Friday, May 11, 2012

Non-profit, non-sense

I made a ridiculous statement in a meeting this week where I claimed there was no such thing as a non-profit organisation. More specifically, profit making companies and non-profits are essentially the same thing but just perceived differently.

Yes, it doesn't really make sense and is easily disputed and dismissed. Legally there are non-profits. But I think where my statement stemmed from was a frustration in the assumption that non-profits are good and profit making is bad.

More than that, I think I can trace the seed of this thought back to statements two different charity employees made recently.

The first one was earlier this year when a charity employee said he disagreed with fundraising agencies, as opposed to in-house, because they were 'commercial'.

I don't see the difference. He cares about the cause he fundraises for, I care about the causes I fundraise for. He gets paid, I get paid. How am I any more commercial? Being a longterm employee in a fantastic role there is every chance he earns more than me.

The second statement was from a charity employee who used to work for an agency. He criticised agencies for making their shareholders rich. This is from someone who earns bonuses from his charity employer for hitting fundraising targets.

I get bonuses too. They're called dividends. When my company hits targets and makes profit I get this bonus. I didn't receive any bonus this year because we put all our profits back in to the company to develop two new fundraising products.

So how different are agency fundraisers and in-house fundraisers?

And what does this have to do with the term 'non-profit'?

Well I could run a charity, pay myself whatever I want - even millions - and still be commended for being a not-for-profit.

Alternatively I could run my business, pay myself nothing, but take a tiny shareholder dividend if I have a really good year. I'd be a profit making company.

This is not the way to measure effectiveness.

The truth is every organisation, both profit making and not-for-profit, is somewhere inbetween these two extreme examples. Financial reports are dressed up to appear the way organisations want to be perceived. And these shed very little light on how effective an organisation is in changing the world.


  1. Having worked on both sides, I agree there is less difference between charity staff and agency staff than some perceive. We all do good work, effectively and professionally hopefully. I guess the main difference, certainly in the case of people running their own businesses, is that their reward can vary hugely - from nothing in a start-up situation to a good living if business is good, but it is constantly at risk, whereas charity salaries are generally modest but dependable and generally have good job security, pension benefits, etc.

    However, I am baffled by "who earns bonuses from his charity employer for hitting fundraising targets". I'm not aware of any charities that do this - maybe there are some, but I suspect they are few and far in between. Certainly, in the 20 years I worked for charities and often exceeded targets, I never received a bonus - unless you count the odd bottle of wine at Christmas given by kind supplier agencies!

    1. Hi Bruce, I know a number of fundraising managers who work directly for charities that earn bonuses based on fundraising targets. At a guess I'd say it could be a quarter of fundraisers? Don't know...that would be an interesting survey to do.
      On top of that I believe every charity in Ireland that uses street and door fundraisers pay bonuses - I don't know of any that don't.

      I think it's even more common in the UK.

      I think it's a good thing. Good fundraisers need to be rewarded. If a charity isn't comfortable with that they can always think of it the other way: your OTE is your wage but this is reduced if the charity income reduces...a cost cutting measure.