Living to Work or Working to Live
Inspired by the webinar: Living to Work or Working to Live hosted by the Elders Council for Social Entrepreneurs
As a social entrepreneur, how often do you think about money? Not funding for your organisation, but instead the impact of money on you as an individual - funding your career transitions and prospects. The economics of personal care for a social entrepreneur can be just as important as the economics surrounding your organisation. Working can become unhealthy when someone begins to sacrifice their financial wellbeing to support a cause.
Mark Cheng, Advisor to Ashoka and founder of the Social Innovation Circle is in conversation with Mel Young MBE, President of the Homeless World Cup and Co-founder of the Elders Council. Mark has helped thousands of founders within social enterprises raise their capital. He says “I’ve observed again and again that social entrepreneurs end up sacrificing themselves for their own organisation,” a pattern that he recognises can be extremely unhealthy.
The martyr complex
Across the charity sector, it is very easy to end up being overworked and underpaid. And unfortunately, founders of an organisation can end up experiencing the severe side effects of this, in what Mark has coined the ‘martyr complex’.
Similar to a martyr in biblical terms, founders are often the first people to sacrifice themselves when their organisations fall upon difficult times. They may feel the need to cut their salary in order to save money. They may also pay other employees significantly more than themselves, ultimately seeing them as playing a more crucial role within the organisation than its founder.
They also typically won’t contribute enough towards their retirement, paying very little into a pension - if they have one at all.
In the end, a person affected by the martyr complex may approach their eventual retirement with a sense of dread. They simply don’t have the funds needed to retire. Which can lead them to continue working well beyond the point at which they’d want to retire.
This is obviously an extremely unfortunate situation for anyone to be in, let alone a social entrepreneur that has spent their life building an organisation from the ground upwards. “It’s crucial for us as a sector to name this phenomenon, recognise it, and find ways to improve it,” Mark urges.
How did the social sector end up like this?
Mel Young brings up an interesting point: “Could it be the system that is the problem here, rather than the individuals? Mel continues: “I certainly didn’t start out as a martyr in this industry, and I’m sure many of us are the same. But there is a cultural idea that we have to go around begging for funds. A lot of people don’t think we should even be paid for social sector work - because we’re martyrs by default. But why does this happen? Is there some innate reason why the social sector attracts people who are more willing to sacrifice themselves to create movements and support causes?”
Mark thinks it may be a combination of both culture and people: “The sector naturally brings in people that are willing to put the cause first and foremost. This has become institutionalised within the sector, and has led to the normalisation of work practices that are unhealthy,” he says.
There is a perception that nobody in the social sector should be well paid - even if that person is the head of a multi-million dollar organisation operating in several countries, impacting thousands of people. But yet that person is expected to be paid much less than someone in the same position in the private sector.
So how can we fix this? Three example solutions
Mark has noticed many social entrepreneurs turning to the private sector during the latter stages of their career to make some extra money for themselves. What does the private sector have that the non-profit sector currently lacks? And how could we adapt those private sector benefits to suit a social entrepreneur’s start-up?
Mark proposes three ideas:
Shares and equity: Founders within the private sector are usually rewarded for their service with shares of the company. These can then be sold back to the organisation, or to its new owner when the current founder retires. How much money these shares are worth depends on a lot, including how much money a company has made in sales and its predicted profit amount for the future. Corporate Founders selling their shares will usually be able to contribute that money towards their future for example a pension.
There is currently no equivalent to this arrangement in the non-profit sector.
In turn, Mark proposes an alternative type of ownership system for non-profits.. Although the technology would need some development, he sees a new way to create monetary recognition for founders based on their contributions towards the organisation that they helped to build.
Mark sees the sector taking inspiration from Web 3.0, an idea which relies on cryptocurrencies and digital assets as a way of shifting financial control away from centralised companies/governments and distributing it to a collective in a similar way to a cooperative organisation. This could see charity sector CEO’s and supporters purchasing a small portion of the digital assets that an organisation has, and being able to sell those in the future.
“These digital assets could be key to the next generation of philanthropy and the evolution of non-profit organisations,” he expresses. “It’s like a ray of hope for this sector.”
Private pensions: Senior staff in private organisations often have the option to pay into private pensions, with the government and often the company itself matching the employee’s contributions. The majority of social sector start-ups simply cannot afford to match their employee’s contributions.
In this instance, Mark sees funders being responsible for stepping in with grants that could set up an organisation’s founder for a successful retirement. This would be a great opportunity for funders to recognise a CEO for their achievements and would also set up their organisation for success once they have departed.
“This doesn’t even have to be a 1:1 match, why not be even more generous?” Mark exclaims. “This would provide enormous value within the sector by helping organisations be set up for future success, and frankly by just removing some weight off of a founder’s shoulders, maybe even attracting some new CEO’s to the sector.”
Paid directorships: In the private sector, most CEO’s will spend their final decade before retirement becoming non-executive directors within other companies. These positions tend to pay very well, with the idea that these CEOs should be paid for sharing their valuable expertise.
However in the UK, US, China, South Africa and India (just to name a few,) non-profit organisations cannot pay their board of directors or trustees for their services.
In Mark’s final idea to tackle the martyr complex present in the charity sector, he imagines funders and philanthropists creating a paid consultancy program for social entrepreneurs in their last few years of working to be able to spread their knowledge to other organisations.
“It would be ideal if charities were allowed to pay for high quality trustees and directors, but if not, can we create a way to pay them by proxy?” he explores. “A retired private sector CEO could be paid thousands to speak at other organisations, or even become a lecturer - it would be so valuable if we were able to do that in the social sector too.”
Why is it important to solve these issues?
What we’re really talking about here is a change in culture, and with that comes a change in policy and crucially, a change in practice.
“As long as there is a difference in pay between the private and non-profit sector, we will keep seeing a flow of talent away from charities,” Mark explains “Especially those social entrepreneurs in the middle of their careers.”
At the moment, the social sector doesn’t have a great way of thinking about transitions into new career stages. So, continuing the discussion around this topic could help teach people about the importance of planning for their transition, and create new ideas for how we may tackle the issue of social entrepreneurs being unsupported through their late career stages.
It can be quite a radical move to ask funders, who typically provide support at the beginning of a career, to disrupt their ways of grant giving. But in the future there may be alternative funders who are willing to adapt to the needs of social entrepreneurs later in life.
Funders who are willing to disrupt the martyr complex’s grip on the social sector.
Author: Rebecca Thackery
Editor: Katelynne Kirk and Chris Underhill