Customer Reviews

Uncharitable: How Restraints on Nonprofits Undermine Their Potential (Civil Society: Historical and Contemporary Perspectives)

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1 star:		(3)

 

 

I read Uncharitable and I LOVED IT! I am a big believer in the potential of the nonprofit sector and I also believe that there are many structural issues that impact how effective nonprofits can be at achieving their missions. Dan's premise is that human beings are innately charitable and that we have a desire to help our fellow man. Our current system of charity is the bureaucracy that we set up to fulfill that need to help one another. This system has remained unexamined because doing "good" is good enough. In this book Dan asks some key questions: Does this system work? Is it the best system we could have? What other systems are available? His vision is to set free charities and all of the people that work for them from a set of rules that were designed for another age and another purpose and begin to use the rules of free-market capitalism to supercharge the sector. Before you get all high and mighty and say that the free-market system is collapsing around us everyday and that opening up the nonprofit system to its corruption and volatility wold ruin the purity of the sector, I'd like to remind you that the sector is already influenced by the corruption of the for profit sector, as evidenced by many high profile scandals and the volatility for the free-market is what is shrinking my foundation's endowment. The nonprofit system has all of the pitfalls of a free-market system with none of the benefits (e.g tolerance for risk, investment in research and development, and competitive pay). This book is destined to start some great conversations, which are very overdue.

Trista Harris
[...]

Because I read a lot of books and articles on charity and philanthropy, I assumed this would be yet one more dull, earnest, attempt to improve the world of charitable giving, blah, blah, blah.

To my great surprise, upon reading it I find instead of earnest well-intentioned gobbeldy-gook - BOOM!!!! Gay AIDS activist meets Ayn Rand, with all the moral passion and intelligence of both. Dan is someone who has seen countless friends die and committed his life to helping to find a cure for AIDS, raising over half a billion in charitable contributions in nine years, only to discover that the philosophical constraints on non-profits and conventional attitudes towards charity and philanthropy shackled his efforts and prevented him from doing more. And then instead of simply walking away bitterly after these forces destroy his organization in 2002, he sublimates his passion into a brilliant analysis of how our existing paradigm of charitable giving and non-profit structure is itself the problem.

Dan had built a highly successful for-profit company that organized three day walks for breast cancer and multi-day bicycle riding events that were focused on fund-raising. His company raised more than half a billion dollars and netted more than $300 million dollars in unrestricted funds for AIDS and breast-cancer charities, as Dan says, "more money, raised more quickly, for these causes than any private event operation had raised in history." After his company collapsed, in part because of a breach of contract by the Avon Products Foundation after the controversies associated with his for-profit business model came to the fore, subsequent non-profit events based on the same model raised only a fraction of the amount his company had been raising. For instance, in 2002 Pallotta Teamworks raised $142.6 million for the breast cancer cause. The very next year, when Avon decided to try producing similar events on their own (in violation of their contract with his company), their events raised only $28.5 million and after four years they had only brought that up to $48.7 million - and yet Pallotta Teamworks had been criticized for operating as a for-profit; not focusing enough on the cause! Somehow it was more legitimate for a for-profit corporation's nonprofit arm - Avon - to raise less money for the cause simply because of our collective bigotries against capitalism.

Palotta's book brilliantly integrates personal anecdote as a social entrepreneur, data-driven analysis of the weaknesses of the non-profit model, and deep insights into the fundamental guilt psychology of our existing models of charity. Give "Uncharitable" to someone for Christmas this year, a highly original gift that keeps on giving.

What is new in Dan Pallotta's book is not really important, and what is important, isn't really new. Mr. Pallotta's main reason for writing the book is to expose what he feels were unfair critiques of his commercial fund raising company. His rendition of his company's experience provides the only real new information in the book. But that is a narrow focus, and has little value for most volunteers, staffs, and suppoters of charitable causes.

The important issues he covers include questions such as can nonprofits take risks and does a fixation on "overhead" costs prevent the nonprofits from rewarding talent? But he offers little to the discussion because he fails to distinguish between his experience, running a commercial fund raising company, and an actual charity.

I agree with the sentiment he uses as a chapter heading: Let's stop asking this question. His arguement is that when we focus on asking charities how much goes to program versus overhead we fail to look at other important indicators. Low overhead does not mean the organization provides good services.

But that applies to asking the question of charities. The question is still appropriate, even mandatory, to ask of a commercial fund raising firm.

