alt Hacker News$3T flows through U.S. nonprofits every year
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"It’s just that almost nobody looks."
Looking will blow up too many cushy deals for too much of the Powers That Be. A great deal of it is non-show "chairmanship" jobs for the family and friends of politicians. Legal bribes.
Feeding Our Future was another fine example of the shenanigans that go on in the US. Power Forward Communities was setup with $100 and captured $2 billion in EPA grants; caught while still doing only token work and not yet having been drained into the pockets of the favored. Abundant Blessings in CA was another nest of fraud; in criminal court right now.
Seems like you can't go more than a couple days without another non-profit scam mess hitting headlines.
Strangely, what they're selling is some kind of automated surveillance camera system.[1] "Whatever you funded, we can monitor it."
There's a mistake I see in the comments here that "non-profit" = "charity". There are a large collection of non/not for-profits that are not even remotely in the charity business. Some of these companies have long legacies that stretch back to academic labs spun out of major U.S. educational institutions.
I've worked for two such companies in my career (and partnered with a few others) and both of them were really just normal businesses that used their non-profit status as part of their business model. They used that status to position themselves as an objective second party to various governments and businesses and signal trust. They also internally represent themselves as something different from commercial businesses, just with a weird way of mopping up profit at the end of the fiscal year. At one I was a researcher and the other a low-level executive.
At the working level, both paid slightly under comparable jobs in the private sector, were often very top heavy, and spent lavishly on facilities and had large internal R&D programs that often went nowhere but acted like overamped hands-on training programs that expressed themselves in additional expertise they could offer their clients without having to turnover staff.
I often had multiple personal offices, subsidized mid-level restaurant quality lunches, laboratories, assistants, and research budgets stretching into the low millions of dollars. This was in addition to the regular work we were contracted out to do, which was often either direct work on fairly cutting-edge S&T like programs or providing special advisory and expertise services to those same customers.
All of the companies I know in this space are also fairly top-heavy with, executive and administrative pay helps sop up any profit.
The law requires these companies to report quite a bit of information about their financials into the public space every year [1]. Some of the executives make quite extraordinary pay.
Very misleading analysis, the 8% direct grant comes from adding universities, hospitals and non-charities that make up 85% of the denominator. If you account for this using their own numbers, you get about 50% overhead, not 92%
For anyone even more skeptical of where your money goes when you donate to a nonprofit, there are plenty of resources out there for researching this. CharityNavigator is a popular one, but I donate primarily to GiveWell: https://www.givewell.org
yes, what we need is for charities to operate on a quarterly reporting cycle, so that their administrative overhead increase, and (like public companies) they can be myopically focused on short-term performance.
It looks like a lot of the monies in that chart are for wages and admin. That's not the worst thing. Many charities spend their money on doing things for the betterment of society and those people need to be paid a salary for their work. If there's a charity that cleans up parks, I would assume their wage expenses would be high to pay for the people doing the cleanup work.
Not saying that there's not grift in the nonprofit world, but my experience with a lot of people who work in this space is that they're good stewards of the funds and very dedicated to trying to help the world be a better place.
I think charity is good, I donate to charity. At the same time I once watched a podcast that basically said when you donate to charity the mindset and often the outcome of charity is that its money you throwing away and did not invest in making longer term differences. Its an utterly rude statement but I still feel a fundmental tension in that premise that an organization that could seek profit but whose fiduciary responsiblity was to the community it was serving rather some stock owner would have incentives to establish better long term charity. That well example is supportitive of that thought.
But I think the the argument is certainly not good at other times because not everyone has the ability to invest and make a difference donations lower the requirements and the barriers to both. Also whose to say even a throw away Well doesn't make the world of difference to people who really needed even if it was temporary. I just a struggling thought I have sometimes...
> Much of it is operational necessity. But from a donor’s perspective, only 8 cents of every dollar shows up as direct aid and grants. The rest is invisible
One of my groups of friend groups has a lot of people who work at non-profits that are really dedicated to good causes. They are people who care and wanted to find jobs with purpose. The companies they work for aren’t, as far as I can tell, trying to grift or swindle.
