“What 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 “wasting” 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 (“profit”) 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: “Uncharitable 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, “What 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.