Gaochen Xiong the Author of this blog.
A TED TALK REVIEW OF DAN PALLOTTA’S: THE WAY WE THINK ABOUT CHARITY IS DEAD WRONG
When I was working towards my Master of Public and Nonprofit Administration degree, Nonprofit Governance and Management was one of the first courses I took. This foundational course explored the challenges of leading and working in today’s nonprofit organizations. So, as I was watching “The Way We Think about Charity is Dead Wrong” by Dan Pallotta on TED Talks, I was immediately reminded of my time as a student examining in-depth the current issues confronting nonprofit organizations today. The many topics discussed in class included leadership, management, ethics and values, board governance, human resources management, and constituency building. But another emphasis that is highly important in operating a successful nonprofit organization is financial management and charity, which Pallotta shares in his 2013 TED Talk.
Pallotta is a builder of movements with a goal to change the way Americans think about charitable giving. In “The Way We Think about Charity is Dead Wrong,” Pallotta shares his thoughts on social innovation and social entrepreneurship by providing his listeners and viewers with an analysis of the two rule books he sees in our society, one for nonprofits and one for the rest of the economic world. In his analysis, he discusses the five components that discriminate against nonprofit organizations. Those five components are compensation, advertising and marketing, taking risk on new revenue ideas, time, and profit to attract risk capital.
IN “THE WAY WE THINK ABOUT CHARITY IS DEAD WRONG,” PALLOTTA SHARES HIS THOUGHTS ON SOCIAL INNOVATION AND SOCIAL ENTREPRENEURSHIP BY PROVIDING HIS LISTENERS AND VIEWERS WITH AN ANALYSIS OF THE TWO RULE BOOKS HE SEES IN OUR SOCIETY, ONE FOR NONPROFITS AND ONE FOR THE REST OF THE ECONOMIC WORLD.
Nonprofits are frequently challenged with the financial expectation that most donations should go to the needy or to fund the cause, leaving minimal resources for advertising and marketing and staffing. It forces charities and nonprofit organizations to forgo what they need to grow. So it was very educational to hear and see Pallotta explain the difficulties it takes for nonprofit organizations to cross the $50 million annual revenue barrier while trying to meet goals and production metrics that sponsors and the media would consider valid. He also elaborates more on this topic with his own experiences, which I appreciated. It provides credibility and allows his audience to better relate to him as an individual.
I was also pleasantly engaged when Pallotta mentioned the ideology that polices nonprofits: “what percentage of my donation goes to the cause versus the overhead?” I think this is an important component for citizens to understand about the nonprofit sector. This idea degrades the value of overhead and the direct labor in the nonprofit sector, painting an image that makes citizens believe “overhead” is not part of the cause. But in truth, it is the staff that generates the innovative ideas that brings a nonprofit to life, and it is the teamwork that gives value to the mission nonprofit organizations serve to close cultural gaps and fill societal voids.
IN TRUTH, IT IS THE STAFF THAT GENERATES THE INNOVATIVE IDEAS THAT BRINGS A NONPROFIT TO LIFE, AND IT IS THE TEAMWORK THAT GIVES VALUE TO THE MISSION NONPROFIT ORGANIZATIONS SERVE TO CLOSE CULTURAL GAPS AND FILL SOCIETAL VOIDS.
As a graduate who studied nonprofit administration, as a citizen who has provided volunteer services for a nonprofit organization, and as an employee for a not-for-profit organization, I can agree with Pallotta that nonprofits have the potential to thrive in the economy and successfully measure beneficial outcomes for society. However, what Pallotta neglects to mention are the learning opportunities nonprofit organizations can take from these experiences to grow strategically through partnership and shared services. For example, developing pilot programs before implementing a full social service program or engaging in evidence-based studies in order to support advocacy for policy changes are some of the opportunities to ensure a longer nonprofit lifecycle.
ONE THING I TOOK AWAY FROM THIS IS THE REVELATION OF THE DOUBLE STANDARD THAT EXISTS BETWEEN THE FOR-PROFIT AND NONPROFIT SECTORS. IN PALLOTTA’S OWN WORDS, “ONE GETS TO FEAST ON MARKETING, RISK-TAKING, CAPITAL AND FINANCIAL INCENTIVE, THE OTHER IS SENTENCED TO BEGGING.”
In summary, Pallotta’s TED Talk sparks an appreciation for nonprofit organizations and how their charity provides essential service deliveries to the community. Although, you can’t fit a nonprofit 101 class into a TED Talk, his inspirational ideas on philanthropy can motivate how one thinks about charity. One thing I took away from this is the revelation of the double standard that exists between the for-profit and nonprofit sectors. In Pallotta’s own words, “One gets to feast on marketing, risk-taking, capital and financial incentive, the other is sentenced to begging.” It’s a harsh reality because nonprofits don’t aspire to be wealthy or profitable, they’re focused on improving the lives of individuals and communities.
So, reader, what do you think? Does the idea of “overhead costs” keep you from supporting an organization? Or do you believe that we need to change the way that nonprofits are viewed in the economy? Share with us below!
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