The Most Surprising Thing About Charities

In the video below, Ken Stern, former CEO of National Public Radio, discusses the current state of the charitable sector, and gives his take on the most surprising thing about charities - how many of them operate like for-profit businesses.

The full version of the interview can be found here, in which Stern discusses his new book, "With Charity For All." In the book, Stern takes on the charitable sector, which he says, "operates with little accountability, no real barriers to entry, and a stunning lack of evidence of effectiveness." Stern discusses in detail what's broken in the charitable sector, how to fix it, and how Americans can best make a difference. Given Stern's unique perspective from his time at NPR, we also discussed with him the future of radio and the technologies that are disrupting it.

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Brendan: What's the most surprising thing that you found in the book, in your estimation?

Ken: I think two things -- well, there's lots of surprising things; I could go on all day -- but one is how many charities actually look, feel, and operate like for-profit businesses. The best example of that in my mind is charitable hospitals, which are more profitable than for-profit hospitals, compensate their executives in the millions and, most importantly, actually provide no more charitable services than for-profit hospitals.

There are lots of examples of charities like that. That really surprised me, as well as some of the effectiveness challenges.

Brendan: Why be a for-profit hospital instead of a charitable hospital if you can do seemingly most of the same things?

Ken: Well, for investment purposes. I think the real difference between charitable hospitals and for-profit hospitals are the ability of a for-profit hospital to distribute profits to shareholders. It's really an investment distribution issue.

On the charitable side, the question is really whether the government and donors should be supporting these hospitals, which are really essentially for-profit businesses.

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