Complicated issues about charities

[Necronic]

I was talking about Goodwill today with some co-workers at lunch and a few issues came up that I was in the minority on. They are both complicated issues with some obvious knee-jerk answers that I just don't buy. I'm curious to hear your thoughts since my co-workers didn't really want to discuss it.

1) Executive compensation at a large charity (like Goodwill or United Way). Everyone at the table found it apalling that the CEO of Goodwill was earning ~750k. I didn't see a problem with it. This organization earns roughly 4-5 billion $ in revenue a year. The CEO has a significant impact on those earnings. A CEO at a for profit company making that much money would be making 3-4 million at least, so its below market rates, which is fine for a charity, but if you go too far below market rates you start getting inexperienced or unqualified people in leadership positions which can severely damage the company. If the difference between paying 250k and 750k means a loss of even 0.1% of their earnings then they screwed up.

Really you get what you pay for, and you can't expect many people who are CEO calibre to take too large of a paycut.

That said I do think there are limits to this, and some of the compensations I have seen for local Goodwill presidents seem innapropriately high (Portland Oregon President was earning 850k apparently).


2) Underpaying disabled people. Section 14(c) allows companies to pay a disabled person below the minimum wage. This can result in employees who earn less than 1$ per hour, but iirc the average is something like 2.5$ give or take.

On the face of things, especially when considering point 1, this seems apalling. As someone wrote, "I guess slavery is back but just for the disabled". But, if you've ever worked with a severely disabled person, you have to understand that they are incapable of doing labor like a regular worker. They require oversite and may not actually be able to do much work.

The purpose of this provision is to provide oppurtunities for fulfilling work to people who otherwise would not be able to do anything otherwise. The workplace is also a key part of a humans socialisation, so a workplace gives these people a place to talk to people and make friends. The sad truth is that without these jobs many of them would spend many of their days alone.

I do think there are problems with how this law is currently being used. Some people exploit it and take advantage of their disabled employees. There was a turkey farm somewhere that had the disabled employees living in slums and setting their pay to only cover their cost of living. There needs to be significant oversight involved here.

Moreover, I think there need to be more options to meet the varied type of disabled workers. Someone with severe mental retardation is going to have far different difficulties and needs in their workplace than someone who is blind.

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Anyways, my coworkers vehemently disagreed with both of my views on this, and I do understand why. What do you guys think of this complicated issue?

 

[Chad Sexington]

I've never heard of the point on underpaying disabled workers, or that it was in fact legal to do so. I'll have to do some reading and research; I wonder if it is the case in Canada as well. My gut feeling is to say that regardless of ability, everyone is entitled to minimum wage at least (say you cannot work due to an injury; you're paid more than the equivalent of $2.5/hr, and doing nothing), so I'm inclined to protest that there's no good reason, regardless of the labour involved, to change that for a group of people based on a trait. To me that's textbook discrimination. But like I said, that is entirely a gut response to that issue.

As to CEO compensation, I've no problem with a charity worker of any stripe collecting salary; while some of the charities abuse this, and should be subject to penalty if they are basically running as a money-making scheme, I hope these are the minority.

How much money is 'too much' money to compensate a charity's CEO? I have no idea. This comes along with values, I suppose, and generally would say that opposing a charity's CEO large salary is silly. Caveat emptor: find a charity whose compensation levels are agreeable to you; Goodwill, for instance, is only one of many similar charities.

 

[strawman]

Well you made me take a longer look at goodwill than I would have otherwise. They employ over 7,000 disabled people under Section 14(c) Subminimum Wage Program, an intentional loophole in the Fair Labor Standards Act of 1938. Some of these individuals earn less than $0.20 per hour of work.

This is considered Job Training, and isn't meant to be a long term position, but of course that is how it's used. Of those 7,000 workers, Goodwill was only able to place 500 or so into another job (essentially graduating from job training) in 2011. This isn't a small amount of trained workforce, but it's clear that the majority of the people being "trained" are not on a path that will take them out of subminimum wage.

Be that as it may, Goodwill also helps these people apply for federal assistance, and none of them are homeless or hungry. They aren't supporting themselves, and Goodwill isn't supporting them, but because of Goodwill's effort they are surviving and have something to do that keeps their mind and body active - and the value of that can't be easily assessed.

They are their own charity, they don't donate to other causes (not substantially, anyway). Their entire mission is to provide job training and job placement to the disabled, uneducated, inexperienced, or otherwise face employment challenges, and they claim about 88% of all the funds they raise go to that. I haven't delved into the numbers deeply enough to know how that 88% figure is derived, but if it's honest, then they are a decent charity.

However, there are some serious questions about the loophole in the minimum wage. These can be considered discriminatory - the federal minimum wage protections that everyone else receives do not depend on our productivity.

