August 12th, 2013

The End Game of Charity

August 12th, 2013

Charity is failing as a sector largely because it is measured by its ability to become obsolete.  I am not referring to any charity or nonprofit in particular, or to charity as the gifting of money/goods/services, but to the mainstream vision of charity as it relates to addressing significant disadvantages within a population.  The end game of these charities should be to work towards a point where the populations they serve are no longer disadvantaged. So why is it that so few, if any, charities close down because they “succeeded”?

I would argue that it is possible charities seldom succeed because they have reasons not to. The incentive structures within the charitable sector work against their mission, rather than support it. Where the private sector is incentivized by fortune, the charitable sector is incentivized by misfortune.  Just as a gap in the market can bring new opportunities for a business, a gap in income or education can spearhead a charity or nonprofit; more social problems mean more grants and jobs that become available for the charity or nonprofit. It is as if the sector was founded on a conflict-of-interest: succeed by eliminating the “gaps” of society, except that the perpetual existence of the gaps is what keeps you from falling within one.

Furthermore, the charitable ecosystem is built on a culture of permanency. There are no rewards for concluding a charitable mission other than a potential recognition letter from your local United Way. Not to mention the disincentive of everyone in the charity becoming unemployed.  This culture of permanency is further displayed by the recent rise in college graduate certificates like Nonprofit Leadership and Management, and university degrees across all levels, such as the Masters of Philanthropy and Nonprofit Leadership. We now expect people more than ever before to make sizeable personal investments in what are lifelong careers in charitable work.

Obviously, everyone knows the charitable sector is not going anywhere soon. In 2012, a record 882,000 Canadians used food banks each month, and the estimated number of Americans living in poverty increased by 1.1 million to 39.1 million in 2008. According to UNICEF, 22,000 children die each day globally due to poverty and, at least, 80% of humanity lives on less than $10 a day.  As American author Robert Lupton (2011) stated,

for all our efforts to eliminate poverty— our entitlements, our programs, our charities— we have succeeded only in creating a permanent underclass, dismantling their family structures, and eroding their ethic of work. And our poor continue to become poorer.

Now, as we all know, there are multiple factors behind the ongoing inequities that exist around us, but the time has come to acknowledge that the way the sector is structured is also part of the problem.  The notion that charities are somehow not accountable due to their underlying noble intentions is simply no longer acceptable. We need to reimagine the charitable sector, recognizing its flaws and addressing these built-in complications, so those in the sector can focus on society’s gaps without falling in one as well.

  • Mitchell – Interesting perspective and also the subject of a TED talk by Dan Pallota (The way we think about charity if dead wrong). I am interesting in working in the area of micro-finance. Having seen the work firsthand micro-finance (done correctly) DOES actually raise individuals, families and communities out of poverty. I agree with you, however, that some sort of measure should be put into place that give some visibility to return-on-investment (for lack of a better phrase). The irony here is that, with better measures, more charitable donations can be secured. People want to see and know their dollars are well spent, not just thrown into a gap. – Steve

  • Larry

    let’s start with having a proper way to evaluate what constitutes a charity and what % of what they take in has to go directly to their charitable mission. When the CEO’s and other senior staffers of charities make in the high 6 figures and when the charity’s overhead exceeds 30, 40 an in some cases 50% – they are not really as much of a charity as most would like them to be. Likewise, ones that sit in the middle between the doaner and the charity that delivers the actual service, that creates way too much overhead.

  • Mitchell- This is an age-old problem even Jesus said
    “The poor ye shall always have with you” now I know
    what he meant. I pondered this saying in disbelief
    as Jesus forgot to mention an alternative. Why ?
    Perhaps he understood the nature of mankind so well.
    Having said that I thank you for your more indepth
    analysis of this dilemma, I am still bereft of answers.

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  • On the front-lines, where I cut my teeth, the best one can do is try and ensure they are giving a hand-up, not a hand-out. The hardest part of that for me is when working with people who are 50-60+, as it is hard to get someone back on their feet when they are reaching an age when people should be retiring and getting off of their feet.

    The charitable sector definitely has places where it can improve (like food banks taking on a shopping model, as mine utilizes, rather than just handing out food) to empower instead of support, but a lot more needs to change at the societal level. Some charitable organizations simply work on the principle of saving larger structures (e.g. hospitals) financial and logistical burdens (e.g. multiple emergency room visits) while not further empowering people to become self-sufficient.

  • You’re cynical about philanthropy, Mitchell. Maybe you see big foundations & not the quiet work of real people giving back.

