April 01, 2010

Donating Mansions

new sallyBy Sally Raskoff

A recent article in the Los Angeles Times noted that many officers in the Salvation Army are living in houses owned by the organization. The organization keeps and maintains these homes rather than sell them so that their employees, who earn very low wages (around $25,000 per year), have a place to live when they transfer them around the country. They live in these homes rent free, in part to compensate for their low pay.

This article created an outcry since the houses mentioned in the article are large, expensive, and located in affluent neighborhoods. The first printing of the article mentioned that the 87 homes and condos the Salvation Army owns are worth 4 billion dollars, although that was later corrected to $52 million.

Why the outcry? Reaction seems to circulate around the issue that this nonprofit organization should not be housing people in mansions, since it appears financially irresponsible and at odds with their reputation of “sacrifice and service”.

The image of nonprofit workers – especially those who work for charities such as the Salvation Army and may themselves be eligible for help from the organization – is not one of mansion dwellers. When one considers their very low salaries, one does not expect an address to a multimillion-dollar mansion.

One might expect nonprofit organizations to sell off donated properties and not to invest in real estate. The word “non-profit” suggests all sorts of assumptions about financial issues. Yet all it means is a specific type of incorporation that bars profit sharing – those who run the organization cannot pocket any profits that are generated.

We expect that organizations to which we donate money will not be run as for-profit corporations, that they will not try to generate profit nor will they give any employees financial benefits. These assumptions suggest a misunderstanding about how any organization survives, especially when it gets to a certain size.

Many organizations have looked to non-profits to model their ways of doing business. Assuming that non-profits are imagenot businesses is a mistake. They must operate as businesses in our economic context if they are to succeed. The Non-Profit Times looks very similar to the Wall Street Journal and other newspapers for general management and business.

We do hold non-profits to a high standard, and track and rate them based on how much of their donations and assets are devoted to their mission. Websites like Charity Navigator Charity Navigator and Charity Watch provide easy access to some of that information. 

The Salvation Army rates high in financial management by most of its evaluators. A recent post on the Chronicle of Philanthropy website challenges the outcry about its real estate holdings by pointing out that housing is needed to accommodate their employees’ frequent moves, as they are regularly assigned to relocate by the organization.

How can sociology help us understand what is happening here? Sociology asks us to look at societal phenomena and ask a series of questions, among them, who benefits?

Who is benefiting from this situation? Clearly, the employees have very nice places to live. The organization’s need to house their employees is addressed. They also benefit from having their own employees live in the homes to keep them inhabited and maintained so they don’t have to leave them empty or rent them out to outsiders. These homes are much more likely to retain their value with insiders inhabiting them! They also have solid investments that can be a buffer for those years in which donations decline.

Do donors also benefit? Their donations can be put toward the main mission without being sidetracked into housing or other administrative costs. Do the beneficiaries of the organization benefit from this arrangement? If over 80% of the income is spent towards services for them, one might say so.

Does the newspaper benefit from running the story? Definitely yes, since there was such a reaction to it. Any readers are good readers even if they are upset about the article.

Who does not benefit from this situation? The public face of the Salvation Army perhaps. Why? The public reputation for a charity (or any business) is important to sustain donations and support. If people get a sense that their money is not being used for the mission, donations and support disappear.

Why did they cooperate in this story and let the newspaper take photos of the opulent housing? Your guess is as good as mine, but perhaps they wanted to build a reputation for taking care of their employees and for the donated properties.

The images of rich housing provided for charity workers brings up expectations that those workers should live in conditions similar to that of their clients. People often feel that those who do “good work” do it for the intrinsic meaning, not for some extrinsic reward. This alone may explain much of the outcry and reaction to the story. What should be the reward for people who dedicate their lives to serving others in need?

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Comments

I agree that housing those people is important and shows that they are just as important as people who donate, but I think that the size, value, and sheer practically of a mansion is... well...unpractical.

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