The Nonprofit Scam

It’s that time of year again, when nonprofits are beating down doors for end-of-year donations. Some time ago I explained why I no longer contribute to most nonprofits. But, of course, I don’t care if others do. It’s their money; they can do with it as they please. It’s just that I no longer desire to subsidize the gross waste, redundancy, extravagance and inefficiency (including lack of results) that permeate the nonprofit world. That said, I’m sure there are some nonprofits that are doing wonderful work and are good stewards of their donors’ contributions (so if you’re working for such a nonprofit, please don’t get upset by this post). It’s just that it might take some work to confirm whom they are.

My current position was triggered by my time working for a nonprofit college. But the seeds of it were present long before that. I had earlier served on an executive volunteer board for the United Way. That was my first exposure to the extreme redundancies in the system. And it was then I first learned of the number of nonprofits that exist mainly (if not solely) to provide employment and income to their founders or executives (or faculty).

But back to colleges for a second. Today the Chronicle of Higher Education ran a story titled Private Colleges Had 58 Millionaire Presidents in 2015. The president of Wake Forest University received more than $4 million of compensation (which, to be fair, was overshadowed by the $9.6 million showered on the president of Savannah College of Art and Design in 2014). You can find all the presidents’ compensation here if you’re interested.

Colleges have had a relatively easy time raising money because many of their alumni have a strong sentimental attachment to their schools, which, of course, if a good thing for Mr. Hatch (president of Wake Forest) and the other millionaires leading our nation’s colleges and universities. Meanwhile, of course, our nations’ students and former students are carrying nearly $1.5 trillion of student debt. What a system we have.

I used to tell my students that, to understand the dynamics of a particular situation, they should follow the money. Most of the time, it’s that simple.

Fortunately for many nonprofits, their donors aren’t all that concerned where the money is going. But if they ever get concerned, watch out. The nonprofit world will be turned upside down.

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