News and analysis
February 04, 2015

3-Day March to Show Why Charities Need Overhead Aid Is Postponed

Dan Pallotta

Dan Pallotta, the marketing executive who has been leading a campaign to get donors to stop evaluating charities based on their overhead costs, announced in August he was planning a three-day, 60-mile walk next June to raise $1-million to defend nonprofits against critics of their spending.

He created a slick video, promoted it on Twitter, and sent emails with messages from nonprofit leaders explaining why they planned to participate in the Charity Defense March.

But without any public announcement, Mr. Pallotta decided to call off the event after only 35 people had registered in the first few months.

"It never really caught fire," said Tom Callinan, founder of a small nonprofit and an advisory board member for the Charity Defense Council, the group that would have received the march proceeds. "The board kind of advised him there's no reason to keep pushing."

‘For Elites’

Mr. Pallotta removed information about the event from the web and, according to Mr. Callinan, offered to refund money to people who had registered to march.

But he has not widely acknowledged the change of plans, responding to inquiries from The Chronicle by sending a news release that focused mostly on a new Charity Defense Council advertising campaign featuring the message, "Don't ask if a charity has low overhead. Ask if it has big impact."

"The organization also announced that its three-day 'March' planned for June 2015 has been postponed," the news release added. While people want to be involved with the council, Mr. Pallotta said in the release, they "seem to want something more accessible to everyone." He added that the march is still on the table, though he gave no details about future plans.

Mr. Pallotta said in an email the council decided to shift gears 90 days after the march was announced. "We're small right now so we have to use our resources and time judiciously. Also, these multiday events are for elites. They're not for everyone." The group wants to focus now on "something everyone can be part of," like the overhead ad campaign, he said.

Participants in the march would have been required to pay $99 to register and pledge to raise $2,995. A page set up at the fundraising site CrowdRise to handle registrations and donations to the Charity Defense Council has raised just $1,997 of a $2-million goal.

Business Practices

Mr. Pallotta created the defense council to counter negative media stories, run ads promoting the nonprofit field, and act as a legal-defense force. The author of two books, he argues that nonprofits need to invest in salaries, marketing, advertising, and fundraising so they have the resources to fight big social problems like poverty or homelessness.

But he has been a polarizing figure since the 1990s, when his former for-profit fundraising company faced a series of disputes with charities and a settlement with Pennsylvania’s attorney general over the amount of money the groups paid to the company for the bike rides and walks it organized.

Critics charge that he is trying to import the worst practices of the business world, like big executive pay, and that the anti-regulation aspect of his movement could give cover to bad actors.

Mr. Pallotta points to the result of his company’s events: a net $305-million for AIDS and breast-cancer charities. And he continues to pick up nonprofit allies. The Charity Defense Council advisory board includes leaders of the Nature Conservancy, Goodwill Industries International, Share Our Strength, and United Way Worldwide.

"Building a movement for the social profit sector is incredibly exciting work," advisory board member Tamara Copeland, president of the Washington Regional Association of Grantmakers, said in an email when asked about the march, which she said had been "postponed."

Expense of Advertising

But reaction to a recent Boston Globe article about a Charity Defense Council billboard campaign showed that Mr. Pallotta's message does not sit well with everyone. Commenters criticized his for-profit fundraising activities and showed little sympathy for high-paid charity executives.

"Charities with low overhead benefit the recipients," one commenter said. "Charities with high overhead benefit the directors and those who use charities as a tax dodge." (Mr. Pallotta rallied his defenders to respond to critical comments, which he called "old-school negative.")

Mr. Pallotta's marketing firm, Advertising for Humanity, donated creative services to promote the Charity Defense March. But Mr. Callinan said it would have been too expensive to do the kind of advertising needed to attract the number of marchers Mr. Pallotta wanted.

"You live and learn, which is exactly what I'm preaching to the sector," Mr. Pallotta said in his email. "Nonprofits need more freedom to try things, to 'fail forward,' to learn what works and what doesn't."

Phil Buchanan, president of the Center for Effective Philanthropy and a persistent critic of Mr. Pallotta, had a different take: "It is more than a touch ironic that someone who repeatedly chastised the nonprofit sector for supposedly being woefully ineffective at marketing itself was unable to effectively market his event."

Send an e-mail to Suzanne Perry.