At last week’s Philanthropy Roundtable conference, two speakers squared off on the issue of how much the nonprofit world can mirror big business.
Dan Pallotta, a former fund raiser and author of Uncharitable, argued that charity leaders are unfairly held to a different standard than corporate ones. For example, they are vilified if they receive good salaries, spend a lot of money on marketing, or take experimental approaches that may produce big dividends.
“You put the nonprofit sector at an extreme disadvantage to the for-profit sector,” he said.
He said the heart of the problem comes from the Puritans who helped found America. They fostered a culture that requires “self-deprivation” to help the less-fortunate, which leads to the expectation that charities, especially social services, should pay modest salaries and have little overhead costs.
Breaking such cultural barriers would get more money to flow into charity work and produce a huge “Apollo-like” effort to eradicate global poverty, disease, and other major problems.
But William A. Schambra, director of the Bradley Center for Philanthropy and Civic Renewal at the Hudson Institute, in Washington, questioned Mr. Pallotta’s suggestions.
While he supported the idea that charities should adopt some business practices, he cautioned that the author “may have gone a bit too far. He wants to make charity itself a business.”
He said the charitable spirit in the country was not Puritanical per se but was the “self-interested fellowship” that Alexis de Tocqueville chronicled in the 19th century. Without a sense of “community-minded self-sacrifice,” philanthropy would cease to exist altogether.
Mr. Schambra also warned against Mr. Pallotta’s call for a massive charitable endeavor to end social needs, saying it would be like the government’s War on Poverty in the 1960s. Such efforts, he argued, become too bureaucratic and fail to appreciate that often the most successful philanthropy is local and modest in its goals.
Mr. Pallotta countered that such thinking would keep philanthropy about feeling good rather than achieving good and would keep nonprofit leaders as “society’s janitors,” cleaning up other people’s messes instead of preventing them.
“Given the world’s problems, should we resign ourselves to smallness?” he asked.
— Ian Wilhelm