Uncharitable: By Dan Pallota
How restraints on nonprofits undermine their potential.
Uncharitable is about questioning the way we use nonprofits. Dave Pallota spent over nearly 20 years in the nonprofit sector. He created one of the most successful charitable fundraising event operations in history. His charity raised hundreds of millions of dollars, but then went out of business.
We’ve been conditioned to believe nonprofits should be entirely selfless. But this mentality is holding us back. When we compare for-profit and nonprofit systems, we’ll see the for-profit world has an advantage. Capitalism draws in talent, resources, and freedoms that the nonprofit sector doesn’t have. How many of us would choose to work for a nonprofit when the private sector pays twice as much? What would happen if a charity could draw in creative, driven minds to solve problems? What if we adopted for-profit strategies in the charitable world? What would happen if we loosened some of the restraints that keep nonprofits from thriving? Isn’t that the ultimate goal? For nonprofits to make a difference in the world?
Why should you read this book?
Uncharitable challenges our long held beliefs about charity. Beliefs we’ve never stopped to question. Reading this book will more than likely shift your view on the charitable system. Why would we reward the private sector for destroying the world, while holding back the nonprofit sector that’s trying to fix it?
If we want to solve world hunger, shouldn’t we hire the best people to do it? If we want to save lives, shouldn’t we do whatever it takes? Society’s ethic restraints on charity starves these important causes. Because we’re simply directing resources and talent into the private sector, and away from the problems we need to solve. Maybe it’s time to change the system.
Excerpts:
“After explaining to a friend that we need to let charities hire the most talented people in the world, he wholeheartedly agreed and then said something that didn’t logically follow: “It makes me angry to see people making high salaries in charity.” “Even if they’re worth it?” I asked. “Because it’s supposed to be nonprofit,” he replied. Right there he gave expression to the entire problem. His logic was internally consistent but externally nonsensical. Still, I understood where he was coming from. Twenty years ago I felt the same way.
"But what if the fundamental basis of the system is the problem? What if a system that frowns on self-interest turns out to be an inferior way of serving the interest of others? What if a system that allows people to satisfy their own self-interest as well as the interests of others turns out to be a much more effective way of helping those in need?”
“Our system of charity doesn’t produce the results we are after because there is a flawed ideology at work. Its error flows directly from the Puritan belief in human depravity. The principle tenets of this ideology go something like this:
People who want to work in the nonprofit world should be more interested in the good they can do than in the money they can make.
Charities should not take risks. They should be cautious.
Charities do not have the luxury to think about the future. Donated money should be spent immediately to alleviate the suffering of others.
Charities should not make mistakes. A mistake means a charity is wasting money that could otherwise go the needy.
No one should seek to earn a profit in charity. Profitmaking is for the for-profit sector.
Charities should maintain a low overhead percentage. This is the only way to know that any good is being done. Low overhead is moral. High overhead is immoral.
“By “nonprofit ideology” I mean the oppressive set of rules that the whole of society has forced on these good people and organizations—the severe restraints we impose on them that keep them separated from the dreams that brought them into the sector in the first place.”
“If we are serious about curing breast cancer, ending poverty, and advancing the cause of humanity, they warrant our attention:
If we allow charity to compensate people according to the value they produce, we can attract more leaders of the kind the for-profit sector attracts, and we can produce greater value.
The more than charities take calculated risks, the better the chance that they will break new ground.
The more we allow charities to invest in the future instead of only the current fiscal year, the more they will be able to build the future we all want.
Advertising builds consumer brand. The more that charities are allowed to advertise, the better they can compete with consumer products for the consumer’s dollar, and the more money they can raise for the needy.
The more mistakes a charity makes in good faith, the faster it will learn and the quicker it will be able to solve complex problems. This is the only path to solving problems—one must “fail upward.”
Profit is the key to investment capital. If people could make the same return from investment capital in charity as they can in for-profit investments, charity would raise massive additional investment capital.
A charity’s overhead percentage doesn’t give you any data about the good it is doing in the world. If charities focused more on solving the world’s problems than on keeping overhead low, more of the world’s problems would get solved.”
About the Author
Dan Pallotta founded Pallotta TeamWorks, the company that invented the AIDS Rides and Breast Cancer 3-Day events, and raised more money, more quickly for these causes than any other known private event operation in history by fundamentally reinventing the paradigm for special event fundraising in America.