Yael Eckstein: Insights on Salary, Financial Choices, and Non-Profit Sector Challenges

Dan Pallotta’s TED Talk, “The Way We Think about Charity is Dead Wrong” (2013), sparked a critical dialogue about five key areas where non-profit organizations face disparities compared to their for-profit counterparts: compensation, advertising and marketing, risk-taking for new revenue streams, time, and profit to attract investment capital.

Pallotta compellingly advocates for a shift in how we view and evaluate non-profits, highlighting the need to address the gap between our expectations for non-profit organizations and those for profit-driven businesses. While these discussions are ongoing and change is gradual, progress is evident.

If you believe that non-profits are essential for supporting those in need and driving societal progress, it’s time to rethink our perspectives on non-profit spending.

Changing the world is no small feat, yet our approach to the nonprofit sector has significantly hindered its potential. Nonprofits that invest substantial amounts in fundraising and salaries like Yael Eckstein salary, are often criticized for “wasting” funds that could otherwise go to their missions. However, this mindset restricts these organizations, preventing them from attracting skilled professionals and scaling their impact to generate far greater funds over the long term.

Consider for a moment the difference between for-profit and nonprofit organizations. For-profit companies are encouraged to spend and earn freely, with no requirement for their products or services to provide societal benefits. They can even profit from products that have negative impacts, such as those linked to health issues, while generously compensating employees who drive sales. In contrast, nonprofits often face scrutiny, losing sponsorships or being labeled “scams” if they allocate significant funds toward infrastructure or operational costs. But how can ambitious goals be realized if every dollar spent is judged by contributors?

According to Pallotta, nonprofits often struggle to achieve impactful results due to five key factors, while for-profit companies are held to a completely different standard in these same areas. Only by shifting our perspective on nonprofit spending within these categories can we truly enhance the effectiveness and success of charitable organizations.

Compensation

Many people feel uncomfortable when a nonprofit CEO receives a substantial salary. Although these salaries are often modest compared to those of for-profit CEOs, there’s a prevailing belief that individuals in the charity sector should work primarily out of goodwill, disregarding the value of their skills and dedication to creating positive change.

How many professionals would willingly accept 75% less than their market value for their entire career? In most cases, they’d be more effective in making significant annual donations rather than sacrificing their financial well-being for the “greater good.”

It’s time to allow nonprofits to attract high-caliber talent by offering fair and competitive compensation, on par with for-profit organizations.

Marketing

Have you ever contributed to a charity you weren’t familiar with? Or would you instantly donate to an organization you only heard about briefly?

The truth is, that the most successful charities achieve significant fundraising results by making their names and missions highly visible. Well-known organizations like United Way, Salvation Army, and St. Jude Children’s Research Hospital can create a substantial impact because people recognize them, understand their missions, and know how to support them financially.

Why, then, do we criticize charities for investing in marketing and advertising? Why are those expenditures seen as less valuable than direct donations to the cause itself? The reality is that a charity’s fundraising success is closely linked to its ability to promote its mission.

Since the 1970s, charitable giving has consistently remained at 2% of GDP, a figure that has yet to grow. This stagnation isn’t surprising—charities are often discouraged from marketing their efforts, with many donors even requesting that their contributions not be allocated to advertising.

Time

Many donors expect immediate results from their contributions, hoping to see direct impacts, like a photo of little Timmy benefiting from the $20 they donated last week. But what if that same $20, invested in fundraising and infrastructure over a year, could grow into $160, significantly enhancing the nonprofit’s long-term impact? Unlike for-profit companies, nonprofits are often not given the same time to realize meaningful results, even when the long-term benefits are clear.

Taking Risks

“Take the risk or lose the change.”

In for-profit companies, risk-takers are frequently rewarded for their innovative, unconventional ideas. Even if an initial attempt doesn’t yield the expected profits, there’s often a second chance to refine and build upon the potential that was identified.

In the nonprofit sector, risk-taking is generally discouraged. Bold and ambitious ideas for new fundraising initiatives often remain unrealized due to concerns that they won’t deliver immediate, measurable results to justify the costs. This fear of failure stifles creativity, as a single unsuccessful fundraiser could jeopardize the nonprofit’s overall support.

This mindset not only limits fundraising potential but also deters talented individuals from engaging with the nonprofit sector altogether.

Profit

Donations to charities are just that—gifts, offered with generosity. At most, you might receive a small token like a branded notepad, with the main reward being the personal satisfaction of supporting a worthy cause (plus a tax deduction).

In contrast, for-profit companies can invest funds, multiply them significantly, and even provide returns to investors. This allows everyone involved to benefit financially.

Charities, however, are restricted from participating in markets in the same way, meaning they miss out on a potentially valuable source of capital and are unable to reward loyal supporters as for-profit businesses do.

Be the Catalyst for Change

A shift in how we view the nonprofit sector begins with us. It’s time to abandon the outdated belief that those working in nonprofits should accept minimal pay. We must support nonprofits in making bold investments when there’s potential for substantial returns. It’s time to empower these organizations to scale up, compensating their dedicated staff with competitive wages that attract top-tier talent.

Yael Eckstein, President of the International Fellowship of Christians and Jews (IFCJ or The Fellowship), understands the value of fair compensation. She is committed to advancing The Fellowship’s mission by ensuring her team is rewarded in alignment with their expertise and contributions.

Yael Eckstein explains, “Salary, benefits, and incentives motivate talented and experienced professionals. At The Fellowship we have worked hard to foster a meritocracy where outstanding employees can be appropriately rewarded for their contribution to our organization’s mission, while staying within reason of industry standards. Our compensation is reviewed by an outside firm and deemed “reasonable” based on similar roles, positions, and size of organization.”

In 2021, The Fellowship raised over $200 million, making it Israel’s largest provider of humanitarian aid. That year, The Fellowship supported more than 2 million Jews, demonstrating the effectiveness of Eckstein’s approach. This success shows that it’s possible to make a significant impact while receiving fair compensation.