The way we think about charity is dead wrong.

I could hardly contain my excitement after watching Dan Pallotta’s Tedtalk. There is just so much awesome. It’s been a while since I watched it and I’ve finally put some thoughts to words (though not much proofreading, it’s too long & ceebs). I would recommend watching the Tedtalk before reading my post because it might make more sense that way. Also, all quotes are credited to Dan Pallotta.

Dan Pallotta’s Tedtalk, “The way we think about charity is dead wrong,” presents an illuminating insight into the issues which face the growth of the not-for-profit (NFP) sector and attempts to tackle the large-scale social problems we face today. Pallotta speaks about the inherent double standards that face NFP organisations; succinctly described as our expectation that overheads for charities be kept to a counterproductive minimum. He presents a convincing argument for a shift in our attitude towards charitable giving from seeing as overheads as taking away from a social cause to it being part of the solution. In particular, he argues that our attitude towards charities investing in fundraising needs to change. Instead of making normative judgments regarding whether spending 40% on overheads in enterprise fundraising is morally inferior to a bake sale with only 5% in overhead, we should be concerned with the actual funds raised for the causes we care about – $71mil from enterprise or $71 from a bake sale.

“Our generation does not want its epitaph to read, ‘We kept charity overhead low.’ We want it to read that we changed the world.”

In just twenty minutes Pallotta so elegantly articulated all my apprehensions about volunteer work and pursuing career in the not-for-profit sector. This got me thinking that if we are truly interested in a “world that works for everyone”, perhaps even more than a shift in our attitudes towards the fundraising efforts of charities, we need to adjust our engagement with the methods and approaches used to achieve social change.

Pallotta outlines a number of distinct disadvantages that face the NFP sector in growing beyond 2% of GDP in the US. He brings to attention the mutually exclusive choice which faces graduates from top schools between doing well for themselves and their families, or making a lifelong economic sacrifice in order to do good for the world; the contempt towards charities advertising or marketing the good they do; the intolerance for any risk or time required to invest in and grow charitable organisations capable of the scale required to tackle large social issues, as well as the inability to use profit as a means to attract capital. He argues that these issues stem from our puritan beliefs that donations should be going to the needy rather than focusing on actually helping those in need.

In general, as a society we tend to reward effort, in this case spending as little as possible, over tangible results in our approach to solving social issues. As an example, at my old high school, every Wednesday morning a different form group is tasked with running a cake stall to raise money for a charity of their own choice. In principle, it seems like an admirable way to get students involved with charitable fundraising from an early stage. In reality though, cake stalls are actually just a weekly fix of cheap, parentally subsidised sugary goods for the school community (nothing sells for more than $1, regardless of size or ingredients). Nobody keeps track of anything but the money in floats at the end of the cake stall, more often than not the money collected is less than the ‘overhead’ parents spent on actually making the baked goods, and more money could be ‘raised’ by simply skipping the baking and donating directly to charity. Despite this, the school and students are left to feel good about the small ‘profit’ they donated to their chosen charities until the next time their conscience required them to ‘do good.’

Instead of actively engaging with the complex issues inherent in charitable work and actually measuring progress towards and the achievement of social change, society has evolved to conveniently allow us to feel good about ourselves by simply sparing a dollar or more recently a Facebook ‘like’. As a result, the onus of actually seeking solutions to social solutions is pushed onto volunteers, philanthropists, charities, and to a lesser extent the government – it becomes anyone’s problem but our own. Despite this, we all still feel entitled to outrage when charities or even government welfare agencies fail to achieve the social outcomes we individually desire to see. There are two probable explanations for this strange contradiction.

Firstly, we hardly, if ever, discuss what a “world that works for everyone” would actually look like. Instead we place the unreasonable expectation on those in the NFP sector that they help the poor without addressing the structural problems within society, which lead to people falling through the gaps in the first place. If we are really serious about the necessity of the NFP sector in aiding “the 10% who get left behind” and who cannot be served solely by social enterprise, we need to start examining where NFP fits into our society and attempt to overcome the obstacles which accompany that change. Moreover, we need to start communicating this vision to our charities rather than simply expecting it to happen.

Secondly, we expect that a simple donation of money is sufficient to achieve the social change we desire. We hand over money expecting good will be done, and in the most efficient way possible. As a result, we often retrospectively express outrage at the misuse of funds or the fail to achieve “sufficient” impact, despite taking no time to actually examine the methods used by various charities or making decisions to donate to truly inspiring organisations rather than simply the causes we come across on the street and offload our loose change to.

