I totally let the New York Times beat me to the punch! Over the summer, Dan Pallotta, the author of the new book Uncharitable: How Restraints on Nonprofits Undermine Their Potential , sent me a review copy of his book. He sent it to me after reading my Financial Times column arguing in favor of paying nonprofit employees a market rate salary. But I never got around to writing a review and so now the New York Times’ Nicholas Kristof has beat me to it:
A new book, “Uncharitable,” seethes with indignation at public expectations that charities be prudent, nonprofit and saintly. The author, Dan Pallotta, argues that those expectations make them less effective, and he has a point.
…Mr. Pallotta argues powerfully that the aid world is stunted because groups are discouraged from using such standard business tools as advertising, risk-taking, competitive salaries and profits to lure capital.
“We allow people to make huge profits doing any number of things that will hurt the poor, but we want to crucify anyone who wants to make money helping them,” Mr. Pallotta says. “Want to make a million selling violent video games to kids? Go for it. Want to make a million helping cure kids of cancer? You’re labeled a parasite.”
…In the war on poverty, there is room for all kinds of organizations. Mr. Pallotta may be right that by frowning on aid groups that pay high salaries, advertise extensively and even turn a profit, we end up hurting the world’s neediest.
What Pallotta gets right in his book is his broad theme that the social benefit sector is hamstrung by a cultural belief that people who do good should do so in a sacrificial way. This belief confuses the act of doing good with the actual good that is achieved. Our cultural belief system implies that a person who goes to work for little pay, in a nonprofit organization that is barely surviving is more admirable then someone who is highly paid, working in a robust organization regardless of what good each person actually achieves.
Imagine for a moment an imaginary nonprofit that is working on homelessness in a major city. It is staffed by intelligent, hard working people who care deeply about alleviating human suffering. They work in a dingy office in a warehouse district and depend on donations and volunteers to help them survive. But year after year, the homeless problem gets worse.
Now imagine a new organization comes to town. It is a for-profit homeless relief agency! The group has devised a program that dramatically reduces homelessness, not by driving people out of town, but by putting into place the elements that actually get people out of the cycle of homelessness and into a stable living environment. The organization’s offices are in the penthouse of a downtown skyscraper and the CEO makes millions.
If you are like most people (including me) the first organization warms your heart and the second one makes you feel a little sick. But at the end of the day it is the second organization that actually relieves homelessness! Shouldn’t that warm our heart more, regardless of how it actually gets done and how much money the people doing the work make?
If you’ve read this blog for awhile, you know that I don’t believe there are a lot of profit opportunities in social problems. I don’t write much about for-profit business that are doing good. My focus in on traditional grantmaking to nonprofits. My point here is NOT to suggest that nonprofits should turn a profit. But to highlight the way that as a culture we embrace a certain way of achieving good at the expense of actually doing good in the world. The core of my column on nonprofit salaries was not an argument that nonprofit employees “deserved” more or that they “should” be paid more, but that doing so, or at least having it be morally acceptable to do so, would result in higher impact.
That’s what we need to care about. Not how hard we try, not how nice we are, not how much we sacrifice, but how much good we actually achieve. Anything else is downright selfish.
Readers of Uncharitable will find many things they disagree with. Pallotta’s past was in running a for-profit company that raised money for AIDS research. He created the hugely popular AIDS Rides before public outcry over his company’s profit forced him to close down (see Pallotta’s comment regarding why his company closed). My friend Robert Egger is quoted in a recent Chronicle of Philanthropy review of Uncharitable saying that “[Pallotta] strip-mined the cause. He did a tremendous disservice.” Another friend of mine who does charity evaluation work emailed me after reading Uncharitable (at my suggestion): “Oy vey!!!!!! I have gotten to page 10 and can not believe how much I disagree with the guy!”
I urge you to read Uncharitable not as a list of suggestions that I think you should agree with, but as a challenge to the assumptions you make about charity and social good. The benefit you should take from the book are not prescriptive actions but a cracking of dogmatic beliefs you don’t fully realize you hold.
Pallotta opens the book with a quote from George Bernard Shaw: “All great truths begin as blasphemies,” and another from John Kenneth Galbraith, “All successful revolutions are the kicking in of a rotten door.”
So go out and read Uncharitable. You’ll have some of the rotten doors in the way you think kicked in, but you’ll also hear some blasphemies!