Friday, December 9, 2011

The Dignity of a Reciprocal Exchange

Nonprofit accounting is, well, a bit goofy. There are 2 types of money: earned and contributed. Earned revenue is generated from reciprocal exchanges: I give you money, you give me a service or good. Contributed revenue is generated from non-reciprocal exchanges: I give you money, and I don't expect anything in return.

Reciprocal exchanges are easy to follow and understand. If your nonprofit offers a service or good that I value and the price is acceptable, then I will buy it. Non-reciprocal exchanges -as they affect the person receiving the service or good - are more complicated. Donor A gives Nonprofit B money to help Person C. Person C either accepts what Nonprofit B is offering (usually for free because Donor A paid for it already) or they go to another Nonprofit or do without.

The problem with non-reciprocal exchanges is that nonprofits are concerned about making donors happy, not offering something that people who use their services or goods value. Reciprocal exchanges are more dignified because our success in selling something is based on the value assigned to it by the person buying it. As such, the buyer is exercising her or his choice. As we say in social work, their self-determination is maximized.

Of course, the reason why we have non-reciprocal exchanges is that often people in need - such as people who are homeless - don't have the money to pay for goods and services offered by nonprofits. But what if we acted as if they did and made an effort to determine if what we are offering is actually valued by the people we are trying to help?