Here's one article that is critical of Goodwill, from which most of my numbers come: http://www.huffingtonpost.com/john-hrabe/the-worst-corporation-in-_b_1876905.html

Charitywatch rates them an A: http://www.charitywatch.org/toprated.html#disabled

Google knows everything: https://www.google.com/search?q=how+does+goodwill+spend+its+money

Goodwill, of course, has its say: http://www.goodwillakron.org/about/environmental/what-happens-to-your-donations

Snope's article has a lot of good links to charity watch organizations and charity lists that delve pretty deep into what each organization is actually accomplishing: http://www.snopes.com/politics/business/charities.asp

Overall, the CEO salary doesn't bother me, for the reasons you list, but the subminimum wage issue bothers me, and should be examined carefully by congress to determine if it still has a good role to play in our society, and actually serves its intended purpose without too much abuse.

Regardless, of all the ways I can dispose of my junk that still has some value to someone, somewhere, Goodwill puts it to better use than any other place I might toss it. Further, I buy most of my clothing there, so even if it weren't a non-profit, I'm still benefiting from their stewardship. If I'm benefiting due to subminimum workers, though, and if that is hurting them, or simply not helping them as much as it could be, then I'd not be happy.

At the moment I don't see too much cause for alarm, but I'd like congress to take another look at it. The law is over 75 years old, things have changed economically enough that we shouldn't assume it's the best idea.

 

[Dave]

"Retarded" people shouldn't make even $2 an hour. You're worth what you're worth.

No, these aren't my words. They are from rich guy.

http://www.rawstory.com/rs/2014/01/...ould-work-for-2-youre-worth-what-youre-worth/

 

[Dei]

I am torn on this. On one hand, a lot of these people aren't capable of supporting themselves, and feeling useful and wanted is a huge boost, and they might not otherwise be hired.

On the other hand, I feel like something like this needs way more oversight. For example, could a disabled person who is still capable of doing the work of a "fully functioning" person be stiffed on pay? That would be BS. (There is an extremely disabled person working as a cashier at a nearby Target, and he is perfectly capable of doing his job, as an example)

 

[Chad Sexington]

Here's one article that is critical of Goodwill, from which most of my numbers come: http://www.huffingtonpost.com/john-hrabe/the-worst-corporation-in-_b_1876905.html

Charitywatch rates them an A: http://www.charitywatch.org/toprated.html#disabled

Google knows everything: https://www.google.com/search?q=how does goodwill spend its money

Goodwill, of course, has its say: http://www.goodwillakron.org/about/environmental/what-happens-to-your-donations

Snope's article has a lot of good links to charity watch organizations and charity lists that delve pretty deep into what each organization is actually accomplishing: http://www.snopes.com/politics/business/charities.asp

Charity Navigator is one of my favourites, but on its site it seems to breakdown Goodwill into local chapters, not the whole organisation. However, that could be useful to know if your particular Goodwill is using resources in a way you'd like: http://www.charitynavigator.org/ind...Will+Industries&Submit2=GO&bay=search.results

 

[Eriol]

You want a comparison to slave labour? Look at unpaid internships.

This is pretty dodgy though. Training, or what? If so, free training with minimal pay seems "relatively" OK, but I agree it is something that needs to be looked at very closely.

 

[strawman]

It's rather complicated though. If a for-profit company has to pay $10.10 an hour for a relatively simple job, such as keeping a warehouse floor swept, you can bet they're not going to hire the person that can't keep it clean due to their disability.

At some point federal assistance has to step in for those that can't find a job. Just giving them money can help keep them afloat, but giving them something to do where their contribution is valued is even better, even if they aren't making $10.10 an hour. Particularly if the job provides enough training that eventually they would be able to compete for minimum wage jobs on equal footing with those who are not disabled.

The loophole is a form of federal assistance that encourages employers to hire people they will not hire if they have to pay minimum wage.

Is it discriminatory? Yes.

It would probably be seen as better if, instead, what happened was the federal government paid the employee the difference. So Goodwill pays $0.20/hour for someone that takes all day to sort through one small box of clothing and put it on the shelves, and the governement pays the other $9.90 per hour.

It's essentially the same thing as what's happening now given the food, housing, and other assistance they already receive, but it would be seen as less discriminatory by many people.

However, it would still be abused - which is where a lot of people become angry. But abuse occurs all along the chain. The slum lord that never fixes the stove in the low income housing is making money off the situation, the same as the company paying less than minimum wage for some workers.

I don't think there's a perfect solution, but at the end of the day we need to be sure that we're taking care of those things that some people aren't capable of doing themselves, and that we are simultaneously preventing others from preying on them.

Quite frankly if the poor and disabled are being well taken care of, I don't worry too much about people and companies preying on the government and taking advantage of them. It's going to happen, let's limit it.

But let's not let our desire to protect the government from abuse end up hurting the poor and vulnerable of our society.

As such, I don't know that it would be a good move to eliminate the subminimum wage loophole. Maybe it is, but I remain unconvinced that doing so won't hurt those already having difficulty.