How much money should a social entrepreneur make?

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We all want to earn money. So we can afford a dinner with friends and family in a nice restaurant, a car with up-to date safety standards and maybe even a journey through south-east Asia next year. And of course, we also want to save some money for the future.

Besides the wish to create something, THE main motivation for every entrepreneur is to earn good money. And as long as you don’t get greedy, making a lot of money it is accepted and also respected.

For social entrepreneurs it is at least as important to make the world a better place as it is to have personal financial success. Earning big money even becomes less important if you start your own social enterprise (like a lot of KaosPilots do). The growth or even the survival of your business or NPO is in general way more important. In this situation, the question, if you should allow yourself a big salary doesn’t even arise.

But what if after some time, your business starts to yield some profit and cash is actually available? You’re obviously doing a good job, so you deserve a decent salary. And a compensation for the abandonment during the start-up-phase would be more than appropriate, right? But is it ethically correct to pay yourself a large salary when you’re running a social enterprise or NPO? Or should you use the available financial resources for your company and invest in the actual goal you’re trying to achieve? Where, or at what amount, do you draw the line?

Just recently, Switzerland discussed the salary of the CEO of Rega, the Swiss Air Rescue Service. (http://www.thelocal.ch/20130808/air-rescue-boss-earns-more-than-a-cabinet-minister) His salary is about half a million Swiss francs per year. This is more than a Swiss minister earns per year. The public outcry was loud, a lot of people said that this salary is way too high for an organization that depends on the goodwill and the donations of the public (every third Swiss citizen is a donor).

On the other hand, Rega has pockets full of money because the simply did a good job. They have saved numerous lives over the years and therefore enjoy a good reputation. So why not pay your CEO a large salary if you can afford it?

One interesting aspect to the discussion how much money a social entrepreneur should make, gives Dan Pallota in his TED-Talk “The way we think about charity is dead wrong” (http://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong.html). Instead of rewarding non-profits or social enterprises for how little they spend, he wants us to reward them for their actual achievements. Instead of equating frugality with morality, we should start rewarding them for their big goals and big accomplishments, even if that comes with big expenses.

But is it the final answer, to look at charities as they were normal enterprises? And how should these “big accomplishments” be measured, so an appropriate salary can be determined?

So, what do you think? Is it ok to earn big money as a social entrepreneur? Or is necessary to keep your salary as low as possible to stay authentic?

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