“Who pays?” is an important question for all sorts of reasons.
In the world of non-profits, donors often pay. This can mean:
- That the charity is free to act in the best interests of the people it seeks to serve, unburdened by the demands of the market and client’s ability to pay
- That the charity is beholden to the whim of a few wealthy individuals, running programs for pet causes, often with strings attached, rather than serving consistently according to the best judgement of those who run it
- That the charity is sustainable, with a steady stream of donations from people who believe in the cause
- That the nature of serving the two-sided market of donors and clients means that the charity’s attention is pulled in two directions. It spends a lot on donor-facing reporting and PR, working harder ‘selling’ to donors than to clients and users
- That scaling services is hard – each new product or activity requires new money, possibly from new donors – and presumably the law of diminishing returns applies to finding donors
- That the charity’s managers run a tight ship: this is donor money and needs to be used responsibly
- That the charity is wasteful, because poor performance takes longer to impact income and budgets
- That the charity’s management isn’t able to spend money on infrastructure or invest in high-quality training or frivolous (but sometimes important) things like team building, because everyone wants their money spent on the front line
- That the charity has friends who can provide better than average services (legal, training, advice) for lower than average prices or for free
- That the charity pays low salaries in the name of efficiency – in which case you could argue that its paying its staff in the currency of interesting and meaningful work… or that the staff are paying towards the running of the charity
- That the charity depends on volunteers and donations in time or in kind – so doesn’t have a clear idea of what things really cost
In short, being a donation-run organisation can mean almost anything. If you’re involved in a non-profit organisation that depends on donations, you get to choose which of the above apply to you.
What have I missed?
What will you choose?