Thursday, October 01, 2009

Non-profit vs. For-profit. . .interesting ideas

Click here to check out Randy Mayeux's blog synopsis of Uncharitable: How Restraints on Nonprofits Undermine their Potential by Dan Pallotta.

Reactions?

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11 comments:

Anonymous said...

Larry,

Thanks for mentioning this -- but I think you put the wrong link up -- this one only went to the Amazon page about the book.

Randy

Anonymous said...

My mistake-- I apologize. I clicked on the second link, and missed the first one. Sorry about that.

Randy

Cody said...

I read the synopsis and it made me want to read the book. The chart comparing ideas was obvious, but true; and a good comparison. I have noticed some of these in the non-profit where I work.

I'm interested in your response, Larry. What do you think? How can we respond?

Anonymous said...

As Randy Mayeux's states "Our system of charity doesn’t produce the results we are after because there is a flawed ideology at work. ACORN is one such non-profit, non-partisan social justice organization , and it fits Randy's flawed ideology premise. Unfortunately, there are a great many far left nonprofit groups that hide behind the trappings of nonprofit, when in fact they are nothing more than scams for those with a socialist, or worse, agenda.

Larry James said...

Cody, thanks for the post. I do agree with the source that Randy points out to us. Across the past 15-plus years managing a non-profit and for almost 25 years before that in the church, I've felt that applying business principles and strategies made and make us stronger, especially in the areas of risk, investment and advertising. The issue of compensation is an interesting one that likely deserves a much longer disucssion.

Anon 11:18 AM, don't quite know how to respond to your generalizations and your obvious opinionated rhetoric. So, I'll just let your viewpoint go.

Cody said...

Larry,

It seems, sometimes, that non-profits are the weaker cousins of the business world. It also seems that those living out compassion should take advantage of the best strategies available.

I'm still interested in your ideas about compensation. I have my own opinions, but this is your blog. What do you think?

Larry James said...

Cody, in general I think non-profits and non-profit leadership often err in their thinking about compensation. To have high quality, experienced people involved, especially at "skilled" positions that are so much needed in the communities served (doctors, lawyers, accountants, teachers, etc.), we need to become much more comfortable paying more nearly market rate in compensation. While we will never achieve the same pay scale, and likely shouldn't, we can do much better than we have in the past.

Anonymous said...

Note to anonymous: you wrote: "As Randy Mayeux's states "Our system of charity doesn’t produce the results we are after because there is a flawed ideology at work."

You did not read carefully. That quote was in italics, and it is a direct quote for the book. So the author of the book stated that, not me (Randy).

And I think the ACORN issue is not the same kind of issue that this book is dealing with.
------------------
As to the issue of executive compensation, the book has quite a bit to say about that. the point is simple: All great accomplishment really does boil down to this: do you have capable, and even exceptional leaders leading the people? This is consistent throughout business books (cf. Jim Collins, Jack Welch, for starters), and it is certainly equally important in nonprofits. Here are a couple of key quotes from the book:

“The median salary for chief executives of nonprofit organizations is $42,000 – less than what private companies typically pay people in jobs carrying far less responsibility.” (quoted from the Chronicle of Philanthropy -- from 1998. Though the numbers may have changed, the overall point would still be about the same). (p. 60).

"The message is clear: you should want beluga caviar and a condo in Las Vegas, but if a charity pays someone else enough to eat beluga caviar or buy a condo on Las Vegas, you should not give to it." (reflecting on a cover story from Worth magazine, which featured: the most generous young Americans, and the 100 best charities -- p. 73).

The author of the book simply argues that without adequate, somewhat competitive compensation, then the best leaders will more likely opt for the for-profit sector.

Randy Mayeux,
Dallas

Anonymous said...

Randy, any idea of what the leadership of cdm makes annually?

Larry James said...

Anon 4:15 p.m., what CDM pays its "top executives" is a matter of public record and can be found on our annual 990 tax filing documents and is available on-line at our website or on request a hard copy will be mailed to anyone who would like to see it. Federally recognized non-profits all are required to file a return annually and make it available to anyone interested. Please let us know if you'd like a copy of our latest form. I'd be happy to mail to you.

Larry James said...

One more fact to consider: CDM spends about 8 cents of every dollar it receives on administration and fundraising. This means that 92 cents of every dollar given goes directly to the community. If you factor in the funds provided by our Board of Directors, the amount of other donor dollars spent on administration and funding drops by more than 50% more. We work very hard at running an extremely tight ship with the goal of directing as much as possible toward our community. This explains our top-star rating by Charity Navigator, an independent evaluator of non-profit management.