Yet their overall efficiency looks a lot like this chart: Very little money makes it out of the program because it’s so expensive to pay for all of their staff, office space, and meta-activities like doing more fundraising.
From the outside looking in, there is a lot of malaise and inefficiency that just gets accepted at this level. They know they’re taking a pay cut relative to private industry so they, in turn, put in less effort. Many of them invite us to meet up in the afternoons because they’re “working from home” or just leaving the office early. Every time they encounter hard work the solution is to hire more people. Some of them switch to for-profit companies for a while before coming back to non-profits for the laid back working environment. It’s just accepted, to them, that non-profit means it doesn’t have to be efficient or a lot of work.
Maybe my second hand experience is unique to this little bubble I’m in, but whenever I see statistics like this I think it’s more normal than not.
I’ve given to non profits where I know the people personally and how they operate; and to FreeBSD and NetBSD, which deliver pretty great results on a relative shoestring budget.
One of the reasons why I donate to smaller local charities, like the Husky Rescue near me. Or charities that accept physical goods like Toys for Tots and food banks.
Isn't charity just a business model these days? The first time I came across was about 10 or so years ago where, I think it was a 60 minutes did a report on Movember, how they have some scheme/scam where the guys who started/own the "charity" also have another company that owns the Movember brand and the charity then has to licence the brand from that company. Meaning that for every dollar donated a good portion (can't remember the exact figure) then goes straight into their pockets as license fees.
Wow. This is a massive figure.
The US GDP is $30 trillion but most of that is spoken for; it's wages, costs, reinvestment — money that's already doing a defined job. But this $3 trillion is different; it's flowing through entities that are completely exempt from normal market pressures and competition.
What's insane to think about is the composition of it; this isn't charity money, it's Medicare reimbursements, government contracts, university tuition, hospital fees. Which means the most important sectors of the economy — healthcare, education, research — are basically being run by nonprofits. Enormous institutional players with massive lobbying power, operating in markets with no real competition.
It's less that profits are being funneled into nonprofits and more that entire industries have reorganized themselves around the nonprofit structure to avoid the accountability that competition normally creates. Which explains a lot about why the economy feels so captured and doesn't make sense anymore.
Aka the Nonprofit Industrial Complex.
Here's a surprisingly factual Teen Vogue primer:
https://www.teenvogue.com/story/non-profit-industrial-comple...
AI;DR
ai;dr
I wonder how much of this is religions
these are the lobbies in the middle east, lobbying to topple regimes and co.
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I believe that many (most?) non-profits are a combination of grift and money laundering.
I would love to see requirements that 75%+ of all non-profit revenue has to pass through to the community, that non-profits may not transfer funds to other non-profits, and that directors and officers cannot be compensated and have very modest limits on expenses.
They're a structure to compensate for the lack of state power created by us burdening our instruments of government with overwhelming requirements as much as I suspect that all we did is move the location where crimes were committed. I doubt the direction to success is through burdening these successor organizations with requirements. I suspect it is through reducing the constraints upon our governments - though how one would go about that in the face of highly-organized directed interests is an unsolved problem. Certainly, no one has yet come up with a scheme where firefighters' unions cannot impose rent-seeking requirements like FARS upon the remainder of society. Perhaps I'll take the chance to make a grand proclamation or 'hot take': "America will succeed or fail in the next century depending entirely on her ability to solve rent-seeking".
"only 8 cents of every dollar shows up as direct aid and grants"
That's an extremely misleading statement. For instance, a food bank giving away food to a pantry does not count as "direct aid and grants" (at least, if they're defining that as "Grants and other assistance to domestic individuals." from the I-990" ). The salary for the warehouse worker operating the food bank is also not counted in that 92%.
Other cherry-picked statements like "32% of donors trust charities less today than they did five years ago" (not giving the percentage that trust charities more, or any other way to contextualize) make it clear that this is just a hit piece.