Quora Answer: Does Running a Non-Profit Organisation Lead to Personal Wealth?

The following is my answer to a Quora question: “Does running a non-profit organisation lead to personal wealth, and prosperity?”

Starting, and running your own non-profit organisation, or being hired in an executive capacity can be very lucrative.  The public accounts of many non-profit organisations make very interesting reading.  For example, the American Cancer Society raises well over a $1 billion annually, largely through carefully cultivated corporate partnerships.  Of that, 15% is for more fund raising, and another 60% goes to compensate employees and pay for employee benefit.  For every dollar raised, less that 25% goes into actual cancer research, or other charitable causes.

If we were to systematically go down every major non-profit organisation in the world, from the largest, you will be disappointed at how much actually goes into the cause, and how much is in executive compensation.  The people who volunteer, who give their time for the cause, the ones who give something out of every pay cheque, would be quite shocked at how they have been taken advantage of.  Non-profit organisations bring in income that is tax exempt, for the most part.  And with the right kind of accounting, and a lot of skills with the balance sheet, you would surprised at how much you could keep for yourself, and get away with it.

This is not a uniquely American phenomenon.  In Singapore, specific Muslim organisations collect zakat.  The portion that is allocated to amil, essentially the compensation for the people who collect the zakat, the compulsory tithe, is up to 40%, is certain places.  Some places take the cost of the zakat collection centres, and the related staff salaries out of this.  It is not as predatory as groups such as the Susan G. Komen for the Cure, which actually use donations to fund litigation against other charities, or the American Red Cross, with its excessive executive compensations; but there is room for improvement.

The non-profit sector is lucrative precisely because the funds raised are largely tax exempt.  It is easy to get corporate donors because donations provide tax relief.  People give money because of emotional blackmail, or they actually believe.  It is taking candy from babies with the promise to give some of that candy to other babies, and then getting those babies to lick the wrapper, while you stash the candy away for yourself.