March 1, 2005

Response to Bridgespan’s Study

The perception that people who work for charities should get charity wages is hurting the nonprofit sector's ability to recruit needed leaders, says Lorie Slutsky, president of the New York Community Trust, in this commentary on the 2005 Bridgespan Group report, "The Nonprofit Sector's Leadership Deficit."

By: Lorie Slutsky

A commentary on The Nonprofit Sector's Leadership Deficit

The Bridgespan Group’s “The Nonprofit Sector’s Leadership Deficit” quantifies what many in the sector knew intuitively: we are getting older, and the ranks simply are not there to replace us. While one may quibble with some of the paper’s projections, finding qualified senior management for nonprofits is a major problem.

Not surprisingly, money is at its root: money for recruiting, money for compensation, money for training; Bridgespan recommends investing in these activities. So who would disagree? Some members of Congress, for one, who seem to be convinced that the sector is providing safe haven for nefarious schemes. The media, for another, who question charitable distributions any time a lot of money is raised for a disaster—which happens far too frequently these days. Some of our charity “watchdogs,” most notably Charity Navigator and the American Institute of Philanthropy, who “rate” nonprofits primarily on their overhead, not their results, using data from the tax information forms filed with the IRS that are not useful for these purposes. And, inevitably, donors, who listen to the congressmen rant, read about the latest nonprofit “scandal,” and surf the Web for the “watchdogs.”

The backdrop for all this is the still prevalent perception that people who work for charities should receive charity wages. Add the increasingly accepted idea that nonprofits should use “business practices” to become more efficient and effective—but not business overhead that pays for technology and staff—and you can see the difficult bind we are in.

We have all been accused of not getting out the plentiful stories about our good work, but it seems to me that we often try and just cannot get the press interested. We have responded to Congress with some success, and have failed miserably in arguing with the charity raters’ methodology.

What we have not tried is explaining to Americans the cost of doing good. Nonprofit work is still work. We must pay rent, often in expensive real estate markets, as well as gas, electric, and telephone bills. Many people are unaware of the complex operations some nonprofits run and the need for specialized talent. They may not know that workforce development entails working with prospective employers, following business trends, and training undereducated people to fill jobs successfully. They may not realize that financing and building housing is no different than it is for private developers, except it is harder because it must be affordable for those with modest and low incomes. The list of nonprofit operations that require expert staff is very long.

Americans want nonprofits to function well and without scandal. Government expects nonprofits to carry out many of its mandates—including services for children, the elderly, and the poor. So maybe we should ask our country’s leading philanthropists, who have made their money in business, to step up and explain to Americans what it takes to do the work that must be done. And maybe we should consider investing in public education and public relations campaigns to get out the facts. If we are to run like businesses, it seems the logical place to start.

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