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Why is doing social good so damn hard? And how we can change it.

Yeah, I get that we do not measure social impact when we consider CEO salaries in the private sector; what I do not get is why not?

(Image credit: Vaish Photography)

Over the years I have learned that I am usually on the right track, professionally and personally, when my friends and family say that what I want to do is crazy. To be clear I am not talking about doing things like bungee jumping off the Empire State building or leaving my job and family and going to live among the Masai in Africa. No. I am talking about moving continents without a job, routinely taking on seemingly insurmountable odds at work and a more recent desire to delve into solving large social issues AND make an honest and ‘well-paid’ living doing it.

Of course the obvious question you will have is how can someone who wants to work in the social sector among NGO’s, non-profits, governmental organisations expect to make money?

You would be right to think that way because I don’t know of any Mark Zuckerbergs or Azim Premjis that have been a product of a career with the International Red Cross or Médecins Sans Frontières.

Let’s think about that for a moment and question why that is.

Are we saying that unless you are greatly wealthy, your ability to do great good and have a big impact in the world is limited? Or worse yet, are we saying that if you want to help lift people out of poverty, provide access to education and fight for gender equality – you will need to live on the poverty line to do it?

How many people would feel outraged if I told them that the CEO of the International Red Cross makes a base salary $500k+ but not even blink when I say Lloyd Blankfein made $23 Million in 2013 alone (Source: Business Insider). It is not hard to make a case for which CEO is having a greater impact on society, even if Llyod Blankfein believes he is “doing God’s work” (Source: New York Times).

Yeah, I get that we do not measure social impact when we consider CEO salaries in the private sector; what I do not get is why not? I will save this question for another blog.

I also understand that the sources of capital and revenue are totally different for the social and private sectors. The Red Cross relies on donations from you and me; Goldman Sachs does not. And it is our firm belief that every penny we donate from our hard-earned money must go to victims and not administration costs or to pay employees that lead these organisations.

Humour me for a moment and let’s forget about this one distinction, of where the money comes from. Let’s consider one basic fact across both these sectors; talent is critical. High quality talent is better at solving problems than the average quality talent. It is the reason why a growing list of companies are willing to pay college graduates starting salaries in excess of $100,000/- often with a sign-on bonus and deferred equity. It takes most people a long time to make six figures; if they ever do. The private sector is used to paying big money to recruit and then paying through their nose to retain the same talent.

It is true that companies like Google and Facebook donate and spend large amounts on social initiatives but they will never have the same direct impact of an NGO working on the ground. So why are we telling talented, bright, tech savvy youth who want to change the world that they need to decide between living on the poverty line to do it, or can only do it in their free time while working for an investment bank or a tech startup?

I believe there is a better way and there has never been a better time to change this notion.

Nobody is suggesting that we start creating billionaires or millionaires in the social sector but there is something between the current poverty-line existence and Mark Zuckerberg’s net worth that we can agree on.

Below are some of my thoughts to get this debate started:

  • We need to think about recruiting talent in the same way that the private sector does and being willing to pay is a large part of it; let’s stop pretending that we need to create Gandhi’s and Mandela’s to change the world. There is no shame in wanting to earn a good living. I also believe we can start by making the pay scale a little lower (than the private sector) because people who want to do this stuff tend to be a tiny bit more altruistic in their motivations.

  • The low costs of deploying technology (and it will get still lower over time; think 3-D printing, gene testing, etc.) allows us to substantially reduce program administration, implementation and even activation costs. For argument’s sake let’s say using technology will allow us to change the split in spend and move it from the currently unrealistic 15/85 split between overhead administration and direct program spend, to 40/60 in favour of talent recruitment and retention (Source: Pay-What-It-Takes Philanthropy, SSIR) . It is a good place to start so that we can begin to invest in building an even deeper talent pool in the social sector. Also, consider that thanks to technological advances, fewer dollars can now have greater impact through automation and elimination of waste. Further, technology allows us to very quickly measure and assess program impact so we can either iterate and re-deploy, or rapidly scale.

  • To be clear, the pay factor is just one part of the equation we need to fix. We also need to incorporate more private sector principles of management into the social sector; from setting clearly defined objectives and tangible goals to much greater accountability and transparency. Most importantly we need to find better ways to measure impact and effectiveness, and create a standardised return-on-social investment measurement, if you will.

  • Finally, by increasing accountability and measuring results, I believe we can also start to change donor stigma by beginning to treat donations less like giving away our hard-earned money, and more like active investments in organisations we see are doing the most good. This way we will also change the paradigm of donations being driven purely by emotional guilt and being made primarily after a major tragedy. We can make it a more informed decision and create the notion of “social-holders” akin to shareholders in the private sector; albeit with totally different parameters that would not include ownership or financial return on social investments.

All these things would force the social sector organisations to compete for our social investments (donations) based on their performance and impact, versus using guilt as the major mechanism (e.g. picture of cute puppy) as they are currently forced to do.

If we can start this debate, then just imagine that the next generation of Zuckerbergs, Jack Mas and Evan Spiegels might just hail from the social sector. And perhaps in a generation or two the measure of corporate success will not solely be based on profits and net worth but also on net-impact to society.

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