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Dan Pallotta: A call to change how we think about charity and fundraising

The not for profit sector is a topic that has been frequenting mealtime conversation in my circles lately. So, when I watched Dan Pallotta’s TED Talk about (in his words) “how the things we’ve been taught to think about giving and about charity and about the non profit sector are actually undermining the causes we love and our profound yearning to change the world”, I was struck by how ripe the conversation was and how strongly his words resonated.

In a time when the new generations entering the workforce are increasingly driven to find fulfilling work that ties into social good, and organizations are faced with growing pressure to operate more transparently, taking into account a deeper set of social, environmental, and financial responsibilities… the social good and cause sector is evolving far beyond just philanthropy and sponsorship. It is becoming an integral part of business, our social fabric, and an expectation. The not for profit sector can’t help but also experience a shift alongside this evolution.

Pallotta has a great deal of experience and expertise in the area being the intellectual powerhouse who invented the multi-day charitable event through AIDS Rides and Breast Cancer 3-Days years ago, and activated a tremendous amount of support and participation through his events and initiatives. But these successes were not without their challenges – which he gets into in his talk.

Aside from perfectly articulating the core disadvantages he feels the charity-sector faces, Pallotta sends a compelling message about how we think about charities, giving, and not for profit and the ideological shift required to really make a difference. It’s inspiring.

At the heart of his talk, Pallotta speaks to five major areas where non profits are disadvantaged when compared to for profits.

  1. Compensation

The point Pallotta makes here is that while it is widely accepted in the for profit sector to compensate people according to the good work they do, there is a social stigma around people making good money helping people. Instead, those who be attaining a higher salary in non profit are viewed to be societal parasites. In contrast, in the for profit sector, it’s perfectly okay for people to make a lot of money not helping anyone. The result is a rift in skilled labour, and also a difficult choice for those who wish to make a difference, but are forced to choose between a livelihood and a drive to help others as a career.

  1. Advertising and marketing

It is acceptable for organizations in the for profit sector to spend a great deal of money on advertising and marketing to raise awareness and drive the desired actions around their products and services; however, the for a non profit organization to do the same would be a misappropriation of funds – even if it means generating a great deal more participation, action, and ultimately, funds for the non profit. More on this in the next point.

  1. Taking Risks

The luxury of taking risks for new revenue ideas is frequently enjoyed in the for profit space; however, non profits risk giving up their reputations should any risk fail – and even if they should succeed. The result is a disincentive for non profits to take risks, even if there is much to be gained or when innovation is desperately needed.

  1. Time

Pay-offs and positive results from projects or investments within for profit are expected to require time – often over years. The same thinking is not applied to non profits, where results are expected now and proof of the work they are doing is required immediately. To require a timeline in the scope of years would be detrimental to a non profit’s reputation.

  1. Profit to attract risk capital

While further investment of profits into capital markets is normal in for profit, non profits are limited in being able to do the same.

The combination of these five factors, Pallotta asserts, have resulted in compromised talent pools, marketing scale, innovation, time to find supporters, and capital for non profits, putting them at a severe disadvantage. He also gives his thoughts as to where this thinking originated from in the first place.

If you haven’t seen the TED talk yet, I recommend checking it out.

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