The goal for a non-for-profit organization is to make as much change in their desired issue area as possible. They should follow their theory of change and see it through that the problem is reduced or solved. There are many ways to do this and finding the right one is difficult. A non-for-profit organization should run like a business, but instead of maximizing profit they need to maximize change in their issue area.
First, how should the firm present themselves to the public. How transparent a organization is will effect its future endeavors.The issue of putting a white child onto a piece of mail over a child of maturity even though most of the funds were going to children of minority decent. was mentioned in class. The white child was used because it was believed that it would cause a larger gathering of funds. Ethically it is controversial, but on the business side it makes sense. By knowing that racism is present and putting on a child that more people will relate to means that more donations will come in. Especially, because it was sent by mail and will be read with a donation most in mind by elderly people because younger generations have gotten more accustomed to junk mail and throw letters out more liberally. There is a higher percentage of people with racist ideals in older people because they grew up in a different time period where racism was more prevalent. The issue of compensation also came up in class today. Pallotti had raised over 500 million dollars, but gave himself a salary of almost 350 thousand dollars. This is less that .1% of what his organization raised. Large salaries can be a positive for non-for-profit organizations. It would be better to pay somebody 1 million dollars if they could bring in 3 million dollars than bringing in 5 people at 50 thousand a year that combine to raise 125 thousand dollars. Compensation comes from what is earned and if someone has earned the privilege of making millions by bringing in assets then they deserve what they have earned. Pallotti earned his 350 thousand dollar salary and I would have been fine with him making even more.
This story on Nancy Brinker of the Susan G Komen foundation is an example of an executive that made too much money.
http://investigations.nbcnews.com/_news/2013/06/10/18869742-susan-komen-ceos-salary-draws-fire-as-donations-drop-races-are-canceled
Brinker was the CEO of the foundation and made bad decisions. The move by the firm to stop providing funds to Planned Parenthood caused a drop in donations. However, after the drop in donations Brinker received a 64% raise. This is not how a non-for-profit or corporation should be run. It should be based on merit and Brinker did not earn that raise. Analysis of the foundation shows that Brinker's salary is very high compared to organizations of similar size.
How ethical should the organizations be? If a non-for-profit is in a financial hole should they disclose this information even if it will result in a decline in investments? Should employee salaries be public information? Should they create ploys to make themselves receive more donations?
While I do agree with you that the Pallotti example that was given in "A Path Appears" showcases an ethical dilemma in the philanthropy world that seems to be misunderstood, I do not agree with your argument that it is a smart business tactic to advertise a young white child in a mailing campaign versus using a child of minority as an advertisement. Your argument is that this is a smart business tactic because mail marketing campaigns are targeted towards elderly people who still read the letters that come in the mail. However, it is naive of us to think that marketing strategies are not changing and evolving to target a larger audience - especially the young working class generation (yuppies). If tactful marketing strategies were implemented by non-for-profit organizations to target the younger generations to give back, there would probably be a massive increase in donations. For example, non-for-profits can invest in a social media campaign rather than a mailing campaign because social media is more hip nowadays than mail. Or perhaps, even an email campaign. There are so many other ways that a non-for-profit can creatively think of marketing strategies to include people of all races. Just because some people in society are ignorant, we should not allow for that and continue to let racism prevail just because it may be an arguably smart business tactic.
ReplyDeleteHowever, I do agree with your argument that Pallotti does deserve a high salary for his ability to pool hundreds of millions of donor money. Like you said, it is better to invest in one individual like Pallotti who has a proven track record than to hire 5 other employees who will not do a great of a job as Pallotti had done for his organization. I am aware that many people will find the idea of profiting off a non-profit organization to be morally displeasing - but if you take a step back and think of a non-for-profit as a mini-business within itself - perhaps people will start to think differently.
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ReplyDeleteHello Mike,
ReplyDeleteThank you for bringing up Komen’s issue with their CEO, Nancy Brinker. That article is a great example of how the public will react when they find out a non-profit is paying their CEO a high salary. Yes, Nancy Brinker may be receiving more than the typical average non-profit sector leader, but does she deserve it? Not only did Nancy Brinker start the whole Susan G. Komen foundation to help end breast cancer, she raised awareness with their signature pink ribbon. I personally think it is a little excessive to be receiving a high salary but I do not want to undermine the things she had done for this campaign.
Many individuals who come to college do not plan to join the non-profit sector in the future. Why is that? Most college students have the preconception that non-profit organizations do not get paid well and most students are in college in hopes of getting a stable job. However, many regret not studying what they are passionate about after they look back, but in their college career, they prefer to study a doctor degree instead. If people who dedicate their life, like Nancy Brinker, cannot get their fair share of salary, then this will not motivate other individuals to work in this nonprofit field. Not to underestimate the leaders in the current non-profit industry, but many intelligent and creative individuals seek big private corporations because they know they can live a success and stable life. If non-profits were able to openly admit they are paying their leaders the right salary, then more individuals who have creative minds are more likely to join the industry and really help make a change. I believe our society needs to be more open-minded in facing these issues because these little oppositions led to decline in donations, whereas those donations could have went to her salary or helped someone for their next check-up.
