An Insider's View of Nonprofits

For nearly 12 years now I have worked for nonprofit organizations. In addition, I have worked with a handful of other nonprofit groups in a volunteer leadership capacity. In hanging out on Facebook tonight, I saw a post that got me all worked up. It was an infographic that claimed to tell about how some very large charities were paying large salaries to their executives and how some smaller charities were putting more of the money donated to "the cause."

After a quick check of Snopes to see if anything had been said about this infographic, I found that the information it presented was old and very inaccurate.  Unfortunately, things like this fly across Facebook at amazing speed and most people will just decide to turn their backs on larger charities without ever trying to learn the truth.

If you intend to give to a charity/nonprofit, you should be checking to see where the money goes. I'd like to .

tell you some of the things I've learned so you can have a better understanding of how some of these organizations work.  I'm no expert, but I have a working knowledge to share. The first thing to be aware of is that charities need to be recognized as such by the IRS. Getting that official nonprofit status means that they've set up the organization and proven their purpose and that they will have to meet certain standards to keep that status. Not every charity is a nonprofit. There are actually some charities that are for profit rather than nonprofit.

My biggest pet peeve when people look at and judge nonprofits is that they assume that everyone involve should be working for free or for very tiny salaries. Good will and desire to help drives many people to volunteer their time and talents to the causes they believe in, but how many of you would be willing to work a 40+ hour per week job all year long without any pay? Those in executive positions would make at least 2-4 times more for the same work in a for-profit company. In my current job with the National Multiple Sclerosis Society, we make very good use of volunteers and the hours they contributed last year were equivalent to five full-time employees.

The task of calculating where the donated money goes is a very interesting process. You have to determine how much money went toward the mission of the organization. That could be programs, services, research, etc. On the other side are the administrative and fundraising costs. Although some donations would probably come in without prompting, the majority of donations will come in through fundraising campaigns and events. There will generally be costs associated with either of those activities.

For example, I manage our Walk MS events in Utah. We do what we can to get things donated and have fees waived, but we still have a lot of costs involved. It was a challenge to do the budget and determine every penny needed and where to cut spending. Here is just a sampling of what costs go with this type of event:

• event permits
• police fees (for blocking streets along the route)
• location/park rental
• food and water for participants
• signage (sign, sign, everywhere a sign)
• bibs (race number) and safety pins
• design and printing of posters, brochures, postcards, etc.
• design and printing of event shirts, volunteer shirts
• prizes/incentives to motivate fundraising by participants
• rental of sound system, tables, chairs, tents
• envelopes, letterhead, and postage for letters to acknowledge and thank donors
• miscellaneous office supplies and printing for registration forms, waivers, check-in lists, etc.
• first aid/emergency personnel
• gas/mileage, truck rental, etc. to haul supplies
• armored transport for money
• advertising for event
• bank fees for credit card donations
• software platform for online fundraising
• salaries of staff involved

Even with a fundraising campaign, you're paying for the envelopes, letterhead, and postage and then the salaries of those involved with preparing and executing the campaign. Bulk mailings can help with costs for sending out a lot of appeals at one time. Despite the way most people seem to feel about these appeals, they tend to bring in more than what was spent with much less effort than a large event or phone campaign.

I used to work for a different nonprofit that had a very different setup. It was a residential treatment center for youth and the fundraising (or development) side of things was actually quite small. Funding for the treatment provided came in from various agencies, health insurance, and families of the clients. That meant that the basic needs of the facility were already taken care of. Fundraising targeted specific needs and improvements to the program rather than the daily needs. In some ways, they could claim that 100% of the donations went directly to the cause and nothing was spent on administrative and fundraising expenses since the employees, buildings, equipment, etc. were already being paid for and weren't dependent on the fundraising. It makes sense, but the official way of calculating it isn't swayed by that logic. Salaries for executives and the development personnel had to be weighed against the small number of donations that were coming in (fees for the services provided aren't donations) and that gave an unfavorable picture.

Next time you decide to support your favorite cause, check to see how they handle the money and keep in mind what it takes to keep that organization up and running. If you decide to be part of a charitable event that doesn't charge a fee, I hope you will consider donating a few dollars to offset the costs of that "free" event. I hope you will also consider how you can make a difference by contributing your time and talents (especially professional skills) as a volunteer for your favorite charity.