Yael Eckstein: Salary, Spending, and the Non-Profit Double Standard
“The Way We Think about Charity is Dead Wrong” by Dan Pallotta on TED Talks (2013) sparked an essential conversation about five key factors that unfairly burden nonprofit organizations in comparison to their for-profit counterparts. These factors are compensation, advertising and marketing, taking risks on new revenue ideas, time, and profit for attracting risk capital.
Pallotta makes a compelling case for addressing the disconnect between the unrealistic expectations placed on nonprofits compared to the for-profit world. While discussions continue, there has been some progress, but much remains to be done.
If you believe in the critical role that nonprofit organizations play in aiding the needy and advancing society, it’s time to rethink how we view nonprofit spending.
The challenges of changing the world are immense, and our capacity to do so has been limited by the way we treat the nonprofit sector. Nonprofits that allocate significant resources to fundraising and staff salaries are often criticized for “wasting” money that could have gone directly to the cause. However, this mindset restricts nonprofits, preventing them from attracting top talent and scaling their impact over time.
- Compensation
Ethically, people often object when a nonprofit CEO earns a significant salary. Even though nonprofit salaries are rarely on par with those in the for-profit sector, there is a belief that anyone in the charity space should be driven purely by goodwill, devaluing their skills and commitment to making a difference.
But how many professionals would be willing to earn 75% less than their market value for their entire career? It would make more sense for them to donate annually than to sacrifice their livelihood for the “greater good.”
Nonprofits must be allowed to compete with for-profit companies for top talent by offering appropriate and competitive compensation.
- Marketing
Would you donate to a charity you’ve never heard of? Even if you briefly came across a charity’s mission, would you be inclined to make an immediate donation?
Successful charities thrive by raising awareness about their causes. Well-known organizations like United Way, Salvation Army, and St. Jude Children’s Research Hospital are able to do so much good because people recognize them and understand how to contribute.
So why criticize nonprofits for investing in marketing and advertising? Marketing is crucial for generating donations, and without it, their ability to raise funds is stifled.
Despite decades of charitable giving being measured since the 1970s, contributions have remained at 2% of GDP. This figure hasn’t increased, partly because charities are discouraged from marketing themselves. In fact, many donors specify that their donations should not go towards advertising.
- Time
Many donors expect immediate results from their contributions to nonprofits. They want to see direct, tangible outcomes from their donation within days. But what if that donation, invested in long-term fundraising efforts and infrastructure, could generate far greater benefits over time?
Nonprofits aren’t given the same patience as for-profit companies, even when the potential for long-term success is clear.
- Taking Risks
Risk-taking is often celebrated in for-profit companies, where innovation can lead to lucrative opportunities. If a business venture doesn’t yield immediate results, investors might still back the project if they see potential for future profitability.
In contrast, nonprofits are discouraged from taking risks. Big ideas for fundraising campaigns are often shelved out of fear they won’t yield immediate returns. This stifles creativity and dissuades talented individuals from engaging with nonprofits.
This cautious approach limits a nonprofit’s ability to grow and innovate, restricting the potential to raise more funds in the long run.
- Profit
Donations to charities are gifts, with perhaps a branded pen or calendar in return. For-profit companies, on the other hand, can invest your money, multiply it, and even offer you a return.
Charities lack the ability to tap into markets in the same way, leaving them without a key source of capital to grow.
We Can Be the Change
Shifting perceptions around nonprofit spending begins with each of us. We must let go of the outdated idea that nonprofit workers deserve minimal compensation. It’s time to support nonprofits in making significant investments when it promises greater returns. Nonprofits must be empowered to scale and pay their staff competitive wages to attract top talent.
At the International Fellowship of Christians and Jews (IFCJ or The Fellowship), President Yael Eckstein knows that compensation is key. Yael Eckstein’s salary reflects her commitment to elevating the organization, ensuring that her team is compensated fairly based on their experience and contribution.
According to Yael Eckstein: “Salary, benefits, and incentives motivate talented and experienced professionals. At The Fellowship we have worked hard to foster a meritocracy where outstanding employees can be appropriately rewarded for their contribution to our organization’s mission, while staying within reason of industry standards. Our compensation is reviewed by an outside firm and deemed ‘reasonable’ based on similar roles, positions, and size of organization.”
In 2021, The Fellowship raised over $200 million, making it the largest provider of humanitarian aid in Israel. That year alone, it supported more than 2 million Jews, proving that Eckstein’s approach is effective. You can achieve great things while ensuring fair compensation.
Produced in association with The International Fellowship of Christians and Jews (IFCJ).
