I recently watched a TED talk about how we look at charities and other organisations which try to help people or causes they believe in. It was a real eye opening moment for me. I was always suspicious of large charities and their high “overheads” which I read as the organizers taking home a nice pay packet. I would also wonder why so many charities spend so much on advertising and not actually on the cause itself.
Well I can explain why this is not the best way to analyse a charity in a few examples. Firstly it is acceptable for a very successful professional to go to work make money for his or her organization and be sufficiently compensated for this at the end of the month. Now, if we were to have a professional who was making a charity a lot of money and took home a good competitive salary we may deem them to be a parasite. This attitude is not useful, it makes many people have to choose between a life where they can achieve financial success or one where they can help people and not do so. This drives some of the best minds away from the non-profit sector.
Secondly, we have a small bake sale where the overheads are very small and the total sales amount to £50. The overhead is only £5 so most of the money goes to the cause. The alternative to this is to have a professional event with actual chefs and the overheads are high. In this case you make £50,000 but your overheads are 40%. Which do you think is better?
The non-profit sector cannot hope to compete and grow when we have two different rules we judge the profit and non-profit sectors by.