There has been a whole lot of discussion and confusion over whether nonprofits are like for-profits. To be honest, it seems pretty simple to me:

How they’re similar: both are organizations trying to accomplish difficult things as well as they can.

How they’re different: Nonprofits take donations; for-profits don’t.

When people draw analogies that have to do with the former, they’re usually valid analogies. Saying that some nonprofits are bad at what they do seems pretty common sense. So does saying that it’s important to figure out which ones these are. So does saying that effectiveness doesn’t always mean low overhead.

On the other hand, anyone who says nonprofits must be “economically sustainable” in the sense of having non-donation revenues greater than costs is simply confused. I won’t go into all the mechanics of why and how it’s possible to provide a service and be worthy of existence while still not turning a profit. Honestly, I don’t think anyone reading this blog needs help understanding that.

Analogies are analogies. They compare two things that are similar in some ways, yet are different things. You have to evaluate each analogy as it comes, and ask whether the things being compared are similar in the way that is being claimed. Otherwise, you’re liable to just start rambling about all the ways in which they’re similar and different. I guess what I’m saying is that I could go for a touch less of that.

I think that funders should be blunt, honest, and public in their feedback to nonprofits, including those who get rejected. The benefits in terms of allowing public dialogue and giving nonprofits the feedback they need to improve are obvious – yet every foundation I’ve called agrees that publicly criticizing rejectees is unacceptable. Why? The answer, according to many – most recently Mark Petersen and Daniel Ben Horin – is that doing this would discourage and demoralize the people who work so hard to make the world a better place.

I think in many cases this is simply wrong – I and the other members of GiveWell always prefer honest feedback to “nice” feedback – but I suppose there are some people who would rather miss out on feedback than have their feelings hurt. My short hand term for these people is crybabies, and what follows is a letter to them. I don’t mean the term “crybaby” to be offensive or negative – just saving space. Really.

Dear crybaby,

First off, I don’t want to hurt your feelings, so please read the following standard “nonprofit niceness” disclaimers:

I really admire your work. From all I’ve seen of you, I think you are the greatest human being in the universe: compassionate, kind, and brilliant. What you’re doing is so amazing. You are the best and you rock. Everything I’m about to say is only because I care so much about you and it’s all just nitpicks, so don’t take it too seriously, and when you’re done reading it, forget that you ever got criticized and focus on the big picture: that you are about 3/4 of the way between person and god.

OK. Now let’s get rolling. As a nonprofit person, you have presumably given up a good deal of money, security, and comfort. The question is, why?

I hope the answer is that you care more about making the world a better place than just about anything else. If that’s right, then consider how helpful criticism – all criticism, regardless of tone – can be to your mission. Unfiltered criticism is the best way to get others’ perspectives on what you’re doing, which unless you’re already omniscient is hugely valuable information. If you get offended by criticism to the point where you fail to learn from it – or worse, get demoralized – this is hurting the people you’re trying to help. So don’t.

Working out can be painful and unpleasant (granted, I’m largely speculating here), but any aspiring athlete who skipped it would be a joke. The mental equivalent is learning from criticism, and if you’re putting yourself forward as a person who can use others’ money to improve the world, you’d better be ready to put learning and improving first, and your feelings second (or twelfth). So here’s my advice to you: seek out as much feedback as you can, push people to be honest, and get so used to negative feedback that its emotional impact wears off (leaving only the educational impact). When someone starts giving you the “nonprofit niceness” disclaimers, cut them off and ask how you can improve. When someone uses inappropriate language like “you suck,” be grateful for the assistance in toughening up. I’m speaking from personal experience, as a very emotional person whose gut instinct is to shut down when I get criticized – the more you go through this, the better you will become at getting improvement, rather than pain, out of criticism.

If you find yourself unable to do this, I only have one explanation: that helping people isn’t the core of your motivation. That you care more about your short-term emotions, day to day, than about the good work you’re trying to do. That you’ve chosen nonprofit over for-profit not because you want to improve the world, but because it’s a nice, cuddly atmosphere where you will never be challenged. If this is you, I take back everything nice I ever might have said about you, your intentions, and your project. It would be one thing if you were off volunteering on your own, but the money you ask for could be going to someone else with a thicker skin, and more value on learning than on their own feelings, who can do a better job than you at helping people. I want you out of your job and other people’s way.

