Stop Judging Nonprofits Unfairly


By Shane Power, President of Watertree Health… 


It’s that time of year when nonprofits are most active in their fundraising efforts, and when the breadth and depth of their vital programs addressing social issues will be determined for the following year.  

This is also when people scrutinize the nonprofits to which they are considering giving their money and voice their opinion on social media. Many times, these posts are negative—unfairly so. Most commonly misjudged is the head of the nonprofit’s salary and the amount of money being spent on fundraising. Critics focus on (in my opinion, wrongly so) the percentage of donations that go to overhead.

Dan Pallotta in his TED Talk “The way we think about charity is dead wrong” offered very compelling reasons why this is so irrational, and how it actually goes against our desire to help address issues and change the world.

He notes, if you focus on spending less money on fundraising and more on programs, then you have no way to increase the money being spent on programs. If you can’t grow, nothing changes.

Dan also points out that you need to be able to use money to incent leaders away from the for-profit sector. These business people have the potential to help achieve great money and mission goals for nonprofits. He asks—“Why do we make people choose between doing well for yourself and your family or doing good for the world?” Why do we make it cheaper for someone to give significant money to a charity versus working for one?

In his talk, the following stat is cited to show the result of nonprofits not being “allowed” to do what they need to do to grow. From 1970 to 2009, the number of nonprofits that crossed the $50 million annual revenue barrier was 144 versus 46,136 in the for-profit sector during the same time period.

Social issues are massive in scale, but nonprofits often struggle to generate the growth needed to reach their ultimate goals.

The fundraising restrictions or less-appealing salary options for new leadership coming out of business school, for example, can hinder their opportunity for real change in the way they operate, and more importantly, in their tackling of problems not addressed by the government. Transparency in the nonprofit world is important, and websites like CharityNavigator.com and GuideStar.com provide this. However, I agree with Dan—instead of evaluating nonprofits by what they spend, let’s evaluate them on the goals and achievements they accomplish. By doing so, we would be helping (no longer hindering) these organizations that play such a critical role in our society.

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