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I sometimes still get asked about @danpallotta's @TEDTalks from a number of years back. It influenced a lot of people. But the problem is that it's rooted in fallacy and distortion. Here are some points I made about this in a 2013 @HuffPost piece.
1) Pallotta says the sector has failed because we haven’t “ended” homelessness or poverty. But if the nonprofit sector is to be blamed for this, should it also be credited with the dramatic improvements in worldwide infant mortality or progress in LGBTQ rights?
2) Pallotta argues that nonprofit performance suffers because the sector doesn’t pay adequately (a disparity he, unbelievably and grotesquely, equates to apartheid) — and that it should take a page from the corporate world.
In his talk and in his books Uncharitable and Charity Case, he looks uncritically to corporate CEO pay as a model. He has gone so far as to describe the IRS’s monitoring of “excessive compensation” at nonprofits as “an assault on individual liberty that towers over anything ...
we might have feared in the Patriot Act.” Seriously?
Look, I agree that nonprofit CEO pay is frequently lower than it should be (and occasionally higher than it should be).
Look, I agree that nonprofit CEO pay is frequently lower than it should be (and occasionally higher than it should be).
But not let’s look to corporate pay as a model when the gap between the highest and lowest paid in corporations has widened so dramatically -- and when corporate CEO pay is so often utterly disconnected from actual performance.
Moreover, Pallotta either ignores or is oblivious to the increasingly rich body of research that suggests that pay is in fact not a key driver of motivation and performance.
3) Pallotta argues that nonprofits are ineffective in marketing themselves, suggesting that this explains why giving has been basically flat as a percentage of GDP.
Leaving aside the question of whether holding giving steady with GDP is a failure (as Pallotta argues) or, in fact, an achievement — and I think you could credibly argue either — the notion that nonprofits haven’t been effective marketers is simply false.
In his history of American philanthropy, Olivier Zunz describes how nonprofits have mobilized mass participation and action for positive effect in the fights against disease.
He also describes the successful campaigns to encourage giving that accompanied the birth of the “community chest” and the community foundation, and the “democratization” of philanthropy.
Indeed, the country’s high level of charitable giving relative to other countries is the result of savvy marketing by nonprofits!
4) Fourth, Pallotta argues — rightly — that percentage of budget spent on overhead is not generally a good measure of nonprofit effectiveness. But he takes his argument to an extreme that ignores the fact that it is isn’t always irrelevant either.
By lumping together fundraising costs that too often are, in fact, questionable, with investments in professional development or performance measurement, as Pallotta does, we do the cause of reducing the emphasis on overhead a disservice.
Why am I tweeting about this now? Two reasons. Because I see Dan promoting the talk here on Twitter still(!). And because it's especially important right now that people understand the nonprofit sector accurately.
Nonprofits are on the front lines in responding to the crises our country faces right now. They are doing heroic work and very often doing it quite well. Sometimes they're standing in the breach between marginalized and oppressed people and a government that is targeting them.
Let's understand sector for what it is & the unique role it plays. It's far from perfect. But the answer is not to analogize everything to Apple. For more on that, & on @danpallotta's problems w facts, see this review of 1 of his books in @Philanthropy. https://www.philanthropy.com/article/Nonprofits-Need-a-Stronger/156053#comments-anchor