Let me close on a personal note. I’ve been a donor, but now I am on the other side. I’ve given up a great job with great pay for one that has more hours, more stress, and less comfort. I’ve already struggled, I’ve already felt pain and demoralization, and I know that I’m just getting started. But to give me “sympathy” by tempering your feedback would hurt our project, and my desire for the project to succeed is the only reason I’m doing any of this in the first place. So please, honor the following wish for me. If you ever talk to me, be totally blunt with me about the job you think I’m doing. And if I ever complain that your language or your tone or your criticism is inappropriately harsh, and focus even a speck of my energy on making you “nicer” rather than learning from you, please do these two things in succession:

1. Remind me of this letter; call me a crybaby and a hypocrite; and repeat your feedback, as harsh as or harsher than before.

2. If that doesn’t work, and I continue to focus on my feelings rather than your feedback, kindly bludgeon me in the head.

Best,

Holden

I find a huge disconnect between what others mean by “corporate social responsibility,” and how I think of it. Here are some of the things I don’t think are part of corporate social responsibility, pulled from a scan of dotherightthing.com (think CSR meets Digg):

• I don’t think it’s irresponsible for a corporation to charge as much and pay as little as it can. If it doesn’t, someone else will.
• I don’t think it’s a good thing for a corporation to sponsor social change projects that have nothing to do with the goods and services it sells.
• I don’t think it’s a good thing for a corporation to offer donation matching for particular charities.
• In fact, I don’t think it’s a good thing for a corporation to give to charity, period.

People, not corporations, should give to charity. In fact, every penny that a for-profit corporation gives to charity is a penny that it could have given to its shareholders. Those are people, as capable of giving to charity as any other people. And they’re capable of giving using their own judgment and personal values, rather than being stuck with the charities that their CSR committee (most likely more concerned with marketing than with doing good) chooses. If you’re mad that charities are underfunded, yell at the shareholders, not the companies.

More broadly: a corporation is not a person. A person should contribute to society, spend time with his% family, take care of himself% first but also give to charity, etc. (You haven’t heard that you can now gender-neutralize any word by sticking % on the end? Well, I just invented it. Pass it on.) A corporation is a legal entity whose sole purpose is to provide particular goods or services. A person’s life should be well-balanced; a corporation exists to do one thing well.

If the world were a family, the businesses wouldn’t be the cousins and uncles; they’d be the chores assigned to different people on different days. You wouldn’t complain that taking out the laundry is wrong because it doesn’t involve petting the cat, even if petting the cat is a good thing to do. They’re just two different tasks that need doing.

That’s why I think of a socially responsible company, broadly, as a company that uses only what it pays for and charges only for what it provides. Business models built on under-regulated pollution, invasion of privacy, or other violation of property rights are irresponsible. Business models built on addiction, manipulative/deceptive marketing, or flat-out snake oil are irresponsible. And of course, there are some products that I simply feel that everyone (including the consumers) would be better off without, but my opinions on those are pretty personal. If a business can stay away from these dirty tricks and still turn a profit, that means it’s providing something that people are willing to pay for, enough to justify the cost of making it. For a legal entity, what more should you ask?

People can get away with some incredible things as soon as they say that what they’re doing is “for charity.” First among these, of course, are the tax advantages that subsidize everything from helping the needy to fighting gun control, convincing people to eat beef, and stockpiling giant piles of cash for eternity. But it isn’t just the IRS that loses all ability to tell right from wrong as soon as the word “charity” comes up. It’s all of us. Except me.

You may not attend a rock concert to benefit beef, but what about cancer research? How about humane societies? Of course, these two causes are in direct conflict over the question of animal testing – many humane societies put significant amounts of their resources directly into trying to illegalize the testing that other “charities” are busy funding.

Charities oppose each other in more subtle ways as well. Going through all these 990s, I’ve really become aware of the huge presence among charities of political advocacy. It’s natural that charities find themselves wanting to address the “root causes” of the problems they address; but as soon as they do this, it’s no longer safe to say that their funds are “going to a good cause” without at least thinking twice. After all, if the legal changes they want to make were completely noncontroversial, you’d think they’d already be made. If you go to a concert to “fight global warming” or “save the environment,” your dollars aren’t going to feed cuddly bunnies; chances are, they’re going to lobbyists, advocates, even demonstrators, with the aim of putting laws in place that might be pro-environment or anti-business, depending on your point of view. And even if you’re on the pro-environment side, it’s worth considering that one of the biggest struggles in politics is not just for position, but for attention and prioritization. When it comes down to it, Greenpeace (saving the environment) and Oxfam (fighting poverty) are largely working against each other – trying to get legislators to pay attention to their issue rather than others.

