Activist and fundraiser Dan Pallotta in his recent TED talk calls out the double standard that drives our relationship to charities, and how we have been undermining the causes we love. He raised the same question back in September 2012 in a Wall Street Journal article. Yet, his TED talk stirred a lot of attention. On twitter his talk was tweeted and retweeted by many quoting it as “a must watch,” “brilliant,” “smart,” “important,” and “stunning.” Many applauded Dan for being brave enough for starting the discussion.
Dan questions the way we think about philanthropy. He says, we have to ask non-profits the scale of their dreams and how they measure their progress towards their dreams instead of how much they are spending on overhead. Donors won’t invest in a bake-sale just because the overhead is low, when they see the return will also be small. (See the chart above). He recommends giving non-profits the flexibility so they can grow the pie chart extensively. If non-profits are to take up a role in development, we need to allow them to build the kind of demand for philanthropy that Hollywood builds for movies.
Dan very clearly lays out five reasons why the non-profit sector is being discriminated. He says, because we don’t want compensation to be an incentive in the sector, we force people to choose either to do good for themselves and their families or to do good for the world. Secondly, since we don’t want non-profits to advertise for themselves – as that will mean spending money – the non-profit sector hasn’t been able to take market share from for-profits so charitable giving has been stuck at the same level for years. Thirdly, he says, we prohibit failure and taking risk for non-profits which curtailed their innovation. He adds that we haven’t been as patience with time with non-profits as with for-profits by using the Amazon as an example, which went for six years without making any return on investments. And, lastly, he says, since there isn’t a stock market for non-profits there isn’t any way to attract risk capital.
He invites our generation to be generous in our thoughts towards how a charity should act. Then, he says, the non-profit sector has a possibility to make a change.