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Who pays? (Donor edition)

“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?

2 thoughts on “Who pays? (Donor edition)”

  1. I think being a charity also means providing an alternative way to the market driven system that most often equates value ( a broader concept ) with monetary value. Going against or at the margin of the market always brings issues of insecurity and extra work. Whether such hardship is worth enduring will be subject to some parameters of scrutiny.

    1. Agree! My feeling (and hope!) Is that it’s exactly at the margins of the market that the most opportunities for value creation (in the broad sense you describe) lie… which may or may not be income-generating value creation, but is almost always interesting and useful work.

I'd love to hear your thoughts and recommended resources...