Do we somehow instinctively oppose the payment of people who help others? Which way do we go, NGOs?

Nov 28, 2020

Let's give ourselves a chance to think differently about the function of the non-profit sector—guest article by Veronika Pistyur, head of Bridge Budapest, on the occasion of the upcoming Giving Tuesday.

For a long time, I was saddened by the news of an NGO manager asking for donations for her survival in a desperate Facebook post. Today I'm distraught by such hopeless, recurring crises. Situations and circumstances in which the heads of NGOs often find themselves. As head of an NGO and market participant, I am now less keen on venting. I would instead address why NGOs that create fantastic programs are, to this day, forced to make embarrassing requests for money for their subsistence to pursue a mission that often involves unlimited working times and the sacrifice of family, a living and a sense of security.

Giving Tuesday is approaching. An American tradition. The first Tuesday following Black Friday — the yearly date of the shopping craze — is when most American NGOs receive the funds required for operation, often absolved from excessive spending. We have no such thing in Hungary. No such date. No tradition. For years attempts have been made to establish this tradition here, but a breakthrough is yet to be made. However, companies are drafting their annual plans, budgeting, and considering costs that serve social benefits. Therefore, it is essential to consider specific circumstances and facts that may impact our plans, with potential future effects. It is necessary not because I'm assuming intentional indifference or disregard but because

there is some public consensus on misunderstandings associated with the NGO operation and support, which are wrong. We need to act for these attitudes to change.

Before we begin, however, I have the unwelcome task of making sure things are clear because their understanding and acceptance are essential if we want to speak the same language:

• We think of NGOs as the heralds, catalysts, helpers, and fighters of unresolved social problems that are often difficult for the majority to understand and see, who make efforts to make this a better world and don't abandon, for example, the 10% who fall behind through no fault of their own;
• the work and achievements of these NGOs are recognized and lauded, and their accomplishments are often internationally esteemed;
• we don't do victim blaming, holding people responsible for choosing their fate, that they deserve the consequences;
• we know and accept that NGOs are very diverse, e.g., those offering sensitization, activists, and field workers, but their operating problems are very similar;
• everybody is having a hard time, not just NGOs, especially with the additional burden of COVID-19, but our focus is on them — they, too, have yet to be saved by a "package."

We have many supporters around us, beautiful examples who understand and are aware of the challenges facing NGOs as managers think in the long term and aim at value, such as the Ambassadors of our initiative For a Conscious Business Culture and representatives of leading companies on our Edisonplatform. There is a growing number of good examples of company-NGO cooperation. One of our goals at Bridge Budapest is not to limit this attitude to a few best practices but to make it a management standard.

If we think about funding irresponsibly, our desire to change the world will not be fulfilled any faster. The magnitude of problems dwarfs the organizations struggling for change. But their struggle is not without a cause. Even if the end is not in sight, no one else can step in their place. The state and the markets are neither in the position nor expected to provide for everything. Many people probably assume that several tasks performed by NGOs are duties of the state, so their neglect or the fact that they're performed by NGOs and not the state is not registered by them. It is often the case. We usually only confront challenges, systemic deficiencies, and unresolved problems if we're affected. NGOs carry out essential tasks in social work, hospice, and in a broad range of areas. And yet NGOs are sometimes condescendingly labeled as "extras," "cute," or "compassionate philanthropists." Undeservingly.

How does the head of an NGO end up "scrounging" for her subsistence?

These are the successful heads of successful NGOs. But unfortunately, sometimes, no funds are left for their survival. Let's list the primary sources of NGO financing.

• Corporate and private donations,
• grants,
• corporate sponsorship,
• revenues from services,
• and tenders.

That's about all. Most funds are sourced from tenders and donations. Even the most progressive NGOs put in an enormous amount of work to develop and learn to operate business activities related to and supporting their cause to generate income supplementing donations. Most of such action, however, is also linked to gifts. The majority of such NGOs operate a webshop. We often buy valuable things from them to support their cause. Such revenues account for a tiny share of total costs—less than 10%.

How did we end up here? Why should NGOs be required to learn the tricks of online commerce or take part in business training courses for sustainable operation? It would not be necessary if those who can afford it would devise an NGO funding strategy.

