Giving Compass' Take:
- Jeannie Fox argues that the limited scrutiny of nonprofits based on Form 990 information is a disservice to the sector and that shifting to business-style criteria be would better suited.
- What are the hurdles that nonprofits face because they do not run like businesses? How can donors help contribute expertise?
- Read about why nonprofit leaders need to start making business personal.
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Executive compensation remains one of the most highly scrutinized activities in the nonprofit sector, yet is often described by only one data figure, the dollar amount on compensation, and not in context of the organizational budget or in comparison to other sectors.
Due to general over-reliance on only one data point from IRS Form 990 filings, these oversimplified lists don’t tell the whole story of the changing nature of non-profit organizational revenue streams. Members of the general public are often surprised to learn that today’s nonprofits overwhelmingly earn their revenues from an earned-income business model, as opposed to mere grants and gifts. The Urban Institute, based on 2013 data, puts the earned-income to gifts ratio at an almost 80-20 split. Advocates of the sector need to be able to move the public perception from one of church basement, all-volunteer-run organizations to today’s picture of the sector being made up of larger, more highly complex, and professionally-run organizations.
Further, nonprofits have the right, like all businesses, to compete in the marketplace for the skills, abilities, and talents needed to run their organizations. Increasingly, executive search firms are looking for nonprofit leaders with advanced degrees and “business” skills.
The truth is, all sectors—government, private, nonprofit—want to recruit and retain the best workers for today’s challenges.
The nonprofit sector would do well to better educate the public and the media on the realities of today’s complex nonprofit economy and the skills needed to operate these organizations, keeping in mind both efficiency and ethics. And, if we don’t stay united as a sector, this growing divide within the sector threatens to split nonprofits along the lines of size.
Read the full article about nonprofit businesses by Jeannie Fox at Nonprofit Quarterly.