Ted Talk Review: Dan Pallotta
December 15, 2016 Lynette Garet latest 0 Comment
The Way We Think About Charity is Dead Wrong
Dan Pallotta is a smart guy and he is a busy guy. His résumé reads like a list of innovative charitable fundraising achievements…
He’s founder and president of the Charity Defense Council, founder of Pallotta TeamWorks, and president and chief humanity officer for Advertising for Humanity, an advertising consultancy for NPOs that want to change the world and are willing to spend the money to do it.
He is also an outspoken critic of the restrictions that public perception places on charitable fundraising. That perception considers it socially irresponsible and morally unethical to spend more than a pittance on the overhead of raising money and running charitable programs. That perception closed the doors on Pallotta TeamWorks—responsible for the innovative multiday fundraising events such as AIDSRides and Breast Cancer 3-day walks—in 2002, when the charitable sponsor pulled out over the perception of too much overhead. Those are events that raised $302 million on a $400,000 investment over five years.
Pallotta says that perception is dead wrong. In his February 2013 Ted Talk, he makes a compelling case for scrapping the rule book that says only for-profit business can spend money on staff compensation, advertising and overhead. Social conventions say that nonprofits must never risk failure in their efforts to raise new revenues that say nonprofits must never invest time and capital in capacity building to improve their fundraising potential.
Charitable giving has remained steady at 2% of GDP, since the 1940s. Only 20% of that amount goes to the health and human services sector; poverty in the U.S. has remained steady at 12% for the last 40 years. Pallotta says, “A lot of people say now that business will lift up the developing economies, and social business will take care of the rest. And I do believe that business will move the great mass of humanity forward. But it always leaves behind that 10 percent or more that is most disadvantaged or unlucky.”
In his Ted Talk, Pallotta said, “…we don’t realize is that this system has a powerful side effect, which is, it gives a really stark, mutually exclusive choice between doing very well for yourself and your family or doing good for the world to the brightest minds coming out of our best universities, and sends tens of thousands of people who could make a huge difference in the nonprofit sector marching every year directly into the for-profit sector because they’re not willing to make that kind of lifelong economic sacrifice.”
He makes his case, showing a for-profit CEO, making $400,000 a year can easily donate $100,000 annually and still be financially better off than a nonprofit CEO earning $84,000 a year. Pallotta maintains that traditional criteria for charitable giving undermine nonprofit goals, purpose and effectiveness by scaring off the best and brightest minds—that NPOs forego growth opportunities to keep their overhead down. He underlined his point, “And if you can’t grow, you can’t possibly solve large social problems.”
Pallotta wants philanthropists and nonprofits to invest based on the scale of the dream, to exercise charity of thought so that nonprofits can change the world. He clearly believes it is possible to do well by doing good.