[ska]

Your protip is naive.

I'm not saying there isn't any excessive pay in some charities. But the management needs of an organization are not determined by the goods or services being supplied by that organization so much as by the complexity of the organization. It's not somehow fundamentally easier to manage a charity than it is a product company of similar scale and size.

Now, there can be unwarranted complexity of course, but some of this is a natural outgrowth of scaling and reach. So just like in private sector, charity organizations have a huge range of needs. Running MSF is very different than running a local independent food bank.

From my limited personal experience, charity sector executives tend to be paid a fair bit less than they would in private sector work, but still at a reasonable scale for experience an skills.

This is exactly what you want: someone capable of doing the work well, who demonstrably cares enough about it that it as made a financial impact on them. Otherwise you are effectively suggesting that it is better for the organization to be inefficient and waste its donations, so long as the people heading it are also "donating" their time. You can hope for somebody good who is financially secure and doesn't need the salary, but it would be foolish to count on.

There is one other issue, which is the question of whether or not larger scale charity organizations are (or can be) more efficient at delivering meaningful impact than smaller, localized one. That seems like a good target for some proper research. If the answer is that larger organizations are better at it, then clearly there is a benefit to having them run well. And caring about the impact is nowhere near enough qualification to do that.

[Retric]

It's not somehow fundamentally easier to manage a charity than it is a product company of similar scale and size.

This is empirically false.

Companies fail far more frequently than similar charities do. The core reason for this is companies operate on a much smaller margins. A charity that distributed 90% of it’s donations last year could distribute 80% if it’s donations this year if they collect half as much. Combined with often significant endowments and failure is rarely a major concern. Companies on the other hand are almost never in those situations.

[ska]

I've tried, but I can't see what you believe you have falsified here, can you elaborate?

There are certainly issues with inefficiency in charities stemming from the fact they don't have the same market pressures on them as private sector companies do (or at least, not as much). However, this doesn't have anything to do with the difficultly of managing complexity in large organizations.

Or were you objecting to the hand-waving about efficiency? I agree measuring impact of charities are difficult but what else would you look at? Executive pay rate is obviously a silly one without extra context. Year-over-year changes are good, but I at least alluded to that.

I guess I don't know quite what you are objecting to.

While it is true for the reasons you mention that a badly managed charity may last much longer than a badly managed company, that has no impact at all on my statement. It is not somehow easier to manage the charity, it is just less immediate that the negative consequences impact you.

But note, I'm not suggesting we support badly managed charities. I'm saying that to manage it well requires similar skill to that of a similarly scaled private sector company, and you will have to pay for those skills.

This is entirely separable from the issue of evaluating whether or not it is being effectively managed.

[Retric]

I object to the assumption that equivalent sized organizations are equally difficult to run.

Compare the rate of companies that existed 5 or 50 years ago and don’t exist now vs the rate of midsized or larger charities that existed 5 or 50 years ago and don’t exist today. If they where equal you could argue running them was equally difficult. However, because utter failure is not equally likely clearly it’s not equally difficult.

You can use other metrics like the rate CEO’s are replaced and they also show it’s just a much easier job.

So, if the org is more likely to survive and you’re not as likely to be fired that’s clearly an obvious threshold for success at the job. Unless you’re going to suggest only more capable people run charities or something.

PS: I then tried to suggest why this was the case, but that’s not central to the argument.

[ska]

I don't think they are exactly equivalent. It's certainly not true that all 1000 person orgs are equally difficult to run (regardless of sector). I didn't claim that.

However, I do think there is an aspect of complexity that is inherent in scaling and reach which is just unavoidable. If you operate in multiple countries/jurisdictions. If you have multiple locations & plants. If you have distinct branches with different goals. If you operate in multiple languages. etc. etc. These things are inherent complexities, and as you get bigger, they are harder to manage well.

I see what you are getting at, but I don't think failure rate is a particularly useful comparison, for two reasons. (1) (as noted before) charities can survive mismanagement for longer, typically. (2) Lots of organizations have a sort of "useful lifetime", not everything is going to become a multigenerational organization, and that's fine. I would argue that due to types of mission, charities skew longer here (e.g. the work is often unlikely to ever go away) than corporations.

Fundamentally what I was objecting to was the idea that charities are somehow inherently easy to run, so they should do fine with people who either aren't skilled or are incredibly self-sacrificing (you'll mostly find the former). That's just crazy to me.

So I don't think anything you've brought up invalidates what I said; it just points out an orthogonal problem - that it is harder to evaluate "good management" in the context of charities. Not that it wasn't already hard to evaluate.

[cannonedhamster]

Care to provide a citation on anything you're making claims to?

Examples include that charity CEOs aren't required to have the same skills as private CEOs, companies failing at larger rates, companies having smaller margins, etc. You're making easily falsifiable claims without backing up your assertions.

Just based on the fact that it's pretty easy to start a business compared to a charity I'd say the average soil requirement for a functioning charity is as high if not higher than a private entity since you can sell your services to make more money, you typically don't have the income incentive to a large portion of the population, you have an unstable workforce of non-paid resources, and unlike an established business you're in constant fundraising mode. I'd say it's more akin to operating mode of an established company with the income model of a startup.

On top of this you need someone willing to spend either time or money to hire a professional to navigate the legal system. It's not a easy as just trying to be good. Our church for example can't be used as a warming center in the winter due to liveability requirements, we had to work with our local city government who has a full time paid grant writer to get funding to cover just the building resources and we volunteer the staffing for the center.

Then there's logistics. Any professional organization needs to know what it has and in what quantity to be able to effectively distribute those resources. That requires software, logistics expertise, and sometimes physical hardware. All of these are professional roles in a company of any real size.

I think you may be understating the difficulty of the task compared to private enterprise. This is why I'm asking for references, I did a cursory look and didn't find anything directly for what you stated, perhaps you're aware of some information resources I'm not?

[aeternus]

Most of the larger charities simply spend more of their budget on marketing. Is that desirable, and should the charity leadership be compensated handsomly for that?

It's a tough question as they may just be redirecting money away from charities with less marketing spend.

[ska]

> Is that desirable, and should the charity leadership be compensated handsomly for that?

It depends on the overall efficiency, doesn't it?

I'm not saying this stuff is easy to evaluate. I'm saying there are vastly more important qualifications than "I care about this work", and if we have decided large charities are effective then clearly we want competent people running them.

I'm perfectly ok with the answer being: "no, the best bet is very small, very local, entirely volunteer organizations".

The worst case to me seems to be poorly managed large organizations, which will then just bleed resources at every level.