Please don't misunderstand; I support all kinds of training courses and development that serve the creation of activities supporting worthy causes, improved efficiency, and measuring impact. However, I'm arguing that compulsory, time-wasting activities could certainly be done away with if those providing support to NGOs would be easier to foresee and their number would rise.

Some institutional donors expect NGOs to participate regularly in project tenders. Some of these only provide funds for new projects. It allows them to prove that something is realized with the funds. These situations usually don't support operation. On the contrary, they place additional burdens on organizations, as they were set up for a specific purpose. They have a cause and programs; they're not seeking new programs but want to operate, develop and deepen the existing ones. Only rarely do they burden their capacity deficits with new programs. It is also necessary to understand and consider this if we have the means to provide support and the intention to launch tenders. We shouldn't place additional burdens on tenderers but rather understand and value what they create and seek ties with them. The option of deepening and scaling increases the potential for change. At the same time, a completely new program worsens the prospects of survival for existing programs and thwarts future success at its inception. Progress is rarely a possibility. The provided grants allow you to start something or abandon it once the budget is spent and the tender settlements are stamped. There are reasonable exceptions, but organizations use many pseudo programs to compensate for operating deficiencies.

Grants spent on operation? No way!

Today it is taboo for an organization to request funds for wages. And even worse. A crime. Only a negligible share of tender funds may be spent on activities unrelated to the given purpose. Some tenders explicitly prohibit the use of funds for financing wages. When NGOs list how they would spend the available 1,000, 10,000, and 100,000 forints, have they ever stated the intention of spending on staff wages? Of course not. It's taboo. We're pretending that these are not costs and needs. As if NGO staff were required to walk without shoes on. As if they do not need security. As if they don't have to pay with money for things. NGOs engage them as if they don't have material needs and desires. They're to blame for not trying to make ends meet in the business world. It's as if they're additionally punished for sacrificing their time and functional capacities on things most people wouldn't want to do. It's absurd.

It is one change we need to understand and accept: some funds should be spent on wages; otherwise, there won't be anyone to do the work! Operation costs money. Those who can include this among the funding criteria! No questions asked, no accountability! Accept it! Its amount matches wages on the market. We shouldn't assume that if NGO staff received funding for salaries, they would lose motivation or go on a spending spree on luxury vacations and gourmet adventures! On the contrary, they want to live in decent conditions. They would like to own an apartment or a car without choosing from other people's used belongings. Why is this taboo?

The minimization and demonization of costs should not be a goal. Keeping costs low is not an accomplishment, but our ability to bring about change is. An organization is characterized not by the number of its expenditures but by what it accomplishes and the changes it struggles to achieve. Similarly, when choosing organizations to fund, we choose not according to their low costs but the cause they are fighting for. It would be essential to invest trust and generosity in NGOs.

Why should NGO staff earn less than they would "on the market"?

"This is outrageous! NGO staff should be paid as much as business personnel?" They can't be serious. There is always resignation behind their words, a sense of shame, and surrendering acceptance of the fact that "well, we can't pay more, we're an NGO." But why? Why is the work of NGO staff worth less than that of a business? Of course, there is no separate pricing for NGOs in grocery stores. But why is their work worth less in the real world?

Maybe businesses consider it normal for NGOs to work with lower wages because they can "actually do what they love to do." But doesn't this sound absurd? Should existential insecurity be compensated with passion for a cause? Or is it normal for people to earn more money in the business sector because they are less likely to love what they do? This argument sounds completely irrational, but on many occasions, I have heard businesses and NGOs say that "at least they love what they do…".

Perhaps not many people are aware, but an NGO employing 10–12 people operates with a budget of roughly HUF 100 million, despite the low wages. It is how much NGO leaders generate through tenders, trade, and "solicit" each year to be able to operate. We applaud this amount if earned by a small company, but if it's an NGO, it's not regarded as actual business performance. Generating money is not even their core activity. That's why they're called non-profits. They're simply trying to collect enough funds to function. There is a specific mission they were created to fulfill. So they have twice as much to do. They help, support, sensitize and seek funds to function in parallel. The head of the NGO is forced to spend most of her time with such tasks and not with the activity for which the organization was established. These tasks account for 70% of the time. These amount to 14–16 hour long days to be able to fight for the given cause and make money. What if this ratio could be reversed? If 30% of the time would be spent on generating funds and 70% on fulfilling the mission. It's easy to see how much the effect could improve.

