I was planning to donate the couple bucks I had left over from the year to the charity called “San Diego Zoo Wildlife Alliance”, I was doing a background check on CharityNavigator and they gave the charity full ratings so it seemed good.
Then I stumbled upon the salary section. What the fuck? I earn <20k a year and was planning to contribute to someone’s million dollar salary? WHAT.
It’s a classic moral hazard of private non-profits. You generate income from press and marketing, so you have an incentive to invest more in those parts of your business. The Zoo Wildlife Alliance doesn’t get any money from the wildlife.
But now you’ve got a marketing team that wants to grow, in order to generate more revenue. So they need more revenue themselves. But it’s “justified” because they can claim credit for every dollar brought in. The bigger the marketing staff gets, the more sway they have within the organization as a whole. So it prioritizes growth for the sake of growth, rather than asking where the money is going.
And all along, the fundraising leadership is justifying higher and higher compensation as a percentage of groups revenue.
Eventually, you’re just a millionaire pan handler, asking money so you can ask for money. That’s a totally organic consequence of unregulated industry.
Yup.
And honestly direct regulation is hard here. Those are the two expenses that grow out of control, because it’s really hard to measure how much marketing or managing you need exactly. No empirical proof of overspending means no legal case against the directors.
Ideally, they’d have to provide something like the MER (management expense ratio) you see on investment funds. Charity kind of is like an investment on the behalf of the greater good, if you think about it.