On the flip side, what people seem to want “not for profit” to mean is “employees work for below market rate for some reason”.
I don't get it. I would expect employees at a non-profit to be compensated along the same lines as those at a for-profit. It's a constant easy story for shitty journalism in the UK – "oh my god this head of a charity makes far less than the head of an equivalently–sized private company! what a bastard!"
I'd go so far as to argue that I have trouble trusting non-profits that do not pay their staff. If a not for profit wants to compete for good people, they need to pay them a living wage.
You're thinking about the wrong thing. It's not about salaries for staff. The fact that it's a non-profit means no corporate taxes. That's where the profits go into the pockets of management, practically.
Profit or non-profit is not about paying market rates. Even non-profits have to pay reasonably competitive salaries to attract and retain good employees.
That's a very pejorative and mostly inaccurate way of putting it.
"Non-profit" doesn't mean people can't earn good money -- it means the organization exists for a purpose other than profit and, therefore, gets some tax breaks.
Most people I know who work in non-profits are paid below-market for their skills.
Take the ideological (and incorrect) definition of not-for-profit vs for-profit companies. The for-profit company is supposed to be willing to utilize any sort of money-making opportunity to improve their bottom line which is supposed to be their goal. The not-for-profit company is supposed to sidestep opportunities that do not necessarily align with their mission, resulting in less profit but greater integrity, as maintaining their mission is supposed to be their goal. If this were the case, not-for-profit business would invariably end up with substantially less funding than comparable for-profit businesses. As a consequence of this, it would be fiscally impossible for them provide the same sort of compensation.
This is of course fallacious. But the reason for this is that not-for-profit and for-profit companies operate in mostly the same way. This is something that most people do not understand. This is precisely what I was aiming to point out to the person who initially said 'why would you ever contribute your time for free to a for-profit?' It's an intuitive, but incorrect understanding of the differences between the sort of a companies.
If they pay more than they can get away with, they are wasting money, but if they pay less and get lesser-skilled workers, they are also wasting their money.
Underpaying in a non-for profit assumes that they can still get the same quality worker.
It's a mistaken belief that "non-profit organization" somehow get to spend less on employees. They have to at least pay market rates like everyone else, or people won't show up, but they can also waste money on employees. After all, when there's no profit, what's the profit motive?
Sadly, the not for profit sector has become a mechanism to avoid paying taxes rather than groups dedicated towards actual charity. That's beyond some of the salaries that directors of these organizations are making.
I think the gp’s point is that to a lot of entities (employees, suppliers) there is little difference between for profit and non profit. And if your nonprofit is passing profit along to a for profit ... you can see how the lines blur. Maybe a way to interpret the above comment is that the incentive structure for many people involved is not significantly impacted by the nonprofit status. And non profits can have money left over at the end of the year, they just don’t distribute it to shareholders.
Non profit doesn't mean all the employees work for free. Your statement is the equivalent of saying "The Red Cross don't need money, they're a non profit!"
Why should a non-profit pay its employees less than a for-profit company? The labor market is the labor market; the feel-good of working for a non-profit might be a "perk" that justifies a slightly lower salary (like equity in a startup), but it'll only get you so far. Insisting that non-profits pay people less just means they'll get less qualified/motivated people.
(And to the extent that the argument is that you don't need to pay $400k to get a qualified/motivated CEO, then that's true of any company--being non-profit has nothing to do with it.)
A well run not-for-profit damn well better be making a profit, it's just not turned back to the owner. They just take their allotted salary. Which is a pretty fine idea too.
I don't get it. I would expect employees at a non-profit to be compensated along the same lines as those at a for-profit. It's a constant easy story for shitty journalism in the UK – "oh my god this head of a charity makes far less than the head of an equivalently–sized private company! what a bastard!"
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