Yesterday, I had a chance to participate in an excellent Nonprofit 911 webinar featuring Dan Pallotta, author of Uncharitable? Bob Ottenhoff, CEO GuideStar and Ken Berger of Charity Navigator discussing the issue of charity rating systems. Here's my attempt at digesting the rich discussion - I'd encourage you to watch the whole thing for yourself.
We got into nonprofit work because we want to change the world and make it a better place. But does society put so many restrictions on our organizations that we can't accomplish that main objective? How can we find a balance between smart business practices while still maintaining donor confidence?
Some feel there are two rule books: one for nonprofits and one for the rest of the economic world. While many nonprofits are adapting a more businesslike attitude, leading the way in areas of social media and internet marketing, many are still stuck trying to change the world with as little as possible.
They aren't marketing themselves because they think "marketing" is a 4-letter word. Does society really think nonprofits shouldn't spend their resources on marketing or other "overhead" like great staff? Unfortunately a lot of people do have this mindset. But doesn't getting the word out about your good cause and having a great dynamic leader help your cause in the end? Isn't every dollar that a charity spends in good faith, spent to further the cause, whether it be to programs or staff? Absolutely. And that's why that mindset needs to shift.
When trying to decide what charity to contribute to, donors often ask, "What percentage of my donation will go directly to programs?" But focusing solely on overhead - those funds that don't go directly to programs - can cause a distorted view of a nonprofit. It makes us think that overhead isn't a direct part of the cause. It can force charities to go without the things they really need to accomplish their mission. And it doesn't tell anything about the quality of the program.
So is this question irrelevant?
No. There needs to be accountability in the nonprofit industry. Unfortunately, we have seen too many wolves in sheep's clothing taking advantage of donors through the guise of a nonprofit. We need watchdogs making sure that when someone says they want to help the children of Haiti, they are actually looking to help the children of Haiti and not fatten their own pockets.
Plus, people have a funny way of deciding for themselves what questions they want to ask. And donors will always want to know where their money is being spent. So instead of trying to tell donors they don't need to be asking that question, perhaps we should steer them in a way that leads them to asking more about our goals and our results - all the good we do on a daily basis. Show them we know how to manage our money in a way that gets results - that changes the world and makes it a better place. Maybe then the mindset will shift.
You can get more insight into this issue and watch the full recording from this webinar here.
Do we focus so much on keeping our overhead low because that's what donors want that our mission becomes secondary? Should nonprofits be fully capitalistic in their approach to the point of paying CEO's of nonprofits the same as they would make in the private sector? Join the discussion and let us know your thoughts in our online community.
