Box 0.3: Blurring the Line Between Profits and Nonprofits
Yes, I would donate my used items to Portland, Oregon’s, Goodwill. Some people may disagree with me based on the amount of money the organization’s president, Michael Miller, and other top executives bring home per year. Some may disagree because Portland, Oregon’s Goodwill is a nonprofit organization, which by virtue of this title is tax exempt. Still others may disagree based on the ideal that a nonprofit organization that makes such a large profit, which does not appear to be reinvested into the organization, is crooked. However, after considering each of these arguments and evaluating my own beliefs, I would still donate to Miller’s organization.
In order to determine whether you would support a nonprofit organization that operates using a business template we must define the main difference between the two. A for profit organization is just that, it is an organization whose goal is to make a profit, a business. A nonprofit organization is created to improve circumstances and affect a greater good for a target audience. The main question posed in this exercise asks if you would you support a nonprofit organization that is making a large profit which appears to be benefiting the organization’s top executives in excess?
It is becoming increasingly popular for nonprofit organizations to adopt a business template in their quest to raise funds. Undeniably, there is an overhead cost to run any organization, regardless of design, so raising money is a necessary task. The difference presents in how the organizations spend these monies. A nonprofit organization has strict guidelines for spending. Benefiting from a tax exempt status, they are obligated to reinvest profits back into their organization with a goal of growing and using those funds to help more members of their target audience. Using a traditional for profit business plan increases the chances of successfully raising funds. It also presents a more professional image for their investors and is something most investors, especially those without any nonprofit experience, can easily understand. The hidden danger in this strategy is investors becoming skeptical of the organizations real mission. Is it to help the disadvantaged or to create a nest egg for executives? Another potential pitfall is getting caught up in earning a profit the organization risks losing focus on their original mission.
Arguments have been made that nonprofits should pay taxes, but I disagree. A tax exempt status is given to nonprofits as a reward for offering a service that benefits society while relieving local/state/federal government from that particular obligation. A nonprofit provides this valuable service to society and in turn, creates a more equitable distribution of societal benefits, reminding me of Rawl’s Justice and Fairness perspective. Taking the benefit of tax exemption away would compromise many nonprofit organizations and in turn the government would be responsible for providing that service. An important fact to understand about this tax exemption is that it is applied only to profits that aid the organization’s mission. All unrelated profits, as well as employee incomes, are subject to taxation.
I believe there might be some benefits of for profit organizations operating more in line with their nonprofit counterparts. For example, if for profit organizations worked to improve the situations of their target audience by slashing prices to enable more consumers to acquire their product, the results might actually be a larger profit in the long run. Placing more of an emphasis on helping others could possibly create a shift in focus from individual rights (I deserve this product because I can afford it) to communal responsibilities (if we make it possible for everyone to afford this product, society as a whole will benefit) and for profit organizations would exhibit Communitarianism. The overall result is not people gaining material possessions, but rather the shared sense of community and commitment to taking care of others. We owe it to our country to ensure we remain a strong nation built on a sense of community, sharing and trust.
One of the biggest controversies, as I understand it, with Miller’s Goodwill organization is the compensation package for him and other top executives. Investors believe it is excessive and subsequently, the board even reduced Miller’s pay package by 24 percent. In this particular case, again, I disagree. I don’t believe a manager for a charity should be expected to work for less than their for profit counterparts. I believe salaries and compensation packages should be based on the skills, experience and education required to effectively forward the mission of the organization. Regardless of status (for or nonprofit) organizations must compete with each other to recruit the most highly skilled and talented employees. The salaries must be comparable to employ the most competent and capable individuals. Understanding the need to keep overhead low, hiring unqualified employees could do more harm than good if their lack of skills unconsciously sabotages success. The recruiting, hiring and training process is costly, so I view turnover as an unnecessary cost. If the most capable employee is hired in the beginning, even if at a higher salary, the organization will reap the rewards of experience and continuity. If a nonprofit is successful in helping and continues to better the situations of their target audience, the salary of the team member required to do so should be on par with what an executive in a comparable position at a for profit is making.
This being said, I do not believe Michael Miller’s salary package is excessive. He tripled per-store sales and increased total profits tenfold. The profit increased enabled the organization to reduce its reliance on government funding and this alone paid dividends for all Americans. His salary was comparable to other top executives in similar positions and with his considerable talents could be easily hired away if his salary wasn’t on par. While some may view these executive’s salaries to be excessive, Miller credits them for enabling him to recruit and retain the best possible management team which can help the greatest number of disadvantaged people.
As I stated earlier, I would donate to Portland, Oregon’s, Goodwill. Even with the large salaries for their top executives, I appreciate how they try to affect the greatest good for the greatest number of people. They operate with a Utilitarianism perspective working towards what is good for the collective whole. I believe Miller focuses on utilitarianism while exhibiting altruism. I understand he is impressively compensated for his work, but even with a twenty four percent pay cut, he continued to give the organization his time and talents out of a concern for helping others. Yes, money can be a strong motivator, yet not many, me included, would continue to perform after experiencing a 24 percent pay cut. It is these reason why I would donate my used items.

Works Cited
"Debunking Charity Salary Myths - American Institute of Philanthropy." American Institute of Philanthropy - Charity Watchdog Helping Donors Make Informed Giving Decisions. Web. 09 Oct. 2011. .
Johnson, Craig E. Ethics in the Workplace: Tools and Tactics for Organizational Transformation. Thousand Oaks, CA: SAGE Publications, 2007. Print.
"Why Are Nonprofits Tax-exempt?" BoardSource: Build Effective Nonprofit Boards of Directors through Good Governance. Web. 09 Oct. 2011. .