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Live United: It’s quite expensive for a nonprofit agency to be poor

Live United by Erin Haag


It’s the time of year that many of our nonprofits are starting to work on their budgets. It’s a stressful time for many of them, exacerbated by the pandemic and the realities of having to operate in ways differently than we ever imagined. I recently was reading an article online about the current debate centered around the post office. There was a comment that caught my attention. Someone mentioned, “The post office is a business, like anyone else.” Someone answered, “It’s not a business, it’s a service.”

Erin Haag

Combine this with a committee I was on once. I questioned if the organization could afford to offer the services they were promoting. I suggested that the services be capped, and made a comment that at the end of the day, the organization was still a business and we could not run into the red.

A committee member looked at me in horror and said, “We’re a charity, not a business!”

Just a side note: This committee was not affiliated with United Way; it was before I accepted my position, and it was quite some time ago.

Nonprofits are a business. They’re a service. They’re a charity. These things are not mutually exclusive. They require operating costs just like any other business does. There’s rent to pay, computers to buy and staff to pay. Sure, there’s grants. Those grants are often hard work, taking up hours and hours of time, research and organization. Some grants require special software to be able to find. The grants that are substantial enough to fund a large portion of operation budget required reports, tracking and managing. Those all take staff time which is equal to operational costs.

As I’m working on my budget for the next 90 days — because that’s how I’ve been operating, 90 days at a time — I’m faced with the balance between operational costs and providing the services that are so valuable. Spend too much, then there’s backlash. Spend too little, then I’m operating on a shoestring budget that doesn’t provide for what we truly need.

It’s expensive to be poor. The “cycle of poverty” is a tried and true phrase, and one that has firm roots in reality. This is a little twist on that. Yes, we need to talk about how expensive it is to be poor for individuals in our community. Today though, I want to ask readers to consider the ramifications of being poor for a nonprofit. If you’re considering donating, if you’re sitting on a board of directors or a committee and reviewing a budget, or listening to a capital campaign pitch, remember it’s expensive to be poor.

I remember when my husband and I first combined our finances. After a few months, he spent the evening paying bills and entering them into our budget worksheet. After he was done, he showed me, and we decided we needed to tighten up the budget a bit. A few weeks later, I noticed my shoes were getting pretty worn. I had done well with a pair of sneakers, but they were expensive. I asked him if he thought we had room in the budget for a good pair of shoes. He looked at me in surprise, “there’s always room in the budget for good quality shoes.”

What a difference. I had been used to buying the cheapest to get by. We bought the good quality shoes and saw the difference in the arthritis that I deal with, and how long they lasted.

It’s expensive to be poor.

I think about this when it’s time to choose new computers and technology for our organization as I’m doing now. I dive in the rabbit hole of reviews, hoping to find the perfect balance of buying quality items that will be a good investment, and not need replacement constantly and not spending so much money to have the latest and greatest.

All nonprofits should have that balance. By investing in quality technology, quality staff and professional services, nonprofits can actually save money in the long run, increase capacity and efficiency. When it’s time to think about your charitable giving, keep these things in mind. Ask about them — ask why they are choosing option A over option B. You’ll probably find the staff have lost sleep, read reviews until they were blurry eyed and reached out to experts in the field to get opinions.

Give me a few weeks, and I’ll tell you about my choices for a conference room technology setup. It’s paid for by a grant, and I’m agonizing over the decisions I have to make. I’ve emailed every IT person I’ve ever known or worked with, including my sister that works for Intel. Let’s hope that the final choices live up to all this hype! 

Erin Haag is executive director of the United Way of Freeborn County.