And at least as big as political advocacy, at least judging by charities’ mission statements, is “raising awareness.” Well, awareness is a zero-sum game too. People only have so much attention span available for things that aren’t sports and diets. You want to raise awareness for Darfur, for global warming, or for Lou Gehrig’s disease? “All of the above” isn’t necessarily an option.

Tooling around through my recent Google alerts (“Charity”), I see a mind-boggling silence on these questions. Indeed, I see Barry Bonds being praised for “giv[ing] some of his own things to charity,” with no mention of what causes he’s supported. I see a whole article on celebrities’ support of charities for Mother’s Day, without the mention of a single charity beyond Eva Longoria’s personal foundation (not a word on that foundation’s priorities). I see plenty of debate on the recent “Idol Gives Back” campaign in terms of whether its “devotion to charity” makes up for its cheesiness … but my question is, what does the ONE campaign (one of its beneficiaries) mean when it talks about “call[ing] for debt cancellation, trade reform and anti–corruption measures”? That sounds like legal change – what does the campaign want and is it a good idea? Nobody else wants to know?

It’s the same old problem: as soon as people hear the word “charity,” their critical faculties turn off. Of course, celebrities and athletes would love it to stay this way – the last thing they need is more questions, just when they’re trying to clean up their image by throwing a few bucks at 501c3’s. But the rest of us would do well to wake up. I’ve said it before and I’ll say it again: if you want to know if someone is doing good things, the best way is to look at what they’re doing.

A commonplace among fundraisers is that “people take action and give for deeply personal reasons.” This can mean many different things, but one of the implications is that people give to extremely specific, personal causes: diseases that loved ones have suffered from, local charities in areas where they live or grew up, charities that serve their particular ethnicity or nationality.

There are obvious benefits to giving in this way, but I think the costs are underlooked. The fact is, odds are good that your money can do more for more people if you get less personal. Chances are, you and those you love have never been affected by malaria or (severe) diarrhea – but those who are affected suffer in ways that are both severe and cheap to fix. If you can look beyond “someone I love suffered from disease X, so I want to fight disease X” to “someone I love suffered, so I want to fight suffering” – you can make a bigger impact on more people’s lives.

To continue with the crazy analogies that all of you so enjoy: it’s possible to buy clothes that are 100% tailored to your specific body. But for the same money, you can get an entire wardrobe of mass-produced, standardized clothes that fit pretty well.

With clothing, there is a time and a place for each, and generally, people will opt for more personalization as they get wealthier, because the tradeoff between quality and quantity is less acute (i.e., an extremely wealthy person can afford a whole wardrobe of tailored clothes, so why bother with the mass-produced stuff?)

But when it comes to charity, this tradeoff is always acute. The world’s problems – indeed, even just one of the world’s major problems – easily swamp anyone’s and everyone’s ability to fund them away. There are always more suffering people than you can help. That’s why I think it’s a mistake for any donor – even the wealthiest – to default to maximum personalization, insisting on helping “their people” even though it means helping far fewer people. The world needs far more help than any of us can afford to give it; if you needed far more clothing than you could afford, you’d go shopping at K-Mart (or Goodwill) and forget about the tailoring.

There is still a lot of room for philosophy and personal values in what it really means to help a person. I’m certainly not saying we should all give to the same cause. But I’ve always approached my own giving ready to sacrifice personalization (the causes that “speak to me”) for impact (help as many people as possible, as much as possible), and I think others don’t do that sufficiently. That’s why, where others envision a world where donors increasingly have it their way and choose whom to fund in excruciating detail, I envision a world where better and better information allows donors to focus rather than spread out – with the result that we might actually make progress on these problems. The question is: are you willing to give up some “personal resonance” in order to do a better job helping people?

From the Form 990 of the National Cattlemen’s Beef Association, a federally recognized 501(c)3 public charity (exempt from taxes because of its devotion to the public benefit):

THE PRIMARY EXEMPT PURPOSES OF THE NCBA ARE TO 1) INCREASE CONSUMER DEMAND FOR BEEF THROUGH MARKETING PROGRAMS FOCUSING ON RESEARCH, EDUCATION, PROMOTION & INFORMATION. 2) PROMOTE THE COMMON BUSINESS INTERESTS OF THE BEEF INDUSTRY IN THE UNITED STATES. 3) CONDUCT CHECKOFF FUNDED ACTIVITIES IN COMPLIANCE WITH THE BEEF PROMOTION RESEARCH ACT AND ORDER DATED JULY 18, 1986.

The IRS isn’t going to figure out who’s doing good work for you.