Seven nonprofit new year's resolutions

7 minute read

Nonprofits are an economic force to be reckoned with, employing 10% of the domestic workforce and accounting for 5% of GDP in 2014.

And yet, too many of us are mired in a bizarre myth that for a nonprofit to be a good one, it has to change the world on a shoestring. This isn’t helped by funders, most of whom insist we spend less than 10% on overhead.

10%. Total.

This is compounded by the societal expectation that nonprofit employees should be paid less. Now, the reality is that society pays for what it values. Which is why it’s truly appalling that teachers make a fraction of what reality stars and pro-athletes do. None of this is new, of course, but here’s the thing: Nonprofits have a distinct advantage. We have a group of people (funders and donors) that do value our work, and want to invest in it. But it’s on us to change expectations. The time to be humble, self-effacing, and proud of our ability to spend next-to-nothing needs to end.

Here’s the reality: Spending more on overhead and salaries is a good thing. A necessary thing. It doesn’t just help the staff - it exponentially improves the likelihood that you’ll actually achieve results, do what you say you want to do, and give funders the outcomes they want to support.

I’ve been fortunate to work in organizations from across the funding spectrum, so I’ve had the experience of being somewhere with a great salary and access to top-notch resources and equipment. More often, I’ve worked for organizations that can’t afford to offer me benefits, a decent computer, or enough money to pay for a 300sq foot studio. I’ve been in organizations where I never have to worry about getting my paycheck, and organizations where I’ve gone months without a salary. And I can tell you this: Having resources and a good salary makes a world of difference. Period. And it’s not because nonprofit employees are greedy. It’s because they’re able to operate faster, better, and more efficiently. They can focus on doing killer work, as opposed to fixating on how to duct tape together a computer to get a proposal submitted on time.

We’ve entered uncharted territory in light of the election. It’s unclear how exactly the funding landscape will look, but two things need to happen:

  1. Nonprofits need to own that their work matters enough to warrant decent work spaces and competitive salaries. They need to represent themselves and advocate for what they really need to get the work done. In other words: core support.

  2. Funders need to change the way they invest.

Vu Le does a great blog with a self-proclaimed (and externally confirmed) “no-BS approach.” In a particularly good post, he discussed the argument for funders to treat us like businesses, with the following suggestions:

  1. Invest significant funding. Le referenced the Bitmoji app, which received $8 million in funding (from one funder) for an app that turns people into cartoons. Most of us cobble together (ridiculously, frustratingly) restrictive funding in thousand dollar increments and cross our fingers that we’ll figure out how to make it work before the next payroll cycle. Most of us probably can’t even fathom what $8 million in funding would allow us to do. To do real, meaningful work, we need funders to recognize that significant, multi-year, core funding has to happen.

  2. Make decisions faster. You want a strategic plan? And financial stability? Relying on grants that take months (or, in some painful cases) years to materialize due to arduous proposal processes and administrative bureaucracy, means we sacrifice both of these and play defense, year after year, never able to escape the cycle.

  3. Get over overhead I don’t know that I can discuss this without getting heated, but I’m going to give it my best. Better resources—office spaces, equipment, marketing and communications, accounting services—only make for better results. Period. I’m trying to imagine a funder making an argument that a staff member should work on a word processor—simply because it’s cheaper—than a relatively recent, decent, laptop that doesn’t freeze every 10 minutes. I don’t think there’s any funder out there that would do that. But when you argue for lower overhead, that’s the argument you’re making. Funders should want to see us spending money on solid financial management, work environments that are safe and comfortable, and equipment that works. Because these things only help us succeed in getting them what they want. These are, in reality, programmatic expenses that have been relegated to the ugly stepchild world of admin costs.

  4. Focus on results. What should matter is the work we do. What we accomplish to make this world a better place should matter more than how we spend the money. The reality is that you will get - and retain - better staff if you pay them more. You get a happier, more productive staff if you make sure they’re cared for. Some time ago, I worked for an organization that sent a few staff members on a project trip abroad. When they returned, I was doing the (super exciting) task of reviewing and logging expenses for a funder report. And noticed that one of the staff hadn’t logged anything for food. At. All. So he either paid for it out of his own pocket, or didn’t eat for four days. Both of which are completely unacceptable. We want the same things that funders do - to make positive changes. So let us spend the money to do that, however we see fit. (And this should definitely include making sure your staff eats).

  5. Get over sustainability. Le really said it best: “No one goes into an Apple store and says, “How are you going to sustain your business after I’ve bought my iPhone and I’m no longer here?” If a product is good and you want the company to keep making it and developing new models, then you buy it and you tell your friends about it. That’s how the business is sustainable, the end. Same should go for nonprofits. If services are good, support the nonprofit so it keeps providing them. The end.”

  6. Increase funds to get parallel results. If a nonprofit is successful, that doesn’t always translate to more revenue. If we double our results, we don’t automatically get double the funding. Should funders offer additional results-based incentives?

  7. Accept risk and failure. For-profit businesses get millions in funding, sometimes fail, and while it’s not viewed positively, it’s typically accepted as a normal part of business. On the other hand, nonprofits dealing with complex issues rely on smaller pots, and if we don’t deliver the outcomes, are met with disproportionate disappointment. What should be happening is evaluation and a plan for adaptation, with funders acknowledging that this is likely, and wanting to invest further to improve approaches.

We have an important few years ahead of us. The need hasn’t changed - all of the problems that were there in October remain. But we have an uncertain future from a funding perspective. Nonprofits can’t rely on funders to simply change their perspective (although in time, hopefully, that will come). We have a responsibility, not just to ourselves and our staff, but to the people we serve, to advocate for what we need to do a better job.

So the next time you put less than 20% overhead in a grant proposal, think about the people you’re working for. This mission you’re fighting so hard to accomplish. You’ll do better for them if you advocate for yourself in the process.

Teaser image credit.