other ways to measure meaning and your worth than how much you make.

Don’t get me wrong–I dig your argument, and would back you up all the way…I’m just trying to be realistic, given the economic rumblings that growing louder everyday.

In the meantime—I don’t think it’s implausible for nonprofits to start to pay folks more. At DCCK, we start everyone at $12 with full bennies and family leave. It’s hard work to come up with that kind of scratch, but we also push donors to understand that’s what it takes. More of us who can need to push back when donors (or politicians) make the flimsy case that we can’t or shouldn’t….but that also speaks to our current “leadership” within the sector.

And that, my Bruther is another op-ed.

Keep it rolling Sean!!!

RE