Another example is his observation about charities being afraid to take risks. But does he follow this up with a discussion of charity taking a hard look at how it provides services or bravely underwritting the costs of bringing services to an underserved community? No; his example is the "risk" his organization took in trying innovative fund raising events. Yet a full reading seems to indicate that the cost of the risk really fell to the charitable recipient of the event proceeds. Mr. Pallotta's example of a risk that failed is when an event yielded only 20% to 30% to the charity because it failed to gain enough participants. I may be jumping to conclusions, but my reading seems to indicate that Dan Pallotta and his firm still met their costs.

The best part of the book is the case study of Mr. Pallotta's firm which is included. It sheds some light both on the positive and negative aspects of the large scale events that his firm produced.

A novel perspective on the state of the American nonprofit sector, Pallotta offers an intriguing reconceptualization of charity and catalogues all the things that are counter-productive about our current approach. After years in philanthropy (Dan created AIDS ride, his company raised about a half billion dollars for charity in a mere 9 years), Pallotta has taken what he learned and put it into an extremely well researched text.

Opening his argument with the Puritan ethos that is at the foundation of our ideas about charity, then working right up to the current challenges faced by nonprofit organizations today - in particular the balancing act they have to perform mediating donor expectations and the needs of their causes - Pallotta explores his topic from myriad angles ultimately presenting a clear and counter-intuitive resolution.

For anybody who has ever given a quarter to the Salvation Army or a fat check to the United Way, this book will make you re-visit the way you think about charity.

Is there an inherent flaw in the author's thesis? Let me count the ways. But first, I must give due credit to Zamboanga Don below who really summarized the salient points quite succinctly.

The first flaw is in the cost of doing business. I've been in fundraising for a long time, and for most well-managed non profit organizations, the cost of raising a dollar is 10-15 cents. That's not unusual, and well below any potential corporate costs. For a corporation to make even a marginal profit, they would have to be at 50-60 cents per dollar raised. This is abhorrent to all donors--especially the ones you wish to see give year in, year out.

The second flaw is in motivating people to perform through financial gain. It doesn't work! Since you have nothing to "sell," you run the inevitable risk of inducing people to push donors into decisions they wouldn't otherwise make.

Yes, short-term gains always look good in Corporate America, but most successful charities are in it for the long haul, and treasure their donors (they don't plan on going out of business, and few do.) If you push for a short-term gain in philanthropy, you will fail in the long run. Sound familiar? How many corporations have been undermined by short-term profit seeking, at the expense of long-term growth? Axiomatic? Indeed!

The third flaw is right in the opening of the book--examining the roots of philanthropy. For those of us who have been road warriors for several decades, we know that there is a strong element of providence to our work, and that the act of tithing has been an integral part of our ability to secure philanthropic gifts. One cannot inject capitalism into this equation, or the whole covenant has been debased. Personally, I have marveled at the generosity of donors, both large and small. It has never ceased to humble me.

The fourth flaw is in the notion that some really bright corporate types can remake the paradigm. Granted, there are many non profit organizations that suffer from a host of issues--from poorly trained staff to struggling to keep the numbers up during this protracted recession. This leads us to the fundamental flaw that makes this book dangerous for those who don't understand the tried and true methodologies of fundraising. I have been on too many billion dollar campaigns to see through how ridiculous this author's thesis stands up to serious scrutiny--replacing smart passionate people who are donor-centric, with ones that are profit-centric.

What? Okay, if I start a really good for-profit corporation that seeks out philanthropic donations, and my company does really well, then maybe I will get bought out by some bigger corporation, like a Nabisco, or a Bank of America. Then the organization I started becomes just one more arm of some multi-national corporation that offshores the workforce to India, and then you have people from India calling on behalf of The Lighthouse, or Deborah Hospital, or even City of Hope. Follow the logic--it's a recipe for disaster.

In summation, all we need to look at is the lax corporate regulation that led to the Great Recession. Charities were "victims" of capitalism. Charities have boards of directors keeping them in check, but moreover, they have "donors" to which they are beholden. If you try coloring outside the lines, or treating donors like customers, you will most certainly lose.

While this author has concerns about the need for more pedagogy in the fundraising profession, and a stronger adherence to tried-and-true fundraising methodologies that continue to stand the test of time, I respectfully disagree that the best ideas reside in "corporate" methodologies, which run counter to philanthropy in every way imaginable.

The need to improve the fundraising teams across America is a pressing one, but one that many, including this author, are actively addressing, as the needs of communities all across our great land are growing exponentially.

America's charities will answer the call, and will deliver. Please, don't confuse an act of altruism with a potential "sale." Mr. Pallotta, you are advocating that charities employ tactics that are tantamount to doing surgery with a chainsaw.

There is a division between church and state, just as there is a division between capitalism and philanthropy. If you can't find a good fundraiser, you're looking in the wrong places.

