How Can Non-Profits Thrive? Insight from Dan Pallotta

 “Working In the Non-Profit Sector”, I want to share with you some thoughts that have been moving, shifting and turning in my mind. For the past few months, I’ve been engrossed by a book that’s made me look at non-profits from a new angle. Written by Dan Pallotta, the book makes a bold argument: non-profits are hindered by the moral expectations of society.

The book is called Uncharitable: How Restraints on Nonprofits Undermine Their Potential. Pallotta has worked in the sector for over twenty years and organized AIDS Ride, AIDS Vaccine Rides, and Breast Cancer 3-Days – his events have raised over half a billion dollars and netted over $300 million for AIDS and breast cancer research.

Non-Profits Cannot Reach Their Full Potential

Uncharitable looks at the many contradictions that make up non-profit culture: never wasting money on advertising, not spending money on infrastructure, not having competitive salaries for staff, and not embracing for-profit business models. Some of those things may seem sensible on the surface, but do they actually lead to significant results? Pallotta argues we care more about the means non-profits use than the gains they produce – which is discouraging, considering the magnitude of the issues they are dealing with. World hunger, clean water, medical research – these are such important and serious issues, we must have carefully planned strategies, and non-profits’ dependence on grants and gifts does not allow for that. Pallotta believes we can get the results we want, but not unless there is a major overhaul of the entire sector. What society considers “appropriate” business conduct is a set of conditions that inhibit success – when the government cuts budgets or when donor gifts diminish, non-profits have few alternate means of staying afloat. This whole process means people working in the sector feel little security in their work and don’t feel what they’re doing has value in society. Pallotta claims that if non-profits embraced capitalism, they could become self-sufficient.

Advertising is Taboo

As you can see, there are a lot of new ideas in the book’s premise that deserve attention. But I’ll address one very important issue – advertising, and consequently, story-building and raising awareness for the work non-profits do. If you read in the Metro that a local non-profit was being called out for foul play due to spending donated dollars on advertising, would you shake your head in disappointment and frustration? Would you think about how many that money could’ve helped if it was donated directly? But what value does donating “directly” actually have on the big picture? The saying goes, Give a man a fish and feed him for a day. Teach a man to fish and you feed him for a lifetime. The same logic applies here.

Without proper advertising, the general public remains unaware of most NP’s, and instead advertisements for mascara and fast food are getting the air-time. We got there by putting means before the ends. We think we’re putting non-profits first, but by considering advertising budgets a waste, we push them into obscurity. Businesses don’t exactly like to waste money either – they take risks and advertise because it works. There is no good reason, objectively speaking, for why I have so much information about consumer goods and know so little about the non-profits in my own community.

Defining Foul Play in the Non-Profit World

Countless times I’d read of embezzlement of funds or “questionable profits” for CEO’s of charities, and assumed that yes, the paper was right – making a profit from a charity is shameful. But what actually constitutes foul play? I’ve been volunteering for a non-profit animal conservation group for close to a year and have begun to understand the importance of long-term strategy. But society scorns on “risky” tactics or bold and new ideas that are the stuff that transforms industries and products in the business world. Risky spending is scorned on not only by laypersons but also many working in the sector, who perceive the status quo as the best way to operate. Obviously, there are also people like Pallotta, who must accept an environment that restricts them from putting their ideas to life. 

Accepting Diversity in Strategies

There is room in the world for non-profits that donate funds directly and those that work to find long-term solutions – it’s important people learn to understand how the latter would actually operate and stop blowing the whistle at more commercial-oriented approaches. There are so many different types of for-profit businesses – it’s not unreasonable to allow the existence of a greater variety of non-profits also.

So what do you think – would you support this type of change in non-profit culture? Have you read the book, and if so, what is your perspective on Pallotta’s ideas?

You can read more about Pallotta’s work on his website, Dan Pallotta.com. Non-profit consultant and former SFU Volunteer Services Program Administrator Trina Isakson wrote about Pallotta after attending his talk in 2010.

By Sonya Reznitsky