Charity Case: How the Nonprofit Community Can Stand Up For Itself and Really Change the World

Q & A with Dan Pallotta, Author of Charity Case

What prompted you to write this book?

We all want to alleviate human suffering–to reduce poverty, to feed the hungry, to cure diseases. Around the world, people donate tens of billions of dollars to charity every year toward that end. In our heart of hearts, we want to change the world. But if we look at the big social problems, the needles aren’t moving very much–not at nearly the pace we had hoped. In the U.S., for the past forty years poverty has remained constant at twelve percent of the population. AIDS deaths have increased from 1.1 million a year twenty years ago to 1.8 million today. Breast cancer deaths in the U.S. have only gone down by about eight percent in twenty years.

In my last book, Uncharitable, I explored why we haven’t been able to make progress on these social challenges. I argued that our social problems are much larger than our nonprofits–and that our nonprofits are unable to grow to meet their scale because we force charities to operate under a set of rules that prevents them from doing so. We don’t let charities pay to lure the best talent away from for-profit sectors. We don’t want charities to spend money on advertising. We don’t want charities to take any of the risks they need to take in order to succeed. We deny charities the freedoms we give businesses to allow them to prosper.

Since the publication of Uncharitable, I have given 150 speeches on this subject in twenty-nine states and seven countries. After each speech, attendees are hungry to know what we will be able to do about this situation–how we will be able to give charities the freedom they need to really grow and actually solve our social problems. So I decided to write a book about it. Charity Case is the result.

What is the most important thing that needs to change for charities to have the freedom they really need to grow?

We need to change the way the public thinks about charity. Individuals give seventy-five percent of the $300 billion donated to nonprofit organizations each year. They influence public policy. The media gives the public what they think the public wants. So changing the way the public thinks about charities is key to changing the rules that undermine their ability to actually solve social problems.

What’s wrong with the way the public thinks about charity and giving?

Pretty much everything. The public wants charities to spend as little as imaginable on overhead. The public doesn’t like to see charities paying high executive salaries. The public wants every gala dinner and walk-a-thon to send one hundred percent of the money donated back to the cause. What the public doesn’t realize is that low overhead is not a path to the end of world hunger or a cure for cancer. It’s the opposite. Only allowing charities access to the lowest-cost talent is not a strategic plan for alleviating human suffering. Demanding home runs on every charitable fundraising endeavor discourages innovation and keeps charities small and in fear. The very things the public has been taught are good and ethical–low overhead, low executive pay, funneling all donations to the cause–are practices that are killing us.

The public doesn’t know this is wrong because the nonprofit sector, government regulators, and the media keep telling them that these are the things that matter. Thus we are trapped in a vicious cycle with the public: we keep telling people what they want to hear about how their charitable donations should be used, and they keep parroting that back to us. But it’s not true, and we need to take the first step within the nonprofit sector to make that known.

How do you change the way the public thinks about charities?

By talking to them methodically, frequently, and consistently. By helping the public remember that what they really want is not low overhead. What they really want is to solve social problems. My experience has been that the public has tremendous common sense. Once you tell them that low overhead is not how you solve social problems, they want to know how you do solve social problems, and they want you to start doing the things that will do that. It’s just that no one has ever given them the full story.

How do you start this conversation on a national level?

By creating a national leadership organization for precisely that purpose. Right now the nonprofit sector lacks such an organization so several of us in the sector have created one: the Charity Defense Council. The Charity Defense Council will focus on five strategies to fundamentally change the way the public thinks about charity:

1. Serve as an anti-defamation league to correct inaccurate and sensational stories in the media that continue to contaminate public thinking with the wrong ideas about the nonprofit sector.
2. Conduct major advertising campaigns to begin a conversation with the public about the work it does and how it needs to do it to be effective. In the same way that the pork industry changed the image of pork from a fatty heart-attack-waiting-to-happen meat into a healthy alternative to chicken by advertising it as “the other white meat,” we will be able to change the way people think about charity with strong and consistent advertising campaigns.
3. Serve as a legal defense fund to offer protection to the sector’s first amendment rights by challenging unconstitutional laws, regulations and proposals that violate those rights. Freedom of speech is as much about having the right not to say things you do not need to say as it is about having the freedom to say what you wish. All too frequently, government regulations force charities to speak in the language of overhead percentages instead of in plain English and consequently most people thinks that overhead is the most important question they may be able to ask. These regulations de facto censor charities’ ability to talk about things like impact on official reporting forms.
4. Organize the nonprofit sector and those who lead, work, and volunteer in it to act and speak on their own behalf. Similar to the way the gay-lesbian civil rights movement advanced so quickly by individuals coming out, we need individuals in the nonprofit sector to come out and tell people that “I kept the overhead low” is not what they want engraved on their tombstones.
5. Help to enact a National Civil Rights Act for Charity and Social Enterprise which will not only serve to improve the statutory environment in which the sector works, but, by its very enactment, will serve to change the way the public thinks about charities and giving.

What is your goal?

My goal with the publication of Charity Case and the organization of the Charity Defense Council is to fundamentally transform the way the public thinks about charity within ten years. How will we know if we have achieved this? A study from NYU revealed that in 2008 seventy percent of most people believed that charities waste either “a great deal” or “a fair amount of money.” We can know we have succeeded when seventy percent of the public believes the opposite.