Should fundraisers get rich?

You Should Be Able to Get Rich in Charity. That’s about all you need to know about Dan Pallotta’s recent post at his HBR Blog. Dan says we’re not really using the incentive of money to solve the world’s problems:

There should be no limit to the amount of money a person can earn making the world a better place, so long as the money is commensurate with the value they produce.

I mostly agree with Dan. We should pay effective people in nonprofits salaries that are at least in the competitive ballpark with the for-profit world. The best people are well worth paying for, and we urgently need the best people.

But he’s missing a couple of important things:


  • There are other form of richness than having lots of money. In fact, most other forms of richness are better, deeper, stronger, and more lasting than money ever will be. People in nonprofits tend to know this better than people in the business world.

    The soulish compensation of changing the world really kicks butt over monetary compensation. I’ve worked at companies that are all about money, and it sucks. Bringing that kind of culture into the nonprofit world would be a tragedy.

  • Setting out to get rich isn’t a good way to succeed. This is true not only in the nonprofit world, but everywhere. The best of most sure way to be a great success is to serve very well. If you know whom you’re serving and how, and you’re very good at it, you will do well in any setting. You might even get rich. If your goal is to get rich, you’ll have a tendency to short-cut the stuff you really need to do to succeed.

    The last thing we need in nonprofits is small-minded get-rich types. We need great servants, rich or not.

I wish nonprofits paid their best people a lot more. I also wish they’d get better at letting go their incompetent people.

But a focus on getting rich won’t get us where we need to go.


Comments

8 responses to “Should fundraisers get rich?”

  1. I read Palotta’s column, too, and I think he’s 100% wrong. Nonprofits enjoy a special status because they – and their employees – aren’t supposed to be led by the profit motive. That’s why it’s generally taboo for fundraisers to work on commission, for example. I have no problem with people seeking wealth in the for-profit sector. That’s why it’s called for-profit!
    I think your point about non-monetary forms of wealth is well-made. However, Palotta’s error isn’t just in failing to recognize alternate forms of wealth. He argues that if someone produces $1 billion in value, it’s all right to pay him/her $1 million.
    The problem is that this isn’t how most compensation’s set. Instead, it’s based on how much other professionals are paid in similar jobs. This encourages higher and higher salaries to lure good candidates, without a connection to their underlying value (or a specious connection derived from their “executive” title).
    The result is public outrage when nonprofit leaders get large salaries. If a for-profit decides to pay its CEO $1 million (or $100 million), fine. But people want a clearer link between the pay of nonprofit executives and the difference they personally make, before assuming that such pay is a fitting use of charitable dollars.

  2. I read Palotta’s column, too, and I think he’s 100% wrong. Nonprofits enjoy a special status because they – and their employees – aren’t supposed to be led by the profit motive. That’s why it’s generally taboo for fundraisers to work on commission, for example. I have no problem with people seeking wealth in the for-profit sector. That’s why it’s called for-profit!
    I think your point about non-monetary forms of wealth is well-made. However, Palotta’s error isn’t just in failing to recognize alternate forms of wealth. He argues that if someone produces $1 billion in value, it’s all right to pay him/her $1 million.
    The problem is that this isn’t how most compensation’s set. Instead, it’s based on how much other professionals are paid in similar jobs. This encourages higher and higher salaries to lure good candidates, without a connection to their underlying value (or a specious connection derived from their “executive” title).
    The result is public outrage when nonprofit leaders get large salaries. If a for-profit decides to pay its CEO $1 million (or $100 million), fine. But people want a clearer link between the pay of nonprofit executives and the difference they personally make, before assuming that such pay is a fitting use of charitable dollars.

  3. “I wish nonprofits paid their best people a lot more. I also wish they’d get better at letting go their incompetent people.”
    Amen, brother.

  4. “I wish nonprofits paid their best people a lot more. I also wish they’d get better at letting go their incompetent people.”
    Amen, brother.

  5. Jeff Imparato Avatar
    Jeff Imparato

    With the transparency of nonprofits so apparent through the 990s, it would be foolish for salaries to be excessive, if we are going to then turn around and ask for donations. Not only administrative expenses of less than 20% expected, they should be required by their governing body. The majority of the monies donated should go to serve the people for whom the nonprofit exists.

  6. Jeff Imparato Avatar
    Jeff Imparato

    With the transparency of nonprofits so apparent through the 990s, it would be foolish for salaries to be excessive, if we are going to then turn around and ask for donations. Not only administrative expenses of less than 20% expected, they should be required by their governing body. The majority of the monies donated should go to serve the people for whom the nonprofit exists.

  7. I rue the way folks debate this issue as though the decision were between paying Hedge Fund salaries and dish washers (sorry scrubbers – had to pick someone). The truth is that the non-profit sector is hamstrung by the evangelists of “every dollar not spent on the narrow definition of program service is a dollar wasted”-ism. The impact of Charity Navigator is going to take a generation to unravel.
    In the meantime, until NGOs are able to pay salaries on which you can raise a family, live in a place like NYC, or generally participate in society, it will remain the catch all for trust fund kids, only the most deeply committed, and those who do not realize they could earn more elsewhere.
    We don’t want hedge fun salaries, but it might be nice to buy a house one day.

  8. I rue the way folks debate this issue as though the decision were between paying Hedge Fund salaries and dish washers (sorry scrubbers – had to pick someone). The truth is that the non-profit sector is hamstrung by the evangelists of “every dollar not spent on the narrow definition of program service is a dollar wasted”-ism. The impact of Charity Navigator is going to take a generation to unravel.
    In the meantime, until NGOs are able to pay salaries on which you can raise a family, live in a place like NYC, or generally participate in society, it will remain the catch all for trust fund kids, only the most deeply committed, and those who do not realize they could earn more elsewhere.
    We don’t want hedge fun salaries, but it might be nice to buy a house one day.

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The future of fundraising is not about social media, online video, or SEM. It’s not about any technology, medium, or technique. It’s about donors. If you need to raise funds from donors, you need to study them, respect them, and build everything you do around them. And the future? It’s already here. More.

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Jeff Brooks has been serving the nonprofit community for more than 30 years and blogging about it since 2005. He considers fundraising the most noble of pursuits and hopes you’ll join him in that opinion. You can reach him at jeff [at] jeff-brooks [dot] com.

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