Not to mention that more predictable funds may lead to less early burnout among NGO leaders. But, of course, others also experience burnout. It is a common condition because we don't have enough time for ourselves. Experience suggests that most NGO leaders often experience burnout from this dual life and pressure, having to secure operating funds and the impact within a given time frame. It is not the degree to which NGO staff sacrifice their own lives for a cause but rather the results and impact that should be the accepted social standard of commitment. We shouldn't expect this from NGOs, just as we often reassure ourselves in business that we can also experience our obligations within the various limits we define. In their totality.

Deliver impact!

Measure, prove, and document that what I give is not wasted. Beyond generating money, most NGO leaders spend their time providing evidence. They participate in impact measurement courses and strive to become infinitely efficient, often to the detriment of their health. Is this normal?

NGOs trade in the hope of change. If they're good at it, we believe them. But at the same time, we disregard the fact that what they do does not bring about change from one year to another. Some NGOs can state how many more trees they planted and how many children are not left to starve, while others work to implement structural changes and change attitudes. It would be absurd to expect them to state an impact each year. There are techniques, and obviously, success has to be documented, but it is unnecessary to call to account and calculate returns constantly. It should be enough to grasp the given problem the organization is tackling, its efforts, and the small steps of progress. We should not insist on fanfares, a tower clock with a chain, fireworks, and gift wrapping in exchange for the fancy annual reports. An incredible amount of time is spent providing evidence, taking away energy from fulfilling our mission. It is a structural problem with a fundamental lack of trust. It is an issue not only affecting NGOs.

And on the topic of returns. Suppose you think of it, in exchange for a donation of a few hundred thousand forints. In that case, NGOs must fuss over details, write proposals, conduct negotiations, persuade, prove, report, settle accounts, etc., which few businesses would be willing to do if broken down into hourly rates. It is required, nevertheless. If you're not dutiful and disciplined enough, you're risking funding.

Not to mention the confusion surrounding the requirement of NGOs to indicate their donors. There is nothing wrong with this. It ensures transparency, and it's also essential to see that many companies are becoming committed sponsors. However, if the logos are displayed on the website, that's the problem; if they're not, that's also a problem. If they are displayed, they get caught up in this vicious circle, discouraging many from donating because they already see how many donors they have. Why would they need one more? Without knowledge of the background, the number of donations, or the necessity of funds. Just by seeing the logos. So how can you manage this issue well? We should be transparent but not misleading and/or immodest.

We are jointly responsible for improving the self-esteem of NGOs. They shouldn't feel as subordinated, supported actors forced to prove their legitimacy persistently. Money can't buy everything. There is business value and social value. The latter is not inferior, and in fortunate cases, the two values are not light-years away from each other. When we consider funding, our primary criterion should be social value, and visibility, for example, should only be an indirect, quasi-secondary benefit. There is nothing wrong with building and showcasing a brand with a bright, responsible, and consistent funding strategy. The problem is when proportions are overturned, and social values are assigned less priority.

But there's also the 1% of donated income tax…

The standard and amounts of grant culture are shallow. It has been said so often; that writing it down is a grim task, but that's the truth, and the situation is not changing. It's getting worse. This year we might see some changes in micro-donations because many people realize that the survival of their cherished media platforms also depends on them. Unfortunately, this trend cannot be observed yet by NGOs. The harassment of NGOs a few years ago has brought about some change, but nothing to facilitate operations. If we consider, for example, the untapped opportunities related to the 1% of tax, when we're not asked to reach for our wallets and "only" essentially have to decide on using 1% of our taxes. In general, those who could afford to — one-half of taxpayers — do not provide for the use of these amounts. In theory, the budget is around HUF 32 billion. According to the statistics of the Hungarian tax authority, in the past five years, 600 thousand fewer taxpayers provided for using 1% of their taxes. In 2015, 2.2 million taxpayers offered an organization 1% of their taxes. This year the figure is only 1,600,000. So a total of HUF 9.6 billion was allocated to organizations. What could be money on the street cannot be collected by NGOs, despite all their efforts, campaigning skills, and tremendous activity aimed at receiving 1% of taxes. It is unbelievably distressing. These billions of forints could help out hundreds of NGOs, support their survival and let them pursue their various activities without the need to ponder over the means to do so and whether they can provide a decent living for their families if they remain committed.

