Recently I was reading two books, and they seemed to go side by side, one arguing for charities to band together and advocate for the sector, and the other, well, it seemed to cherry pick every single nonprofit disaster from the last 10 years and gang up on charities to tell them what a crappy job they are all doing.
So I’m going to give you a breakdown of two books. Charity Case, Dan Pallotta’s new book, about what’s wrong with the sector and what to do about it, following up from his book, Uncharitable, in 2010, which I wrote about here and here and here and here. The second book is With Charity for All by Ken Stern, the former CEO & COO of NPR. He worked at NPR from 1999 to 2008.
Ken Stern has a problem. He is mad. He is mad that the sector is so “ineffective.”
He is mad that people get paid so much. He has a chapter entitled “Million Dollar babies” where he talks about the lavish pay packages that CEOs receive.
This is the man who, I believe, made over $150,000 the last year he worked there. And he was one of several people who made over $150,000. in fact, according to Guidestar, he made over 1 million in 2008. Not deferred compensation. Cashing out his pension? Perhaps. See below.
He says that it bothers him that pay is not tied to effectiveness. People continue to get paid as they run their nonprofits into the ground. And the last year he was at NPR, NPR made 10 million less than the previous year.
As you can see, NPR made $71 Million in 2007, and $61 million in 2008. Was Ken Stern’s pay docked? No, no it was not. We know this because the IRS form showed what he made the previous year, as well as 2008. Hypocrisy much?
In this book, Ken Stern has done exhaustive research and shows over and over and over how ineffective nonprofits are.
I sympathize with people who are working for wasteful nonprofits, and who know it, and with people who are working at nonprofits that really do help a lot of people. If your nonprofit wastes a lot, I believe it is in not treating its employees well enough and encouraging them to take risks, and take ownership of the cause.
I’ve seen some nonprofits that were poorly run but there are many that do a world of good. Mr. Stern thinks these are few and far between. He talks about Quinton White and his wife Jeanette, who were hounded by debt collectors hired by Yale-New Haven hospital in 1982. And he cited a more recent example of Innova Fairfax doing something similar.
I think what his examples here show are a need for a debt jubilee, an Islamic finance system (where interest does not accrue) and clearer financial protections for people who cannot afford to pay.
Of course the hospitals acted wrongly in selling the debt, so did credit card companies, and others who consolidate your student debt and then sell it to someone at pennies on the dollar so they can collect from you. But this does not mean that most nonprofit hospitals do this.
He goes into hysterical shrieking about how many bad nonprofits there are out there, without really offering action items.
His vague solutions? Focus on “effectiveness.” “resist the old ways” and “be a social investor.” ‘Focus solely on impact, base your contributions on objective evidence.’ He says, “Look for indicia of quality” which means specific goals & results listed on their website. He says, “Follow the leaders” like the gates foundation. Look at who Givewell says is good, and then give to them. Finally, “Pool your donations” and put more into one organization.
This may work for investor donors, but that’s only 15% of the population, those who invest in nonprofits and expect to get “a return.” A lot of what many nonprofits do cannot be quantified. How many lives have you touched if you help a woman escape from a violent situation? What is the ripple effect of helping a child learn how to read? You have no way of quantifying those things. And if the woman goes back to the abuser, if the child doesn’t learn to read until age 6 instead of age 5, is that a failure? it’s far too complex to decide and most people just give up and hope for the best.
Reading a book like this isn’t going to help donors make a better decision. I think donors will be turned off by this book, because they give from their hearts, mostly, not from a sense of “do what someone else told me to do for highest outcomes based giving.”
Nowhere does Mr. Stern mention the ultimate measure of effectiveness, which is employee retention.
He seems so focused on chief executive officers that he can’t see the people, working hard underneath the machine, to make it all happen.What about us, Mister Stern? If the CEOs aren’t doing their jobs, shouldn’t we be unionizing and demanding better treatment and more accountability from the leadership? Isn’t this an employee empowerment issue, instead of a simple government oversight issue? The nonprofit IS its workers. WE are the ones who make it happen. WE deserve better payment, and focusing on people who make over a million at a hospital isn’t helping us reach empowerment any faster. It simply clouds the issue.
He does deign to mention development staff in an offhand way, by stating that NPR got a big gift because a staff person thought to reach out and make the connection to the McDonald’s fortune. But he is obviously sneering at the “accidental” nature of the gift, the biggest one in NPR’s history, because to him it seemed random.
This book-long attack does nothing for the sector except proves to people who thought nonprofits were wasteful that yes, they are wasteful and horrible. We don’t need more books like this. This is why Dan Pallotta founded the Charity Defense Council. Because it’s easy to look at nonprofit failures and think, “the whole sector is shit!”
Well, guess what? Nobody is looking at the thousands of business failures and saying, “Well, obviously capitalism isn’t working!” or “We have so many corrupt businesses! We must vet them all individually to pick the best ones to frequent!”
I liked Charity Case a lot more because even though it says some of the same things that With Charity For All does, namely, establishing various ways for charities to be accountable, pay for performance, etc, it has a lot of action items in it, things we can do, right now, to start re-educating people about what makes a charity effective.
Bottom line: Pick up Charity Case. It has a bunch of stuff you can do to mobilize and help people trust nonprofits more.