The Case for Incentives in Non Profits

By John A. Haas
Management Strategies Group

“Need more funding” describes conditions at the vast majority of non profit organizations, whether in healthcare, education, social services, the arts or other “cause” base. They require sustained fund raising and marketing efforts to continue to deliver on their stated vision and purpose.

The Anti-Incentives Cultural Bias

First, these organizations are not profit-oriented as are most businesses. Already strapped for money, how could they possibly afford to pay incentives?

Employees and volunteers who selflessly dedicate time and effort pursuing the mission certainly are not doing so to maximize their personal income. They passionately believe in the cause, and that’s what drives them. If offered incentives, they may well respond “I already work as hard as I can; the prospect of more money won’t get me to work any harder!” Offering incentives may at first be construed as an insult.

Legal limitations, ethical guidelines and public disclosure requirements govern compensation practices in non-profits. This applies especially to those engaged in fund raising.

Still, most non profits are struggling to survive and thrive, so they must consider alternative approaches in their “business model.”

How Incentives Can Help

Offering key (or, even better, all) employees an opportunity to earn at least some additional compensation can produce the following benefits:

  • Encourage clearer definition of organization goals, budgets and plans. Target incentive payouts would be budgeted.
  • Identify specific, measurable targets that define how each incentive participant can best contribute through individual and/or team effort within their job responsibilities.
  • Participants will pay more attention to measures, and seek and expect regular reporting on progress toward goals.
  • Encourage better internal communication and more focused action planning.
  • Assuming that all employees seek to do what’s best for the organization, incentives help define what “a good job” means for the current period.
  • Individual and team goals can be updated for different time periods, reflecting current priorities.
  • While money is not the (or a) primary motivator, even a few hundred dollars tied to goal achievement would always be welcome.

Perhaps most important, incentives can generate greater “buzz” and excitement as people are encouraged to think about their organizations and roles in new and creative ways.

Spring 2005 -Volume 15, Number 2

 

 

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