A justification I often hear for not donating to charities or supporting particular causes is the prevalence of fraudulent charities and charity work, or just general mistrust of NFPs – according to a study by NYU 70% of Americans believe charities waste some or most of their money. However, it is hardly surprising that the NFP sector lacks transparency and accountability when we simply expect it to be there, rather than reward it with increases in or redirection of donations, or even increased engagement of any kind. One might argue that there is near impossible to find reliable information, even if you wanted to, about the new charity that just added you on Facebook, claiming to fight poverty just like the last fifteen that called asking for donations. Yet a lack of information is hardly a good excuse to turn a blind eye to real social issues that affect the people around us everyday.

If it is information that is lacking, then why not simply ask for it? In Kate Torgovnick’s Ted Blog post, “How to pick the charity that’s right for you”, Pallotta gives advice on how to choose a charity to support, and more importantly the questions to ask about the progress being made towards its goals. The advice he gives about engaging with a charitable partner over the long term is incredibly simple yet sadly unconventional. We all need to ask ourselves what kind of change we wish to see and take control of driving society along that road instead of passively expecting charities to achieve the impossible.

“Overall, for each charity I give to, I ask myself if I believe in their business model and if I feel they have a bold future ahead of them”

In fact, if charities are trying to sell social value to a market of philanthropists who do not directly consume that value, does it not it make sense for charities to be able to communicate their goals and dreams openly as something other than just ‘doing good’? Furthermore, why is it acceptable and even encouraged that charities approach single sponsors with the sales pitch of supporting social change, but it is unacceptable for charities to market to the public in order to fund the exact same activities? If we believe in having a “market for love”, we need to start moving away from the idea that only ‘good’ people donate, and that in order to be ‘good’ you should donate. Ideally we would live in a society where information about the social value generated by donations is freely exchanged and people could make informed choices about investing in the kind of society they wish to live in. Moreover, how do we get people to contribute not only money, but instead give generosity of thought to the development of social innovations?

“Philanthropy is the market for love. It is the market for all those people for whom there is no other market coming.”

The acceptance of charities marketing themselves might help in more than simply raising more donations and instead actually raise awareness about charities themselves and get us to “ask about the size of their dreams”. Once we allow charities to invest in marketing their cause and the philanthropic “experience”, and charities begin to share and communicate the good they do in order to attract donations, naturally metrics will develop and evolve to measure and communicate the social impact generated by different projects, as well as increasing the transparency and accountability needed to restore our faith in charity. As our engagement with the NFP sector grows, undoubtedly the number and quality of the social innovations we pursue will increase. Some of the ideas might be relevant to the questions of social security and welfare which pervades political debate across the world. Perhaps though, something even more revolutionary could develop: a real functioning “market for love”.

Pallotta leaves the trickier questions of our attitudes towards compensation and profit within the social sector, as well as how a ‘market for love’ might function unanswered. Neither I nor Pallotta can purport to have all the answers, but it is obvious that a fundamental shift in thinking is needed for there to be any chance of finding viable solutions. However, this shift might not be as difficult as we all think; as Pallotta put it, “people are weary of being asked to do the least they can possibly do. People are yearning to measure the full distance of their potential on behalf of the causes that they care about deeply. But they have to be asked.”

This post turned out to be a whole lot longer than I expected and I still had things I wanted to write about. It was a fun post though, even if it did fry my brain a little. When I feel up to spending a few hours contemplating the social sector again, or after I read Dan Pallotta’s books, I might try exploring some of the trickier questions of charity work, social enterprise and the ‘market for love’ in a follow-up post.



  1. Hey Cynthia, I’ve stumbled on your blog it seems (You can thank D Tram)

    This is a really interesting topic – I think one of the reasons NFPs/Charities struggle so much is that it’s hard to quantify social benefits. It’s much more than just a dollar value, and success in this sector is different things to different people.
    Great discussion of the problems though, definitely would want to hear more.

    1. Hey Hungy, Thanks for dropping by! 🙂
      I agree that it’s really hard to quantify social benefits using conventional methods but surely there has to be a way to value it and reconcile different definitions of success. I mean an apple was just worth an apple until we invented bartering.
      In any case, I’m glad you enjoyed the read & will definitely let you know if I write some more 🙂

  2. […] what a ‘market for love’ might look like after my blog post a while ago, The way we think about charity is dead wrong on Dan Pallotta’s Tedtalk of the same name. Clarity is a online platform for smarter […]

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