Like so many in the nonprofit sector, I was completely spell bound by the recent Ted Talk by super-fundraiser and activist, Dan Pallotta. I’ve always admired Dan’s challenge to the nonprofit sector to evolve beyond a culture of poverty, but his arguments in this talk are – from my point of view – irrefutable.
If you haven’t listened to it, do it now: http://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong.html
At the heart of Dan’s argument are five ways in which the nonprofit sector is discriminated against compared to the for profit sector:
1. Compensation: The nonprofit sector can’t attract the same talent pool as the for-profit sector due to frighteningly low compensation rates.
2. Advertising and marketing: Nonprofits are highly discourages by spending even a fraction of the money on advertising that the for-profit sector spends.
3. Taking risk on new revenue ideas: While the for-profit sector is expected to take risks making money and sometimes fail, nonprofits are roundly rejected if they lose money in a new venture.
4. Time: A for-profit venture can not return profit to its shareholders for years, but nonprofits are expected to perform as soon as they start making money.
5. Profit to attract risk capital: Nonprofits don’t have any access to capital markets that help them to grow like for-profit companies do.
This discrimination leads to a nonprofit sector that simply doesn’t have the resources to tackle the mammoth social and environmental problems it is up against and unless something changes, it never will.
I’ve lived this in my work in the nonprofit sector for the past 25 years. Even so, my immediate thought was, “Yeah, that’s right. Someone should do something about that.”
You know the answer. It’s up to us. Whether you are a staff member, donor, Board member, or a fundraising consultant you can do something to change this paradigm.
Fundraising Staff: You, wonderful staff people, probably think you have the least impact on this potential change. But nothing could be farther from the truth.
You have a critical role and there are things you can do right now:
Board Members: You can be a real change agent within your own organization and community. Be the one who asks the question, “Are we giving our staff the tools to really make an impact?”
Donors: This is where the rubber hits the road. You, donors, are already on board. Fundraising results have shown that donors are not nearly as influenced by the rating of charities based on percentage of fundraising or “overhead” to program expenses as the charity “watch dogs” would have us believe.
Foundations and corporations have farther to go. While a few have loosened up their funding requirements to allow for true investment, most say they want organizations with long-term impact, but yet their funding practices demand short-term returns.
As a donor, you can vote with your money:
Yes, this will take some faith. And, indeed, some nonprofit organizations will abuse our trust and spend money on stupid stuff. But, how are we ever going to solve these BIG social challenges if we continue to force the nonprofit sector into a false economy where investment is bad and inefficiency is good?
There are things we can all do to create the nonprofit world that Dan envisions. What part are you going to play?
p.s. And by the way, if there are any fellow consultants reading this blog, you TOO, are a critical piece of this pie. Are you helping your clients to seize opportunities?
photo by Tambako the Jaguar