In an earlier essay I looked at the matter of the ethics of overhead in regards to charities. In that essay, I focused on Dan Pallotta’s discussion of the matter and in this essay I will discuss the matter more generally.
While people do vary in their opinions of the matter, there does seem to be a general moral intuition that a charitable non-profit should have minimal overhead. The idea is, presumably, that the money should go to the charitable cause rather than to the cost of overhead. Thus, the idea is that the lower the overhead, the greater the virtue. In this context it is assumed that the overhead is generally legitimate (that is, the money for overhead is not simply wasted or misused).
The obvious way to discuss this matter in the context of ethics is to consider it within established approaches to ethics, specifically those of virtue theory, Kant and utilitarianism.
Borrowing from Aristotle and Aquinas, when assessing charity one needs to consider such factors as the object of the action, the circumstances of the action, and the end of the action. Aristotle, in defining what it is to act virtuously, puts considerable emphasis on the idea that a person must do the virtuous act for its own sake. Using the example of giving to charity, exercising the virtue of charity (or generosity) requires that the giving be done for the sake of giving. If, for example, I give for the sake of getting a tax break, then I am not exercising the virtue of charity. This would seem to provide some foundation for the intuition that charities should have low overhead. After all, for those engaged in the charitable function (be it a road race, a bake sale or something else) to be acting from the virtue of charity they would need to engage in the activity for its own sake. If, for example, I work for a charity to get a salary, then it would seem that I am not acting virtuously. As such, to be acting virtuously it would seem that those involved in a charity would need to be engaged in the charity for its owns sake, which would certainly seem to involve the expectation that they make sacrifices for the charity since they are supposed to be acting for its sake and not for some other sake, such as making a large salary.
Not surprisingly, people are praised for making sacrifices for charity—be it a person who volunteers for free or a person who could be a CEO of a major corporation but instead works for a charity for a mere fraction of what she could make in the for-profit sector.
Kant claimed that what matters morally is the good will and not what the good will accomplishes. Roughly put, if a person wills the moral law, then that is what matters. Whether the person accomplishes anything practical or not is not relevant to the ethics of the matter. In the case of a charity, what would presumably matter is that a person will in the appropriately good way and the consequences would not matter morally. This would certainly match the idea that what matters in a charity is that this will be shown by focusing on minimizing overhead and maximizing what goes to the charitable cause. Naturally, a person can will the good and also have success in terms of the consequences. However, people are praised for their intent. So, as Pallotta noted, those running a bake sale with a low overhead that raises a tiny amount of money are regarded as morally superior to those running a high-overhead event that raises a great deal of money. It is presumably assumed that those with the low overhead are focused on (willing) charity while those who are involved in the high overhead operation are really concerned with their own income.
In the case of utilitarianism, the focus is not on the intentions of those involved nor on what they will or do not will. Rather, what matters is the consequences. On this moral view, it would certainly seem that a high overhead charity could be superior to a low overhead charity in terms of the consequences. In fact, Pallotta seems to be giving what amounts to a utilitarian argument: what matters is the overall consequences. On this view, a charity is assessed based rather like any business: costs and benefits. So, for example, if a charity has large expenses in terms of salaries and promotions, yet successfully raises millions for charity, then it is better than a charity with tiny expenses that raises a tiny amount of money.
While it is tempting to claim that those operating from the utilitarian perspective would be doing so in a way that rejects the idea of the true virtue of charity, this need not be the case. Acting in a virtuous manner presumably does not require that a person act less effectively. As such, if a person accepts a large salary to work at a charity for the sake of the charity, then the person can still be regarded as virtuous, albeit well compensated for her virtue.
The obvious counter is that a person who was truly motivated by a sense of charity would accept a much lower salary so that more would go to charity. This is certainly a legitimate concern and raises the question of how much a person should sacrifice in order to be virtuous. In this case, a person who could make a huge salary effectively selling bottle water to the masses instead elects to make a large salary effectively combating malaria could be regarded as being virtuous—provided that she chose the one over the other for the sake of helping others. While a person who accepted a lower salary for doing the job could (and perhaps should) be regarded as more virtuous, it does seem misguided to automatically regard someone who is doing good as lacking virtue merely because they receive such compensation. If only from a practical sense, it seems like a good idea to reward people for doing what is good.
If, however, a person picks the charitable job for other reasons (such as location or to boost his image for planned political run), then the person would not be acting virtuously even if he happened to do good. We do not, of course, always know what is motivating a person. This probably explains why people tend to praise charities with lower overhead—since those involved are obviously not getting anything for themselves (in terms of money), then they surely must be motivated by charity’s sake. Or so it is assumed.