    Adam, you said:

    [Some charitable organizations simply work on the principle of saving larger structures (e.g. hospitals) financial and logistical burdens (e.g. multiple emergency room visits) while not further empowering people to become self-sufficient.]

    And some do both.

    I don’t remember who said it, I heard it at an event a long time ago. Someone said, “Anyone can give away money. To do it responsibly is the challenge.” Maybe someone was quoting someone…

    Not the exact words. It was the early 90s.

    My concern about philanthropies is heightened when they get involved in policy. Money & policy shouldn’t be commingled.

  • It was refreshing to see that i am not alone in my thoughts about operational conflict of interest regarding charities and non-profit organizations.

    It is because of this conflict of interest that they will not support any potentially successful idea which will effectively eliminate the problems and needs of society that they serve, especially if it could be achieved in a very short period of time.

    I believe the only way to solve the problem of charity and non profit organizations support for such an idea in to include them in the process and as a financial beneficiary during implementation and of the end result. This way they have a claim to fame and can continue to exist through transformation to relevant support services for the project.

  • Thank you for following me and supporting what I do to make a difference. I’ve been doing this almost my entire life and I raise money to fix Hearts that are Broken. 100% of the money that comes in for my annual Lemonade Stand goes directly to the charities and so far my brother and I have raised over $186,000 and I am really proud of this. But what I think is more important is that I am able to inspire others to just get out there and try and believe that you can make a difference no matter how small you think it is. I think this is truly the important part of my philanthropy because I know the money I have raised so far is not going to solve anything major. In fact I always wonder after I give 100% of what is given to me, how much actually is used to treat the people or find answers or cures. I have visited many charities and the costs to run them and their staff must be huge. I have decided that at my age I wont be able to change this yet but what I can do is make sure that everyone makes ‘giving back’ or paying it forward a part of who they are. The idea of helping others becomes something that is automatic and not something that they plan. We have to all believe that every little bit and effort does make a difference and then trying to figure out where the dollars actually go becomes something that we can hopefully fix to help the most people in the best way. My 15th Anniversary Lemonade Stand to Fix Hearts is this Sunday Sept 15 in Toronto and I hope everyone can come out to show their support for making a difference one glass of lemonade at a time for a cause, any cause! Together we can fix the world, one glass at a time if we all believe that we can. Of course if you can’t come by and say hi, then please get a virtual glass of lemonade from my website to support Sick Kids, Save a Child’s Heart or Heart and Stroke. ps. I just turned 16 🙂 so I have a few years to really show the world that you are never too little to make a big difference!!!

  • Zac

    I second Steven Waters’ point about Dan Pallota’s TED talk. Overhead is not the main concern, it’s the size of the pie. Larger organizations (that can consequently raise more money) necessitate larger overhead costs. Managing an organization of 5 is qualitatively different than managing an organization of 50, and if the larger org can raise more than 10x what the smaller one can, why are we so concerned with overhead?

  • Lily Phan

    Having worked in the non-profit and charitable sector for almost a decade, I am very familiar with the shortcomings of that sector. However, I think that to criticize no-profits and charities for their inability to work themselves out of a job is to mis-understand their nature and purpose (which you had stated quite well actually), which is to fill in the gaps. Charities and non-profits are not mandated – nor do they have the power – to change the underlying structural inequalities of our present capitalist system, which is absolutely necessary in order to negate the need for their own existence. And if they could do that, they would not get government funding or corporate donations! The fact that many jobs within the charitable and non-profit sector are becoming professions in their own right merely signals the reality that the system is nowhere near closing these gaps and is, in fact, using this sector to “manage” the crises of needs that it creates. A very good analysis of this industry (and it is becoming one) is Ivan Illyich’s “The Right to Useful Unemployment and Its Professional Enemies”. I highly recommend it.

  • Lauren

    Interesting take!

    Quite the counterintuitve view on the assumption that the existence of charities is by default, a good thing. And I don’t believe that anyone would argue against charitable intentions and organizations helping the greater good as long as they have transparent, measurable results.

    Perhaps in the future, non profits will be founded with the goal of eventually closing down their doors. Yet in the meantime, organizations generally need as much assistance in possible in maintaining their goals, whatever they may be. At the company I work for,, we believe strongly in donating to worthy causes and giving individuals the ability to assist in causes close to their heart.

    One will find fault if they dissect any sector of society: business, government, non profit or otherwise. This should not take away from the hard work of employees and individuals pounding the pavement in the name of goodwill.

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