The video I linked to my post last week of Dan Pollota is one that I have seen many times. I have seen it in multiple classes and before that, I saw it on my own while digging through TED talks. Most of the comments I have heard from those I associate with (particularly in the nonprofit management minor) feel quite positive about his remarks and about how people ought to care about other factors besides overhead to determine whether or not a nonprofit is fulfilling its mission.
As I have plunged into other conversations through twitter feeds and online comments, I have found that there is a lot of negativity about this idea (granted, there is probably some self-selection bias because only people who are extremely passionate or extremely peeved will generally take the time to comment on an article). There were quite a few people who said that Dan Pollota was out of his mind and the majority of their arguments were that if they gave a dollar to charity, they wanted to know that a whole dollar made it to fulfilling the mission. While that is fine in theory, they are not taking into account the fact that it takes a lot of work to get something useful to the beneficiary. Also, a lot of that hard work is being done by people who need to be paid.
In some ways, a nonprofit is the opposite of a business like Walmart. There are products in Walmart that the company only makes 7-10 cents per dollar that someone pays for the product because of the cost to produce that item. Now, a nonprofit is doing the same process, but instead of being the consumer, the general public is now Walmart. Yes, you want to provide a toothbrush to someone in need, but first you have to pay for the production of the toothbrush. You have to pay for the raw materials, the building where it is produced, and the people's hourly wages who put in all the hard effort. Therefore, it makes sense that it is virtually impossible to get 100% of the donated money to the end user. There is a process and that whole process takes time and it takes money.
Additionally, as many other's pointed out in the conversations through the internet, when people only look at overhead percentages, they are not looking at the overall impact that the organization is making. They get so caught up in the salary of the CEO (because it is actually public information on a 990) that they don't see all the good that the organization is doing. This information is public because the government wants nonprofits to be held accountable for their spending. But, what for-profit CEO is going to tell you his/her salary? It is private information and in our culture it would be extremely improper to ask. Therefore, I don't think people should get so caught up in the overhead. People should look at the end product. Is the nonprofit really serving the constituency they say they are and are they doing a good job?
As I have plunged into other conversations through twitter feeds and online comments, I have found that there is a lot of negativity about this idea (granted, there is probably some self-selection bias because only people who are extremely passionate or extremely peeved will generally take the time to comment on an article). There were quite a few people who said that Dan Pollota was out of his mind and the majority of their arguments were that if they gave a dollar to charity, they wanted to know that a whole dollar made it to fulfilling the mission. While that is fine in theory, they are not taking into account the fact that it takes a lot of work to get something useful to the beneficiary. Also, a lot of that hard work is being done by people who need to be paid.
In some ways, a nonprofit is the opposite of a business like Walmart. There are products in Walmart that the company only makes 7-10 cents per dollar that someone pays for the product because of the cost to produce that item. Now, a nonprofit is doing the same process, but instead of being the consumer, the general public is now Walmart. Yes, you want to provide a toothbrush to someone in need, but first you have to pay for the production of the toothbrush. You have to pay for the raw materials, the building where it is produced, and the people's hourly wages who put in all the hard effort. Therefore, it makes sense that it is virtually impossible to get 100% of the donated money to the end user. There is a process and that whole process takes time and it takes money.
Additionally, as many other's pointed out in the conversations through the internet, when people only look at overhead percentages, they are not looking at the overall impact that the organization is making. They get so caught up in the salary of the CEO (because it is actually public information on a 990) that they don't see all the good that the organization is doing. This information is public because the government wants nonprofits to be held accountable for their spending. But, what for-profit CEO is going to tell you his/her salary? It is private information and in our culture it would be extremely improper to ask. Therefore, I don't think people should get so caught up in the overhead. People should look at the end product. Is the nonprofit really serving the constituency they say they are and are they doing a good job?
So, I don't think I completely understand the dogma you're presenting but what I think is confusing to those of us who don't understand notforprofits is how they can have salaries. It sounds like the main point you're making is that they don't sell goods but provide them through charitable donations. Maybe it is simply that the name not-for-profit is misleading. If it is really about all the good that the organization is providing, maybe the organization should be called a charitable organization. But then you're still stuck with the whole salary thing... Maybe they should just cut the salary. lol.
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