This can relate to your question about how ethical is it if an organization decides to use a Russian boy to brand their campaign on their mail. I agree with you, Mike, that it is a smart business tactic to use and ethically I believe it is fine for an organization to do that. If an individual really wants to specify their donations within a specific organization, it is called a “restricted gift,” and the donor has the right to do that according to Council of Nonprofits. (https://www.councilofnonprofits.org/tools-resources/ethical-fundraising)
I agree with you in that Dan Pollotta was making a proportional salary to the donations that he raised. As you mentioned, he was not even making 1% of the money that was raised. I feel as if someone that works hard should be compensated accordingly. Since I am someone that wants to pursue a career in non-profit management, I feel as if workers should be compensated according to the work that they accomplish. In Pollotta’s case, he took a different tactic than has been previously used and it paid off tremendously. In response to your question about employee salaries being public information, I don’t think that it is necessary publicize this information. In order for people’s donation to do what is intended, someone has to run the show and for that needs to be compensated. It is a ton of work to run a nonprofitmaking organization and as we’ve read, founders had to quit their jobs in order to make the foundations work.
ReplyDeleteBased off your question of if non-profits should tell the public about their financials, I feel as if they should even if it may hurt their reputations. As mentioned in book, charity: water lets its donors know when there is a failure to show that they are trying to help. They admit their flaws, which I’m sure many charities have also suffered but find it hard to admit to.
In the case of the white boy on the envelope, I feel as if although this is misleading, it is not entirely a lie since they do help children in Russia. I feel as if it okay if this organization misleads the public because they are actually doing good work. However, if organizations that were not effective started to use this tactic, I feel as if it is not okay. I’m not sure how one would go about measuring this so I guess overall I would say this is not okay.
This blog post makes me so happy, and I am thrilled to hear that we share similar views.
ReplyDeleteThroughout my 4 years at Binghamton, I have had the opportunities to work with many non-profits in the area--as well as non-profits in my home town and I repeatedly discovered that these organizations got too sidetracked from their original goals. A business always keeps in my the underlying goal to make a profit for its stockholders. For a non-profit, the people it helps are its stockholders and it needs to keep that in mind. The advertisement with the white child enabled Operation Smile to better serve the people it was aiming to help. The goal of Operation Smile is not to eliminate racial injustice. Operation Smile correctly did what it needed to do to most effectively reach its goals. I commend their actions.
I am a marketing major. There is a reason that I, and my classmates, are taught to study which demographic buys which product and what media and types of media they are consuming. Not only is it completely moral to play to these demographic tendencies, it is absolutely critical to the survival of businesses and non-profits.
I always believe that a big problem with non-profits is that they do not attract top talent to work for them. Top talent is often enticed by money, so if a non-profit can offer high salaries, it has the opportunity to hire better talent and better achieve its goals. I see high salaries as a potentially very smart investment.
However, I do want to add that there is a line between paying for high talent--such as Pallotti--and egregiously overpaying Executive directors. I think you make a really great point about the percentage Palloti was getting. I think that is an effective way to determine whether a non-profit official is being overpaid or not just the raw dollar amount.
DeleteA lot of what you said in this blog post makes a lot of sense and I completely agree with your claims, especially on your view of Pallotta's salary. At first when we were looking at it in class I did think that $350k was a bit much, especially for someone who is doing work for charity and clearly has a passion for wanting to help people. After we looked at it further and saw what a difference he was able to make, raising $528 million dollars, as opposed to future efforts to try to copy his model but raised significantly less, his salary was almost justified to me. Pallotta was able to make enormous amounts of money and life you said his salary every year was a small percent of overall earnings, and like we said in class, sometimes you have to pay people more to get better results.
ReplyDeleteAt the end, you asked how ethical organizations should be, stemming from the Smile Train issue. Smile Train used that picture even though that wasn't really who they were helping and a lot of people saw that as a big issue and unethical. I personally don't really see an issue with it. Smile Train wanted to help children with blindness caused by cataracts. They used the Russian boy on the envelope, even though a majority of the work they did was in Asia and Africa. I don't really see this as an issue like most people do and that goes back to the reasons why people give. One of the main reasons is because we can relate to the cause, and Smile Train only did what it did to bring in larger donations. By doing this they might have been able to make more money, and effectively cure more children on cataracts, either in Asia, Africa, Russia, or anywhere else. It might be misleading, but it is compelling and that is what you are essentially trying to do when marketing.
Thanks for sharing your thoughts on some of the topics we discussed in class. I think you made some excellent points, and there are some issues that we agree and disagree on.
ReplyDeleteFirst I want to talk about the controversial topic of putting a white child on a card, when the organization largely deals with non-white children. I am skeptical to call racism in the scenario where more people donate to the white child. At face value it may appear to be racism, but I disagree with this assertion and I'l tell you why. I think that people naturally identify and sympathize with others similar to them. That doesn't mean they think less of others. For example, I have blue eyes. If I had to donate to two identical kids, one with blue eyes and one with brown, I am more likely to donate to the child with blue eyes. That doesn't mean that I think that brown eyed people are inferior in any way, I just naturally relate to blue eyes. That being said, I agree with you, and have no problem with the charity using natural identification to make more money. In the end more children benefit from that technique of marketing.
With Pallotti,I completely agree with you. As Chris said in class, if nonprofits want to attract the best and brightest minds, they are going to have to incentivize the work. Pallotti's work speaks for itself. The amount of money he raised is incredibly high, and the salary he took was comparatively minimal. I think that there is no doubt that he earned and deserved the money. You could probably make the argument that the money he raised would have helped more people than work done by lawyers or doctors making similar pay. I believe that if the nonprofit sector wants to take big steps forward then it needs more Pallotti's and therefore should allow people to earn higher wages.