Dan Pallotta, an active fund raiser, talks about the five factors that together have successfully blocked the growth of social innovations through Non-profits ( I like to call NGOs as non-profits) It is a very good summary of how our systems ( that are good in some other area like business) have impacted the growth of non-profits and how the lack of growth of non-profits is impacting us as humanity.
The five factors that affect the growth of Non-profit organisations are poor compensation in Non-profits, Non-use of advertising as compared to business, non-encouragement in taking the risk, the time expectations of achieving the result and the 'inaccessibility of market like stock market' to drive the growth of Non-profits. He highlights the small looking factor of compensation so vividly which makes me repeat it. The difference in compensation of a 10-year MBA working in business and non-profits is almost 5 times ( 84000 US $ as compared to 400,000 US $). Because of this difference, it is far more beneficial for a smart professional to work in business and donate every year 1,00,000 US $ to charities, instead of working in charities. Plus he gets more 'satisfaction' through another source. Because he funds charity, he sits on the Board of charities, while the person who is working for charities 'reports' to him. What would you do, if you are a smart professional? Would you utilise your brains to work for a charity or donate your money to a charity?
More importantly, Dan Pallotta highlights our invisible and unsaid beliefs about charities that have more powerful influence on the growth of non-profits. For instance,
More importantly, we need social businesses as much as need profit-businesses. Social businesses, which deals in invisible commodity like compassion, love, care, help also needs to flourish. But, like business, these commodities have no market. However, as human beings, we need both - money and love - together to build our lives. But we are creating our own hurdles that have stopped the growth of these invisible and invaluable commodities. Isn't it therefore surprising that we do not get both at one place?
The five factors that affect the growth of Non-profit organisations are poor compensation in Non-profits, Non-use of advertising as compared to business, non-encouragement in taking the risk, the time expectations of achieving the result and the 'inaccessibility of market like stock market' to drive the growth of Non-profits. He highlights the small looking factor of compensation so vividly which makes me repeat it. The difference in compensation of a 10-year MBA working in business and non-profits is almost 5 times ( 84000 US $ as compared to 400,000 US $). Because of this difference, it is far more beneficial for a smart professional to work in business and donate every year 1,00,000 US $ to charities, instead of working in charities. Plus he gets more 'satisfaction' through another source. Because he funds charity, he sits on the Board of charities, while the person who is working for charities 'reports' to him. What would you do, if you are a smart professional? Would you utilise your brains to work for a charity or donate your money to a charity?
More importantly, Dan Pallotta highlights our invisible and unsaid beliefs about charities that have more powerful influence on the growth of non-profits. For instance,
- our belief that we must not spend money on advertising for non-profits is stopping us to increase the 'wallet share' of individuals and therefore grow non-profits. Non profits business are stuck.
- Or, for businesses, we allow them enough time to show results such as when Amazon could wait for 6 years to make profits. But for non-profits, we want everything to start producing results from year 1.
- Or we willingly give money to businesses for managing their business ( through overheads), but we want non profits to have very little 'overheads'.
More importantly, we need social businesses as much as need profit-businesses. Social businesses, which deals in invisible commodity like compassion, love, care, help also needs to flourish. But, like business, these commodities have no market. However, as human beings, we need both - money and love - together to build our lives. But we are creating our own hurdles that have stopped the growth of these invisible and invaluable commodities. Isn't it therefore surprising that we do not get both at one place?
