Nonprofit Exeutive Salaries

Though we haven’t spent much of any time in class discussing the salaries of nonprofit executives, and how they impact giving/contributions/fundraising-in-general, I came across this online article from one of my Google Alerts. A Portland, Oregon, TV news station looked at the salaries of nonprofit executives as part of an investigative journalism piece. An interesting read of how an audit can change executive’s perspectives. The article, as expected, is a little critical, but a rather interesting look at just how much salaries may impact administrative expenses. As many of my students know, I’ve discussed administrative costs, efficiency, and accountability ad nauseum in our discussions about the economics and and ethics in philanthropy.

Something to think about. — Prof. Harvey

The (confusing?) economics of philanthropy

I’m getting ready to lead these fine fundraising/philanthropy scholars down the road of the economics of philanthropy. As I’ve been gathering various materials and bits of information, I came across “Four Nonprofit/Philanthropy Trends to Watch in 2007” (better late then never, eh?). I was rather struck by the rather brief discussion of fragmented funding, the creation of larger pools of capital (by donors), and what some funders may now be referring to as “vanity projects.”

I spent quite a few years in the nonprofit sector, and will return into it after I have completed my current teaching contract. I can see both sides of this discussion. On more than enough occasions I have extolled the issue of how it was always easier to get “project or program” funding, and took a crow bar (among other things) to get operating funding. There is something to be said for the collective wisdom of nonprofit capacity building (the virtue of accountability not to be forgotten) over a nickel-and-dime funding approach through smaller project and program grants. I can’t say I like this approach referred to as “vanity projects” however. Leaves a bad taste in my mouth.

I do happen to agree with the trend of treating each nonprofit subjectively. For too long there has been what the authors refer to as an “old school” perspective on operating vs. other funding for organizations. Very black and white. Operating funding has traditionally been a hard nut to crack. Each nonprofit should be looked at from more than just a standard “efficiency” perspective, and taken subjectively. No two nonprofit organizations are created equal. Nonprofit organizations cannot pick up the slack left by both the government’s and the private sector’s inefficient production of “public goods” when their funding is left in a status-quo mode, in-perpetuity. Capacity is subjective, and it takes solid capacity (the definition thereof different with every organization) for an organization to pick up that slack, move toward meeting its mission, and encourage change.