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Before Making a Large Donation, Get This Question Answered

Written by Gary North on June 13, 2014

If there is a nonprofit organization that you believe is doing really good work, and you are seriously considering making a substantial donation to it, you have got to find out one fact above all other facts. You have to find out exactly what the organization is doing to raise up successors.

I have been associated with a number of good organizations. But the fact that they have been good organizations in the past in no way guaranteed that they would be good organizations in the future.

I always come back to the classic example: the Foundation for Economic Education. Leonard E. Read was the founder in 1946. In the early days, he hired a number of competent free market people. Eventually, most of them quit. In some cases, they were fired. Some of them later achieved significant things. The most notable, and then notorious, example was George Roche of Hillsdale College. He immediately hired Lew Rockwell, who edited Imprimis, the free newsletter, which raised over $500 million. Roche surely knew how to raise money. I replaced him at FEE in 1971.

Others who worked at FEE pretty much faded away. Read kept a few good people on the staff who had decided that they never wanted to move on. These were the best people he had: immobile by choice. They had one thing in common. They kept getting older. There were no replacements.

RECRUITING AND TRAINING

The most important single factor in the survival of any organization is the quality of its future employees, and the quality of the training of these future employees. This usually means that the organization has to train a lot more people than it can ever hire. In other words, it has to be committed to producing top-flight people with the best possible training, and sending them out into the world. The goal institutionally is to get out the message. Secondarily, there is this goal: somebody has to replace the existing leadership. If there is no systematic training of the future leadership, the organization is going to hit a brick wall when the founder dies or retires.

There has to be a program of recruitment. It must go after the best and the brightest. Then it must devote resources, especially time, to bring these people along by giving them training for a period of time. I think the minimum required is one summer. This is why it’s good to get students who are in transition. They are either undergraduates who may be going to grad school, or they are graduate students who are either working on their doctoral dissertations or else have just finished their doctoral dissertations. They finish at the end of the term, probably in May. They will not take a teaching job until September. You have from June through late August to bring these people in and train them.

The libertarian organization that does this best is the Mises Institute. It always has summer trainees. Last week, it brought in over a dozen of these people. It does this every summer about this time. Then it puts them on projects. They get counseling from Ph.D.’s on the staff. The small faculty can be brought in for a summer. They need not stay the whole year. This cuts the cost of financing the faculty. The faculty is essentially a summer school faculty. It is expensive to hire them, but at least it is marginal. Mises does not pay a full-year’s salary.

This has to be a systematic program. It must not be haphazard. It has to be seen as the heart, mind, and soul of the organization. If the best and the brightest are not recruited, and if they are not trained, the organization will lose them. It will lose the leverage that they would have provided. The organization will not stake a claim in the future.

(For the rest of my article, click the link.)

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11 thoughts on “Before Making a Large Donation, Get This Question Answered

  1. I support the Tea Party, but want to know their financial statement. Where can I find that. I want to know if BIG salaries are given out and exactly where they spend my money. I won't donate again until I have this information.

  2. allosaur says:

    Finding out what the CEO or top people et als of a "nonprofit" anything can be quite decisive. I considered being a regular contributor of Wounded Warriors until I read somewhere that the CEO rakes in $300,000 a year. I'm sure that organization does wonderful work, but I'm not paying for some fat cat to live like I cannot even approach to afford.

  3. Considering a “non-profit” organization with assets and/or annual gross contributions with those of firms of equal size in the private sector then top execs in non-profits still make considerably less money than there private counterparts in most cases. Surely a prolific CEO/college president fundraiser is entitled to a small percentage of the action. Constantly asking for money is hard work!

    Federal reporting requirements for non-profits requires public disclosure of financial records from which salary expense as a percentage of assets or contributions can be easily accessed. Whether paring the expense ratio down to a bare minimum like a no-load index fund does is not necessarily give the absolute best indication of the integrity nor strength of any given organization.

    I think the salary of the Commissioner of the Salvation Army represents the ideal. Something like $150,000 annual salary for managing a $2 billion dollar enterprise which keeps expenses at 4% and does and enormous amount of good every day.

  4. Holy Shirt says:

    If somewhere deep within the bowels of the Hague, United [Not!] Nations, Council on Foreign Relations or similar den of iniquity lies a conspiracy to commandeer [overblown] 'Western Civilization, would ringleaders ponder that Western thought replaced by never-ending, mind-numbing entertainment comes at too high a price? About as likely as a loud chorus of "NO!"s in sharp rebuke to that pesky old public forum question, "Have You No Shame?"
    http://www.goodreads.com/book/show/494799.Dumbth
    Like Steve Allen, everywhere I go, it appears people taught HOW (rather than WHAT) to think are growing extinct. Selfless Leadership has gotten as scarce as hen's teeth. I suspect Mr. Entertainment would've LOVED this article.

    As my Ukrainian grandma Jenny (may she Rest in Peace) would say hearing something monumentally insightful:
    "You Said a Mouthful!"

  5. One of the things I look for is the salary of the "top dog". Too many get a six-figure salary while only a small percentage goes where it should. I don't have much to donate, but am very careful with the little I have.

  6. I think his salary is less than that, at least what I read just recently. It is not in the six-figure category. Salvation Army is one of the best and has kept up with its beginning ideals. In fact, one of my own children benefited from their generosity when in dire need.

  7. Because I donate monthly (“tithe” if you prefer) to organizations like FEE, Mises Inst and IJ doesn’t mean I will always donate to them. So I don’t quite follow the reasoning here. Where I give I follow their work. It’s not a long term contract.

  8. Abigail Adams says:

    I support TEA Party candidates; I donate to individual candidates, whether they are in my state or not. Each election, I read and research and carefully choose 1 or maybe 2, and I give to them. If you spread your donations over too many ppl, their paperwork staying in contact w/ you becomes more than the donation you gave. However, if you give larger amounts to only 1 or 2, it's very worthwhile.

  9. Abigail Adams says:

    Oh my goodness…. Steve Allen….Steve-arino!! I loved him and miss him. Re how to think: Thinking and reasoning….. taking an idea to its logical and probable conclusion requires a lot of energy and time, neither of which most ppl wish to invest today. Today is fast, get it now. It's broken? Replace, don't repair. Too bad.

  10. I agree about the big salaries. The money needs to go to where it is supposed to. Big ads are another high expense which shouldn't be necessary. There are many "charities" that seem to be very good, but most of the donations go to the higher ups and very little percentage where it should be intended. Salvation Army is one of the best, the executives do NOT get high salaries, very modest ones, and the work they do is fantastic. They also stary in a place where needed until no longer needed. I know this from recipients. Also, I have a relative who was in dire need of help with bills and they helped tremendously.

  11. Great research and hard work is needed for this noble cause and competent and sincere fellows are joined hands in hands to become a team and network.