I’m always eager to spread the word about the Smile Train.
This month’s Harvard magazine has a nice piece on the founder of the Smile Train, Brian Mullaney.
I love the way he runs his organization, and the way he tells it like it is. Here’s one of my favorite quotes from the article:
Most charities don’t see themselves as a business. … [They] can be terribly managed, pay people poorly, and yet never go out of business. They’re almost like churches; people say, “That’s O.K., because their hearts are in the right place.” At Smile Train, we pay people market-rate salaries and if they’re really good, we give them a bonus, and if they’re not, we fire them — we don’t care where their heart is; it can go somewhere else.
and 
. You can also watch it on 
It’s about time someone ran non-profits this way. Lack of competition breeds laziness and waste unless you actively work to stay efficient.
Unfortunately, he’s the exception, rather than the rule, when it comes to non-profits. And don’t even start on the government.
So, he’s really running a non-profit in name only?
the irony is smile train would fail on wall st, where if you’re really good, you get a bonus, and if you’re really bad, you get a bonus
Isn’t a non-profit really just a name designation? It doesn’t mean the company should operate at a loss. Non-profit companies don’t exist to under-pay folks who want to do good deeds. The designation simply means that the government subsidizes the company (through tax breaks, etc.) in exchange for an agreement to keep the company’s profits within the company, and not skimmed off by investors. The money made by Smile Train goes solely to the operations of the company, which happen to include employing a well-paid staff.
We need high-paying jobs within financially-sound non-profits. We need incentive to draw the brightest and most talented people away from investment firms and into fields that stand to benefit society. A bit naive? Maybe.
If job compensation ACTUALLY reflected one’s contribution to society, I would hope Brian Mullaney made a TON more than the CEO of Goldman-Sachs (current economic predicament aside). Teachers too. And doctors.
There are lot of well run non-profits. My Credit Union is an example. As the previous post shows whether or not a company makes a profit doesn’t have to change the motivations of the members. Freakonomics of all publications should realize that the differences in performances between not for profit companies and for profit companies could stem from many factors. For example: employee pay.
Besides pointing out the obvious about pay, this quote only reinforces a stereotype about non-profits.
I love Freakonomics because it has the authority and resources to prove and disprove these sort of stereotypes. Unfortunately, this quote only reinforces one.
Enough with the fallacy that well paid equals well performing, or that individuals are compensated based on their performance or importance to the company or society.
The market benchmark for pay is only a starting point in determining pay. In reality, collective bargaining, inadequate information on substitution and politics all play a under-acknowledged role.
On nonprofits, some prefer that their nonprofit behave a little less efficiently and a little more “warm and fuzzy”. I’ve stepped into non-profits many times to make things more efficient and received a “thank you” as a reward.
Every person or company has a inefficiency level they are comfortable with and It’s usually not at the point of maximum marginal efficiency. Shareholders, board members, or the public will need to apply sufficient pressure or big bonuses will still be taken by those who can.
Caliphilosopher shows a common misunderstanding of a nonprofit. Your nonprofit can overcharge customers, pay huge salaries, squander money on fancy buildings, and so on and still be a nonprofit. Compare nonprofit hospitals versus for profit ones. Nonprofit doesn’t mean good. It means they return money to shareholders.
Thats what we need, a market fundamentalist charity! Sure, those “high qualified money incentived” guys will be so much better … at producing the best outcome on the scale their performance is measured while not careing the least about all those little things that dont get measured. That is unless they find a way to earn even more by simply takeing bribes or changeing the performance measure.