Not sure if I'm missing something, but this sounds totally ridiculous to me.

You give 1M to someone you think is going to spend it well, and they do; why isn't that the end of the transaction? Why do you forever have a gun to their head?

Maybe you've got all the best intentions about what would cause you to call the loan back. But after they've taken donations of this sort, why would anyone continue donating to them? They've built up liabilities to 3rd parties, I'm not interested in potentially paying off their loans instead of doing good work if some of those 3rd parties change their mind.

Op mentions sunset provisions in a sibling, but at that point the difference between this and a recurring donation is marginal.

Just donate a smaller amount on a recurring basis. You reduce your risk that the nonprofit will upset you, without making their existence tenuous.

Now lacking a mechanism for accountability, people give funds with all sorts of strings attached. But wouldn't it be better to give funds with a voting interest attached to the board instead?

On top of this, how could a nonprofit make commitments to people (often people in very vulnerable situations) knowing their funding might get called at any moment? If a donor wants this much control over a nonprofit, they should just start and fund one themselves.

In terms of nonprofits taking too large of salaries, I'd trust beneficiaries to decide what's appropriate. I often feel like some donors care more about low salaries than they care about how much the people being paid are helping others. I'd happily pay a CEO $1M to create $100M in impact over paying a CEO $100k to create $500k in impact, the latter being much more common imo.

This flies totally in the face of Paul's post. His point is to donate unrestricted to non-profits you _trust_. If you can't trust the organization or need to put controls in place to prevent them from doing something bad, you should find another organization to donate to or need to check your ego.

I don’t see a reason to make things complicated; every bit of overhead reduces the net impact your dollars are going to have.

One of the biggest challenges nonprofits face is donors who think they get to micromanage them because they give money. Any decent nonprofit has a development head who will politely but firmly tell donors to butt out, and hand them their check back if they don’t.

> If a nonprofit doesn't understand better than its donors where money needs to be spent, then it's incompetent and you shouldn't be donating to it at all.

Though see TFA for some (corner-) cases where this might not apply.

Open to your thoughts on why TFA is wrong on this point - but I think you need to flesh your case out a bit more to at least address the arguments presented therein.

Start your own foundation and manage your own money. This isn't genius, it's ignorance.

If you want competent people to lead your nonprofit, you have to pay them.

Yeah, if I had a non-profit, I would just plainly refuse.

I think the key would be clarity of mission.

It might be as simple as maintaining a letter-grade of B or above on charitywatch.

I would hope it would be something with more teeth though, like requiring signal to be end-to-end encrypted (for real, not like zoom)

This has been a truism for more than 100 years and has been mocked for as long it exists. There are entire "Yes Minister" episodes about "we use the usual formula: comparison with wages of industry leaders" (they use chairmen of BP and IBM for comic effect).

Also highly recommended is the episode where Sir Arnold leaves the civil service and looks for a suitable successor who will put jobs his way ... sorry, ask him to undertake the jobs.

Excerpt:

  Sir Arnold: Also, I would like to be chairman of the
              Anglo-Caribbean Association, which would
              give me an opportunity ...

  Sir Humphrey: ... to be of service.

  Sir Arnold: Precisely, especially during the winter months.

The CEO of a nonprofit may be a well paid associate, but he is still just an associate. The kind of excess revenue that would flow to a partner’s profit sharing check has to be reinvested in the mission instead of disbursed to somebody in cash just because.

and more often than not, peanuts to those they supposedly help too -- when they're not directly tax scams, covert foreign influence operations, or merely scams...

This is the trope that non-profits should essentially be run by volunteers. Which is fine to a degree, but does not scale well (that I've seen, anyway).

Think of some of the performing arts, dance and music programs in some of the largest cities that are structured as non-profits and charge $20 in ticket fees. If they lost their donors, they would have to charge $100 to $200 in ticket fees just to break even.

And that would happen if they got zero-interest loans as well, since they would be on the hook for paying back the loans and have to cover those.

Only if they ever strayed from their mission. That ought to put a limit to how much corruption they think they can get away with.

Say I am a charity who feeds the homeless. You like that, so you I’ve me a $1 million dollar interest free loan to further my cause, but say you can demand repayment if we strayed from our mission.

Ok... so what is the charity going to do with the money? They are going to spend it on stuff.. so they spend the million dollars either on things that are good for the charity mission or not, but either way they are spending the money.

If afterward you say “that isn’t right, I demand you pay back the loan!”.... how are you going to collect? They already spent the money. The loan wasn’t backed by anything you can take back. You could take the charity over, I guess, but it will be a name with no assets.

Even if a charity had assets to take, how do we know the DONOR won’t ‘stray from their mission’ and suddenly demand repayment years later after the money is spent? Who decides if the charity has strayed from their mission and the money is eligible to be taken back? What if the donor suddenly needs money and claims the charity drifted off mission even though they didn’t?

This is one of those ideas that sounds good unless you think about it.

But the fact of the matter is that paying salaries to people who bring in more money than they make is a good strategy for everyone, that's why non-profits do it. Even if MegaCharity A only spends 60 cents of its income on charity but MiniCharity B spends 99 cents of its income on charity, MegaCharity A is still doing better for humanity if their annual income grows every year due to the strength of their marketing. MegaCharities can raise awareness exponentially and actually change the outcomes of some of the problems in our worlds because they have the power to raise enough money in one place with one cohesive plan to actually fight these things.

I grew up next to St. Jude Children's Hospital. Everyone has heard of them. They bring in billions every year. They have an entire marketing wing and a well-compensated C-Suite (compared to other non-profits). They have way way way more impact because of all these things than most other medical charities for children. No other non-profit in the world can offer completely free medical care to children from anywhere in the world and fly their families to live near them while they're cared for without spending the kind of money they do on marketing and executives.

Non-profits need executives, and people with the credentials to be executives have to choose between non-profit jobs that pay 1/8 of what for-profit jobs do. Sure they make more than a living salary while their employees struggle to make ends meet, but that's true of every type of organization. And in the end, they won't join non-profits at all if the money they sacrifice to do so is too high.

As a business, that calculation is certainly correct. But as a charity, you have to think about what the donor would have done otherwise... maybe your $60 in marketing actually just caused the person to switch their $100 donation from some other charity to yours. Now instead of charity B getting $100, charity A only gets $40 after expenses.

Even worse, you can start an arms race. Now charity B has to spend marketing money to try to win back the donor who switched their donation to charity A, and now they spend $70 to get them to switch back (still worth it from charity B’s perspective, $30 in gain)... now we have two charities spending $130 for $100 in donations.

There is always an opportunity cost.

Is there anyone left that isn’t aware of breast cancer? What is more awareness spending getting anyone at this point (aside from non profit executives)?

It's the same for charity.

Of course all of this is the result of pragmatism and a focus on whatever it is that’s being optimized for (some aggregate impact measure which is unlikely to include employee welfare to a large extent).