The nonprofit world has been buzzing for the past few months over news of long-awaited changes in how nonprofit organizations are rated. For several years, the primary measure of nonprofit “excellence”, according to many of the sector watchdog organizations which prospective donors and others consult before making decisions of support, has been the ‘overhead’ to ‘program’ ratio (both in quotes because of their rather dubious definitions). There are tremendous problems with this very blunt measure, the most serious of which is the fact that it does not actually measure anything very helpful about a nonprofit’s work at all, namely: is it actually solving the social problem it sets out to solve?
But another problem with the reliance on overhead ratios as the benchmark of nonprofit success is its depressing effect on the salaries of those working within nonprofits because, of course, salaries are most often counted as “overhead”, especially the salaries of nonprofit administrators (anyone not engaged in direct programming).
But there is cause for hope, as macro practice social workers head for graduation this spring, when many will officially become part of nonprofit organizations’ “overhead”, applying their skills and knowledge to the effective operation of organizations that, if led by talented people with clear visions of social change and real leadership to marshal resources towards that change, will be part of the solution to our most vexing social ills.
Late last fall, Charity Navigator, the largest and most prominent of the nonprofit watchdog groups, announced that they are totally revamping their formulas for evaluating nonprofit organizations. They will heavily discount their old reliance on overhead ratios in favor of (yet unannounced) metrics that emphasize impact.
Very exciting, really, for all of us who care far more that our nonprofit organizations actually achieve what it is that they set out to do, rather than how much money they spend on salaries in order to get it done. (And, as an aside, I really think that’s just about everyone. I mean, people get all riled up about xyz nonprofit executive making “too much money”, but if I show them a program that spends 100% of its revenues on ‘program’, say, having a volunteer hand out $100 bills to homeless people, I can guarantee you that they wouldn’t be too excited.)
But, it’s almost graduation time, so let’s talk about what’s really on the minds of macro practice soon-to-be social workers everywhere: getting a job that will pay you a decent (read: pay your loans and still earn a real, living wage) salary.
According to the most recent Bureau of Labor Statistics data, the median hourly wage for social service managers, the closest category to social work administration, was $26.92/hour. Assuming full-time work (which, certainly, cannot be assumed in today’s economy, but most management positions are full-time), you’re looking at about $54,000/year. Doesn’t sound that bad, probably, except when you consider that that’s a national figure, which is distorted by the much higher costs of living in some parts of the country (and correspondingly higher wages) and when you look at the BLS numbers for chief executives, who earn a median $76.23/hour, about three times as much, to do very similar kinds of work: manage budgets, oversee personnel, interface with external stakeholders, plan for the future, deal with threats, and solve problems.
Enter this whole discussion about overhead and how we should define and monitor a “good” nonprofit organization. The way that I see it, as long as low overhead equals good organization, then there are very powerful incentives for nonprofit leaders, including other social work administrators, to keep administrative salaries low, even dangerously low, to the extent that it can be difficult to recruit and retain the best and brightest minds.
If, conversely, we start defining a good nonprofit organization as one that excels at its mission, that succeeds in addressing the problem that is its target, that innovates, that surpasses expectations…then won’t there be just as powerful an incentive to find the very best person possible to lead that organization, even if it costs more to hire her?
It’s crazy, really, when you think about it. If a society’s values are lived out in its allocation of resources (which they largely are), then it would appear that we value the creation of new items for Taco Bell’s value menu more than the eradication of homelessness. Or the cure for AIDS. Or the end of child abuse.
You get the idea.
There will obviously be a lag, as the changes in the sector’s barometer slowly infuse themselves into organizational practices. But I truly believe that we’ll see a rise in the demand for top-notch nonprofit organizational leadership in the years to come, and the salaries to go along with it.
Now social work administrators have to make the case that we are uniquely qualified to provide that leadership. That’s another challenge, but one that I can imagine my students and former students will tackle with gusto.