Robbing Peter to Pay Paul – Kari Cronbaugh-Auld, MSW, GPC

During my experience working for and in partnership with nonprofit organizations, one common thread is the perpetuation of a “scarcity mindset”                                                                               ( ). This mindset is based on the idea that nonprofits exist to help others in need and serve the greater good, therefore, staff and anything they might need to do their jobs (salaries, benefits, training) is often last on the list of funding priorities.

Although the scarcity mindset originated when nonprofits where known as “charities” and run solely by volunteers, things are more complex now and competition for funding is high. Finance, grant, and other professionals must be knowledgeable and highly competent. How else can they raise funds needed to run the organization and ensure these funds are spent as intended? (Which is what funders say they want, right?)

Administrative and support staff (CEO’s, finance, grant professionals, etc.) tend to be most affected by the scarcity mindset because they are considered “overhead.” These staff are the “Peters” of the nonprofit world, often robbed of appropriate salaries and benefits because their nonprofit must adhere to overhead cost guidelines set by the funder or “Paul.” This mindset is often unintentionally perpetuated by everyone involved in the day-to-day lives of nonprofits: funders, boards, management, and even staff themselves.

I have witnessed nonprofit staff wear their lack of salary and/or benefits as a badge of honor. I have never heard employees in the for-profit world do this. I have heard proud board members spout about the humble beginnings of their organization. “Back in the day, one volunteer worked 100 hours per week, riding a bicycle with one flat tire…” Ok, I’m exaggerating but you get the point. How do nonprofits attract altruistic, dynamic, knowledgeable, businesspeople who have high impact community connections if they can’t offer competitive salary options?

Thank goodness there are people who have a drive to help others every day of their lives through nonprofit work. Does this mean they should have to choose between their altruism and sending their kids to college or having quality health insurance? Foundations and donors should expect nonprofits to use their funds efficiently and effectively to do the most good in our communities, but the scarcity mindset has no place alongside this expectation.

The federal government negotiates individual indirect cost rates with grantees based upon their specific budget needs, proving there is a different way to address indirect costs. It is up to professionals in the world of non-profits to talk with funders who support our organizations and invite candid conversations about funding practices that are not working. This approach could stop funders from under-mining non-profit goals to ensure access to equitable health care and living wages by forcing a rob Peter to pay Paul scenario.

Competency 2: Knowledge of organizational development as it pertains to grant seeking.  Skill 7: Identify effects of applicants’ organizational cultures, values, decision-making processes, and norms on the pursuit of grant opportunities.