The world’s richest man, Carlos Slim, once said, “Trillions of dollars have been given to charity in the last 50 years, and they don’t solve anything.” In fairness to Mr Slim, who has contributed hundreds of millions himself over the years, I think the point he is getting at is that the way charities are shackled by an archaic school of thought means that the concept of benevolence needs a top-to-bottom rethink.
In Changing the Way We Think about Charity Part 1, I wrote about Dan Pallotta’s TED talk in which he discusses the five key areas of discrimination that non-profits face against private businesses. Pallotta appears to be in agreement with Slim when he describes the people who manage and staff charitable organisations as “The most oppressed community I’ve ever known or seen” and goes on to say “Charity needs its own civil rights movement”.
The discussion points of the TED talk are a reflection of Pallotta’s book Uncharitable: How Restraints on Nonprofits Undermine Their Potential which The Stanford Social Innovation Review said “Deserves to become the nonprofit sector’s new manifesto”. The book explored the reasons why the sector has evolved in the way it has and how we need to change our approach towards how non-profits operate.
Pallotta’s follow-up Charity Case: How the Nonprofit Community Can Stand Up for Itself and Really Change the World sets about tackling some of those ideologies and changing the status quo. For example, the book claims that in 2009, Save the Children spent $3.3 million on advertising. A paltry figure when you consider that in 2010, Disney spent 582 times that amount on its own advertising campaign. As Pallotta puts it “Save the Children 1, Entertain the Children 582”.
The restrictive school of thought which has blighted the non-profit sector is born out of a desperation to do as much as we can, as quickly as we can for a cause to be helped as fast as possible. It’s actually a short-sighted hindrance because it means rushing into a project ill-prepared and doomed to failure.
For example, the contributors of a charity aiming to provide water wells for a drought-stricken area of Africa were so keen to have a hands-on approach that they would regularly make personal trips from their own pocket to work on construction. Because each trip proved so costly, eventually the funds ran dry and the project failed. In hindsight, if they had hired a local onsite manager and given him the authority to assemble a local workforce of labourers at a fraction of their own travel costs, they would have created employment, the project would have been successful and that success would have resulted in cultivation, harvesting and more local employment. The contributors’ hearts were in the right place, their heads were not.
Another way in which we need to change the way we think about charity is investment and growth. Just take Pallotta’s own organisation Pallotta TeamWorks. Despite the fact that the organisation raised $582 million in nine years, the media chose to focus on the overheads they were spending rather than their impact or success. The negative publicity proved toxic and Pallotta TeamWorks was forced to close after its main sponsor withdrew support.
This is proof that we deny charitable organisations access to the best fundamental business practices by not allowing them to use the tools of commerce they need to thrive. Instead, we think charities have a moral obligation to take a vow of poverty. Pallotta believes that the public needs to get over its mistaken fixation on fundraising costs and overhead ratios and realise that these are defunct methods of measuring efficiency across the non-profit sector.
The argument for non-growth within non-profits is evident. In American, since the 1970s, the figure of charitable giving has been stuck at 2% of GDP. The idea that a dollar spent on advertising that could have been spent on the needy is a dollar wasted is flawed. If you took that dollar, invested it advertising and generated ten times that money, clearly that dollar has not been wasted at all. It’s a business model rather than a traditional charity model but crucially, one with much more success.
It’s here where Charity Case discusses the need to create corporate structures for private businesses that can “Drive a whole new class of entrepreneurial and creative thinking into civil philanthropy.” The arguments raised in the book are also reflected in the organisation that Pallotta founded to defend the charities from the sort of scrutiny that limits their long-term chances of success, the Charity Defence Council.
According to its website, their goal is to change the way people think about changing the world by focusing on five key areas:
- Anti-Defamation Force: rectifying inaccurate and sensational reporting on the sector and on individual charities pro-actively educating the media.
- Brave and Daring Public Ad Campaigns: rebranding charity and changing the way the public thinks about charity.
- Legal Defence Fund: challenging counterproductive regulations and laws.
- The National Civil Rights Act for Charity and Social Enterprise: demanding a thoughtful and consolidated statutory code to replace the existing fractured set of oppressive laws and regulations.
- Organising Ourselves: a self-sufficient and structured non-profit sector on a town-by-town, state-by-state basis.
For the sake of the non-profit sector, I, for one, hope Pallotta’s mission is a success.