Wednesday, February 19, 2014

Overhead costs and NPOs...

Recently I heard TED talk by Dan Pallotta, about how the way we look at our charity is totally wrong and how we use double standards while looking at profit organizations (PO) and non-profit ones (NPO). This talk was very informative and sort of eyeopener for me, I am guilty of doing one of the things which he mentioned in his talk, I also used to judge any charitable organization based on how little they spend on overheads, I used to think overhead spending are total waste of donated money, every donated penny should be used for the cause which it was donated.Many people donate their hard earned money towards causes they like, they want to see that change in society as many of them themselves can't devote enough time towards that cause they donate money to some organizations to work towards those causes. This all requires lot of infrastructure and people to make things work, and this is where this talk is very helpful, Dan does a really great job in explaining us how we need to look at spending of these NPOs.

I loved this talk not only because it demonstrated how flawed my attitude was but also he made a very strong case about problems of non-profit organizations because of some unreasonable expectations from donors. Every donor has full right to know how their money is spent and how it helped for the cause for which they donated it but at the same time they all also need to understand that these organizations also need to hire talented and motivated people to work for them, they need to compete with all these profit making organizations to attract this talent and if we all who donate money to them expect them to work well then we need to accept that they are bound to have some overhead costs, we need to judge them based on their performance and not how much they spend. If they are working very well towards achieving their goals and spending reasonable money  as overhead cost then we should not complain. In today's world social work can be a profession and like all professions it also requires lot of hard work, dedication and commitment to become successful. People working this this areas with lot of NGO's also need to have normal life, they also need to have their own family and look after their needs and whether we like it or not this all requires some amount of money and if they are engaged in social work full time this work needs to generate that money for them and this is what we should see in overhead costs.

This talk has changed my outlook towards NGOs and all other socially active organizations. I do care about how much they pay to their employees and if it's reasonable amount I don't feel cheated or feel that they are wasting my money, I do understand that they need good, talented people to do this job and it's not easy to attract good talent without having good or at least reasonable package, but still these organizations need to be careful on how they spend their money as people like to see most of their money is being used for the cause for which they donate it, this can be a tricky exercise but these organizations need to do it to keep all donors interested in their work. I hope this talk will help many people to understand better how these NPOs use or can use their money in somewhat better or efficient way by hiring good people and engaging them in work of their organization.

Thanks for reading and please share your opinion about this topic.

[Copyright : Vinay Thakur. Please contact the author for re-posting or publishing]

Links:
1. TED talk of Dan Pallotta 

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