Double standard

Separate rules apply to the markets and NGOs. According to the American businessman, activist, and fundraising guru Dan Pallotta, this practice discriminates against the non-profit sector. I'm not saying that the business and NGO sectors should be on an equal footing, but unjustified discrimination is undoubtedly harmful. And so is generally widespread hierarchy. There should be a partnership instead of subordination. We have seen this in the past. NGOs face compensation, innovation, marketing, time, and profits discrimination.

"We instinctively resent the idea of someone making a lot of money from helping others.

Interestingly, we find nothing wrong with people who don't help others but make a lot of money." Pallotta argues that you are faced with choosing between helping yourself and your family or helping the world, so when launching a non-profit career, you make an economic sacrifice. The NGO sector thereby loses talent who would otherwise also help the world and not just care for their welfare.

It is also widely believed that we don't like to spend donations on advertising because every cent should be given to those in need. People don't realize that amounts paid on promotion can multiply funds, which can then be spent on the mission. More securely and sustainably. Why is it more typical for a brand to advertise the advantages of a product and objectionable for an NGO to advertise all the good things it creates to secure more funds?

Most companies don't generate profit — or even produce losses — during the initial years, and we take it for granted that they struggle to survive. We are patient with the such market building. But if an NGO initially decided to focus on creating the necessary structures, and the results of its work would only be visible years later, this would certainly immediately weaken its credibility. There is no grace period for NGOs. If a business wastes hundreds of millions of forints until it finds the right direction to take, we accept that this is part of its development. If an NGO would do the same — obviously in the category of phantasy, as it never has ample funds — it would throw money out the window, abuse our trust, and deserves to be held to account. But why do we expect non-profits to know and do everything well in an area that often lacks well-founded, functional, and solid answers? This approach discourages the non-profit sector from experimentation, projecting the fear of failure and negatively impacting its reputation. It often impedes growth, creating a catch-22 situation by preventing progress toward resolving big problems.

Successful work attracts capital to the market. The opposite is again confirmed in the non-profit sector, and people are not waiting in line with bags of money to provide funds for operation and growth. We always expect growth and development from NGOs but fail to acknowledge that they lack the funds. Moreover, financial incentives are downright taboo. You are worthy if you act voluntarily or for minimal revenue, with minimal costs. But this is increasingly counterproductive and also unfair.

The hope of a beautiful future

In my imaginary world, I dream about everyone with income having their funding strategy. So, for example, in Hungary, everybody who could afford it would not only offer 1% of their taxes but also at least 1% of their income each month as a contribution to making this a better world and the world for those who are less fortunate. So it's 1+1%. You don't need complicated math to see how this amounts to billions of additional forints.

In this imaginary world, if we can spare a small amount, we should donate it, preferably each month, regularly. But, of course, you don't need to give to many places if you can't afford to — the emphasis is on regularity. This way, we can guarantee operating security and avoid humiliating situations in which NGO staff ask for assistance on Facebook to pay overdue electricity bills.

Suppose you are uncertain or mistrustful as to whom you can help out. In that case, you could check out, for example, the Ethical donation collecting organizations that are NGOs strictly monitored each year, collectively making efforts to secure transparency and donors' trust. Any of these organizations is a safe choice.

In an imaginary world, a corporate executive is thinking about what is best aligned with her company's activity, goals, community, environment, and the role it aims to play. She chooses NGO partners for the long term, without necessarily switching these each year, if she is satisfied, but is proud that she can provide a sense of stability for the organizations supported by her company. Likewise, the executive would not switch organizations to enhance corporate communications because successful cooperation is also based on the mutual benefits of parties and their ability to draw on each other's strengths.

In an imaginary world, the performance of a company executive is also measured by her ability to apply a long-term strategy in this area and by her understanding of the extent to which her company allows her to shape the world—knowing what she leaves behind.

It is customary in an imaginary world.