Uncharitable by Dan Pallotta: Why are we denying charity the power tools of capitalism?
‘œWhat percentage of my donation goes to the cause?’ Isn’t that what we’re all trained to ask when a charitable organization comes calling for money?
Dan Pallotta’s new book, Uncharitable argues that this paradigm needs a shift and he’s speaking out about how a for-profit entrepreneurial approach should finally be embraced by the nonprofit sector.
This isn’t the first time Pallotta’s name has been attached to controversial ideas in the nonprofit world. Most gays and lesbians will recognize his name (or that of his Pallotta TeamWorks) as the organization behind the very first California AIDSRide’¦ you know the one’¦ that grueling week-long bike ride from San Francisco to Los Angeles. It was a first in fundraising when he created this multi-day charitable event that required participants to raise mandatory minimums of two thousand dollars.
Pallotta changed the game for citizen activism. But as the years wore on he was criticized for his business model, his salary and the way Pallotta TeamWorks went to market with its events. I remember reading about the controversy back in 2002 and wondering what all the fuss was about. Why was he being chastised for infusing nonprofit process with winning strategies from the playbook of capitalism? Apparently, begging for donations is supposed to come with a higher calling albeit lower price than peddling a product or service in the for-profit sector. Isn’t that a double standard?
At the Huffington Post, Pallotta writes:
We let people make a fortune doing any number of things that will harm the poor, but want to crucify anyone who wants to make money helping them. This sends the top talent coming out of the nation’s best business schools directly into the for-profit sector and gives our youth mutually exclusive choices between making a difference and making money. This we call altruism.
We let Apple and Coca-Cola plaster our billboards and television sets with advertising, but we don’t want important causes ‘œwasting’ money on paid advertising. So the voices of our great causes are muted and consumer products get lopsided access to our attention, twenty-four hours a day. This we call frugality.
Amazon could forego investor returns for six years to build market dominance. But if a charity embarks on a long-term plan with no return for the needy for six years we expect a crucifixion. This we call caring.
We aren’t upset when Paramount makes a $200 million movie that flops, but if a $5 million charity walk doesn’t make a 75% profit in year one we want the attorney general to investigate. So charities are petrified of exploring new revenue-generating methods and can’t develop the powerful learning curves the for-profit sector can. This we call prudence.
We let for-profit companies raise massive capital in the stock market by offering investment returns, but we forbid the payment of a financial return (‘œprofit’) in charity. The result? The for-profit sector monopolizes the capital markets while charities are left to beg for donations. This we call philanthropy.
You get the gist. Something is fundamentally wrong with the fundraising model and Pallotta is on a quest to change that: ‘œUncharitable is a manifesto that puts a new cause on the map – equal economic rights for charity.’
Lots of cool people are recommending this book including Sam Page and David Mixner. And of course, in my book, you are cool if Kai Ryssdal invites you onto Marketplace. So if you’re looking for something both altruistic and capitalistic to read this holiday season; buy the book and then make a few year-end donations to your favorite charities without first considering, ‘œWhat percentage of my donation goes to the cause?’
That simple action might just change our world!
As usual, I’d love your comments on this topic below.
Thanks for getting it Nina, and for spreading the word.
Kind regards,
Dan Pallotta
I read about this a bit ago in the Freakonomics blog wherein a guest poster was talking about effective, cheaper ways to eradicate cleft palates in developing countries. I frankly don’t understand why charity has to take the uber-virtuous route if it isn’t cost-effective. I’d rather see my money do maximum good than getting bogged down in the minutiae of whether it’s fully altruistic or not.
Since I have worked in the accounting area for 3 different charitable organizations in my career, I have learned a great deal in how the money plays out in order for an organization to survive. Either leadership believes in rewarding themselves for constantly having to present a positive image despite the costs (i.e. today’s bail out financial executives), leadership either believes in grant writing and doesn’t feel fundraising is necessary because they don’t need to ask for help (i.e. today’s baby boomers), or leadership that believes that you need a good mix of both to survive (i.e. today’s “google” entrepreneurs). Which of these three types do you think are going to survive to help serve another day?
Thanks for posting this. As a nonprofit fundraiser my ears perked up when I heard part of this interview on Marketplace. I’ve always thought the business and nonprofit world should not have such a serious firewall between them, but should instead learn lessons from each other about how to be good corporate citizens, good stewards of human and financial resources, and thoughtful planners. I’m planning to get this book from the library – my nonprofit salary doesn’t permit purchasing of many hardcovers – but I’m looking forward to reading it!
I agree. I have 24 years experience in non-profit management and development. I know how it works. The charity only has enough money to hire one person who actually has a track record in fundraising and is any good at it. That person is then expected to do the impossible with a budget that is much too small and a staff who usually have no development experience (and so poorly paid you can’t ever attract new college graduates eager to get some real world experience). Then, when you can’t perform miracles in a unrealistically short period of time, the board of trustees gives you the boot. And then the whole sad cycle begins all over again. I have always been a proponent of applying the for-profit business model to not-for-profit world. (And wherever I’ve worked I’ve tried to do so, as much as I could.) The one challenge I see is ensuring that the non-profit world doesn’t develop all the corrupt selfish and self-serving behaviors that are rampant in the for-profit and which are, at least in part, responsible for our current economic crisis.