Much of the beauty that arises in art comes from the struggle an artist wages with his limited medium. – Henry Matisse
One of the most common statements I hear about nonprofits is that they are “underfunded.”
When I hear this phrase – and the person saying this likes me, and they seem to be in a good mood, and I could plausibly defend myself if it came to blows – I ask them:
“Underfunded relative to what?”
Last year’s budget?
This year’s goal?
Your aspirations?
This sentiment is not unique to nonprofits. Many for-profit companies fail because they run out of money. For this reason, nonprofits like Network Kansas provide gap financing to entrepreneurs facing systemic barriers to funding. Every entrepreneur wants more money in the bank to do cool things.
Similarly, every household I know could use more money for good things. (I’m in the early stages of justifying the purchase of this perfect basketball goal.)
I think it's safe to say everyone believes they could use more money. Nonprofits are no different.
Yet, this perception of being underfunded is more deeply held in the nonprofit sector than anywhere else, and it stems from one fundamental difference in how nonprofits are oriented.
Businesses are built on profit.
Households are tethered to security.
Nonprofits are rooted to a cause.
People working at nonprofits care deeply for causes bigger than themselves and genuinely believe they can make the world a better place. (I believe with them.)
But this means that no matter your budget…
If your cause is preventing homelessness, you are underfunded.
If your cause is eliminating child poverty, you are underfunded.
If your cause is preventing climate change, you are underfunded.
These systemic, earth-altering challenges are too big for any individual nonprofit to tackle. (They're probably too big for any single government, too.)
When a nonprofit leader says they are underfunded, I think they mean underfunded relative to their cause.
Burning out
If your nonprofit received a grant for $100,000 last year and was able to generate 100,000 units of good, whether it be meals distributed, laughs sparked, or books read, and this year, the funder says that they can only give you $80,000, what do you do?
Reduce your footprint to provide 80,000 units of good?
No. You work longer days, sleep fewer hours, wear more hats, and find a way to produce 100,000 units of good with only $80,000.
And when your funding drops to $60,000 the following year? You do it again.
It’s no surprise that, according to the Center for Effective Philanthropy, burnout is one of the biggest concerns for 95% of nonprofit leaders.
Who wants to tell third graders who love to read that you ran out of money for books?
Instead, nonprofit leaders eat the costs, leaving funders with a genuinely unfair asymmetry. Funders receive accolades for funding on the way up but almost no criticism when they reduce funding on the way down. Nonprofits don’t bite the hand that feeds them 20% less because the alternative would be much worse. (No funding at all.)
Nonprofit leaders didn’t enter this space for the money; they are here for the cause. They work at a roughly 20% discount from the private sector and would probably do this for free, which many often do.
(Here’s data on the 25% wage gap for nonprofit leaders where I live.)
In this way, they are more like artists than any other sector.
They depend on patrons to do good in the world. The free market (usually) doesn’t value their work, and they do it anyway.
This is what they were made to do.
In art, they are known as starving artists. In altruism, we call them martyrs.
We can’t afford martyrs
Just like we tell artists to stop giving their stuff away for free, nonprofit leaders must stop absorbing the costs. Working 60 hours a week to carry a nonprofit isn’t sustainable, and we all know how it ends.
We have to accept that the cause we care about is bigger than us. We must examine the resources we’ve been given and decide what good we can do.
And we have to accept our limits.
Our limits may lead us to grieve. We may need to invite our funders to grieve with us.
In short, instead of doing more with less, sometimes, nonprofits should just do less.
Some practical constraints to consider
Forty hours is enough
Salaries are almost always built on a 40-hour week. Accept that constraint. You can have slack in the system for unusual situations, but consistently working more than 40 hours weekly isn’t sustainable. (And probably violates labor laws unless you are paid overtime.)
Budget your time
Parkinson’s Law states that work expands to the time we give it. Estimate how long your work will take and then create a budget for your time. If you estimate that the event will take 100 hours to plan, budget 120 hours to give yourself some wiggle room, and then don’t spend more time than that.
Treat your time like money
If you budget 120 hours to plan a fundraising event, set a basic hourly rate to go along with it. Something like $100/hour to keep the math simple (and give your time some dignity!) Make sure labor is included in the budget for the event. You need to pay for the caterer, the venue, AND the six months of labor that went into planning the event. When it's all said and done, ensure your fundraiser brought in enough money to justify the investment, with your labor included. (Lots of fundraisers don’t.)
Bake in margin
When you estimate the costs of doing a program, it’s not just the labor and the hard costs associated that should be factored in (direct costs). Add something like 20-30% margin to your programs to fund things like marketing, accounting, leadership development, and – dare I say it – benefits for your team. 🙂
What I’m trying to say
“Nonprofits should do less” is a bold take, but I trust you can hear what I mean.
You aren't alone.
Whether we see it or not, the cause you care about is our cause. When there isn’t enough to go around, that’s not on you. That’s on us.
When you get to the end of the week and you have more emails to read, more proposals to write, more donors to connect with, and you need 20 more hours to get out of the hole, go home.
That work will be waiting for you on Monday.
And if you are wondering why this is so hard and thinking about it makes you want to quit. Watch this scene from possibly the greatest baseball movie of all time.
Dottie wants to quit the team because “it just got too hard.”
And Tom Hanks replies:
“It’s supposed to be hard. If it wasn’t hard, everyone would do it. The hard is what makes it great.”
Until next time,
Ted
P.S. If you missed yesterday’s Attio CRM demo, you can watch it here or sign up for the next one in May.
P.P.S. If you are feeling personally burdened and overwhelmed by politics and the news, I found Aaron Francis's article “An Argument for Logging Off” very helpful (and it influenced this piece.)
