Hostility toward Nonprofits

I admit I sometimes take it a bit too personally when I hear some of the biased attitudes folks hold about the nonprofit sector.  And that bias?  Pro for-profits; anti (or at least not pro) non-profits.

This semester I have 20 students in my nonprofit management class in La Salle’s MBA program.  The class is an elective, so all have self-selected into the class.  Some, by their own admission, did it because it was a hybrid class (a mix of online and face-to-face) and, therefore, very convenient and allows flexibility with their work schedule.  But some of these students expressed some interest in the nonprofit sector to select this elective over other choices.  Some did it because they are management majors and there was management in the title of the class so they thought they’d learn more about management.  Some did it because they are interested in nonprofits.

With few exceptions, however, it appears that they are coming to this class with biases against—or perhaps it is better explained as disdain for–nonprofits.  But why or how?  Few have direct nonprofit experience.  If they do, it seems it is involvement with their church (at least two serve on their church boards), some volunteering , some donating of funds (though the vast majority of students, when asked, said they’d rather volunteer than give money).  So how, at such a relatively young age, have these hostilities been seeded?  Not sure that the source matters as much as the fact that these messages are out there—and continue to be promulgated.

There have been very definite themes in the three weeks.  Some samplings.

• There is a recognition of “fake nonprofits,” with a number of students noting the availability of articles, blogs, websites on how to spot a fake charity, again reinforcing their outrage at such a reality.  And, sadly, reinforcing their thinking that you can’t trust most nonprofits.  And yet, not one student pointed out the scams that are run in the name of for-profit companies.  Not one person noted the outrageous mark-ups that many, many for-profit companies regularly charge. Anyone who has ever stopped to think about it knows that stores that regularly announce “an additional 20%” already reduced items are still making a profit.  Why is there no outrage when a for-profit makes a 500% profit?  Why are there no websites, articles, blogs telling us how to spot a gauging for-profit?  I am not equating the a fake nonprofit that takes people’s money for nothing in return and a for-profit company that gauges its customers by charging a massive mark-up.  I am, however, asking why some are outraged by one immoral, unethical—illegal—behavior and not the other?
• To a person, every student wants nonprofit funds to go to servicing clients—not administrative costs.  Who among us doesn’t want that?  And yet not one of these students, who, with three exceptions (yet all three work for mega-nonprofits) work for for-profits, has bothered to note that every business has overhead costs.  Thus, no one has made the point that without overhead costs a company can’t produce its product.  Nor I have yet challenged them (that’s coming) as to how many of their departments/companies could function on the overhead percentages they would allow nonprofits, or if they reduced their mark-up to a mere 100%.  I can hear the guffawing now!
• In response to the assignment to explore a variety of data-based websites to find data points of interest, it was no surprise that many landed on Charity Navigator’s top 10 lists.  Two very popular lists were the lowest paid CEOs (Charity Navigator’s title, not mine) of the most effective nonprofits (not its formal title) and the highest paid CEOs of poorly performing nonprofits.  They were thrilled with the low salaries and outraged at the high salaries, and not so much because they were high salaries at poorly performing nonprofits, and more because they were just high salaries.  The nerve that nonprofits leaders should get paid six figures!  Actually, the nerve that we should get paid more than $50,000.  No one bothered to point out that the highest salary anyone found for a CEO of any kind of nonprofit came anywhere near the salaries (and forget overall compensation!) of the highest paid for-profit CEOs.  Because the class has this on-line portion, I put things out there and then have to wait to get a response.  I’m waiting to see how students respond to the suggestion that running a business is running a business and why should a person who runs a company that makes widgets receive more money than a person who runs a company, of similar size and heft, that serves the homeless?
• Last example:  there is unwillingness- or perhaps it is really an inability- to think outside of the for-profit box.  Rather, how we do it in the for-profit world is how it should be done everywhere; that is the right way.  Thus, folks want to apply the classic interpretation of ROI to the nonprofit sector.  They want to only look at the financial ratios:  is program A cost effective? If I give Charity Q $100, what percent (as above) will go to delivering that program?  No one is worried about the quality of the product.  Why?  We know that the quality of for-profit’s product is directly tied to the quality of that company’s bottom line:  shoddy product, poor sales.  Why aren’t for-profit folk thinking about the quality of a nonprofit’s product as part of the ROI equation?  Are our products perceived as so unimportant that quality doesn’t matter? Are our clients so insignificant that deserving a quality product is irrelevant?

Just what are the origins of this hostility for the nonprofit sector?  This appears to be the youngest group of MBA students I’ve ever had.  Many of them, I suspect, have never written a check to a nonprofit, though they’ve probably all dropped change in a jar at a check-out counter or sponsored a friend doing a walk or run.   So, how is it that nonprofits always seem to start from behind the eight ball while for-profits are always held up as that which should be emulated? Why is that we are always having to justify ourselves, explain ourselves, fight for our recognition?