If you have a truly "good cause," you will have ready made donors. Just leave it to the professionals. Donors who make large gifts, gifts that transform institutions and communities, will find any notion of being solicited by a "corporation," that bonuses out employees, which goes to pay for all manner of corporate perks, anathema. They will stop you cold.

Then again, unless you've been doing this for a long time, successfully, you wouldn't know otherwise. Any charity that employs the methodologies in this book will see a short-term gain, and a long-term loss. That would hurt a lot of people. The author receives one star for bringing to light the need for more philanthropy.

For anyone who cares about solving social problems, Dan Pallotta's "Uncharitable" is essential reading. Anyone who has worked in or around the sector will immediately recognize the problems Pallotta painstakenly describes. But his ability to relate these problems to the larger issues (solving hunger, curing AIDS, etc.) is both mind-opening and disturbing. While we increasingly demand more of our nonprofits, and we also rightly demand increased accountability, this book shows that these competing demands are impossible with our current oversight system. Truly, a timely, compelling read. If you found compelling insights in "The Trouble with Government," you will find this book similarly eye-opening.

If you are serious about solving the great social problems of the world, this is a must read. Mr. Pallotta's book asks a simple question, is it possible that our beliefs about how nonprofits should operate prevent them from doing the good they seek to achieve? The answer Uncharitable develops is Yes! Regardless if you agree with the outcome, removing the dogmatic view (that charities should be small, good charities are the ones with a low overhead, charities should pay low wages and have little to know advertising) is necessary to create a world that we all know is possible.

Dan makes a cogent case for why non profits generally fail in their missions and what can change that--starting with a negative concept of why we have non profits to how we underfund their infrastructure. This book should be required reading for every Board member and especially every foundation leader. Robert B. Sharp, Founder/President RBSCo.

This book reads like one long screed....one long series of complaints about how society treats nonprofits: Nonprofits "should" be able to compensate their employees just like profit making companies [They can, of course, it's just dangerous to their image]. Nonprofits "should" be able to advertise [Again, they can, it just may not "sit" right with some contributors]. Nonprofits "should" be able to invest in capacity building. And, most controversially, nonprofits "should" be able to take investments, make profits, and return those profits to investors.

Pallotta fails to address the "elephant in the room" and the more interesting questions. First, if "nonprofits" behave as he recommends, what is it that separates them from other profit-making institutions? Why should any organization that intends that model constrain itself by organizing as a nonprofit? This could be an interesting discussion, but it is entirely ignored. Second, why should any organization that takes investor money, intends to make profits to enable it to pay the investors a return on their investments (as Pallotta recommends), why should any such organization be tax free? Again, this could be an intersting discussion but it's entirely ignored.

I fear this book reads to me just as sour grapes....Pallotta had a profitable company that lost its business since its customers were pressured not do engage in the activities the company provided (marketing, fundraising). The book does little more than list out all the reasons why this "should" be ok. I agree. But now what.

If Dan Pallotta means what he says in his final pages of his book, Uncharitable, then all I can say is that I am "in" on his plan to rock the nonprofit world. My final thought as I closed the book was that Dan and I might be dialed into different radio stations but they are both advocating the same ultimate goal.


For the last few years, my thought has been that the Baby Boomer Generation may be "the" group that will push for transparency in the nonprofit industry at a rate that will outstrip the abilities of most organizations to keep up and the growth of charitable intermediaries such as what Dan Pallotta suggests in the final pages of his book might spring up.

Reading Guidance

There were many things I really liked about what Pallotta had to say but I found that this was confined to a few key areas of the book and the many other pages were dense and academic reading that didn't significantly add to my ability to bring about any great changes in my world.

As a result, I am providing slow readers and non-academics like myself with options for reading that they may find more palatable:

Slow Readers Version

1. Read the Introduction
2. Read Chapter 1
3. Read Chapter 2 through to the "First Error"
5. Reading the PallottaTeamWorks Case Study is optional

I Hate to Read Version

1. Read the Introduction
2. End of Chapter 3 (Summary on to the end of the chapter)

Although the book was dense, it did cause me to do some heavy-duty thinking throughout and, although I disagreed with a few of Pallotta's suggestions based on viability issues, in the end, I was delighted to see that he and I share a vision of creating a new entity in the nonprofit world that sends individuals passionate about nonprofit work into the workplaces of charities to examine how they are working, what they are doing, and how effective they are at what they are doing, in order to help others determine to which charitable endeavors they will "invest" their money.

Thanks so much for the read, Pallotta. I look forward to seeing whether I can be a part of your next endeavor - especially if it includes implementation!