But why?

Several times at tonight’s terrific kickoff of Portland’s new Online News Association chapter, guest speaker Mark Briggs quoted a variation on the line: "nonprofit isn’t a business model; it’s a tax status."

If that’s not a cliché yet, let’s hope it will be soon. It’s certainly true.

Nonprofit news companies are just businesses with a little extra flexibility over here and a little less over there. But as Oregon Public Broadcasting’s Toni Tabora-Roberts said after Briggs’ talk, the country’s most successful models of nonprofit local news – NPR, PBS and their affiliates – consider it unethical to compensate their "development" staff based on the size of the sponsorships they bring in.

I know bupkis about fundraising, let alone public broadcasting. But I know an assumption worth questioning when I see one.

Let’s grab this argument by both horns.

Of course! Nonprofits should treat fundraisers like salespeople and pay commissions when they land sponsorships

The argument:

Humans respond to incentives. The faster news economics change, the more important it will become for news organizations to reward entrepreneurial thinking and results. Paying on commission gives development officers clear incentives to invest time in new ventures, and helps organizations know when to pull the plug on bad ideas. It reminds everyone to be bold and fail fast. It gives managers the ability to tweak incentive structures in ways that encourage fundraising around a promising new idea.

Refusing to pay on commission for a job that basically comes down to advertising sales is a relic from the vanished era of scale. No journalism startup, nonprofit or otherwise, would dream of putting all its salespeople on flat salaries. By doing so, public broadcasters are riding the brakes of innovation.

No way! Public broadcasters know this game better than anybody, and they’ve got good reasons to not pay on commission

The argument:

Public radio sponsorships aren’t just ads. Sure, exposure is part of the package a sponsor is buying for their money. But a development officer is also selling warm fuzzies: The feeling of having supported a good cause. A sponsor can then share those warm fuzzies among its own executives, employees or customers.

Most nonprofit funders are ignorant of whether their money is being spent well. Almost all their information comes from their contact in the recipient organization: the development officer. Therefore a funder can’t get warm fuzzies without a close, trusting relationship with a development officer who they’re confident isn’t just out for a quick buck.

I’m already constructing the next round of arguments in my head, but that’s how the basics look to me.

(Creative Commons pledge drive photo by Indiana Public Media.)

I see another danger … that not-for-profit ventures will delay or even choke off for-profit, sustainable entrepreneurship in news. I would prefer to see various of the many funders who gave funds to not-for-profit endeavors – note $5 million give to a new not-for-profit entity in the Bay area – instead had invested in for-profit companies that can build companies that support and sustain themselves rather than rely on hand-outs. That is God’s work.

Jarvis intends this as a paean to capitalism. But he’s got a weirdly non-capitalist way of thinking about nonprofits.

Jarvis’s notion that nonprofits are an anomaly in the market system — and therefore less “sustainable” — forgets the fact that nonprofits produce goods and function within the market system like anybody else.

Sometimes they produce public services for governments. Sometimes they produce warm fuzzies for rich donors.

Wherever the money comes from, a successful nonprofit has found a market for whatever it’s producing. That’s God’s work, too.