Shrinking the Revenue Gap between For-Profit Businesses and Not-For-Profit Organizations: A Repeat of the Ideas Presented by Dan Pallotta…because that’s just how much I agree with him

By Kenneth James Studeny

 

Two Rule Books exist when it comes to our traditional business practices: The non-profit sector and the rest of the economic world. Our thinking about non-profits, about charity and social services is “dead wrong,” according to Dan Pallotta because of five areas of discrimination between the two. The first of these areas of discrimination is compensation. We have a visceral response to the idea that anyone might make money in their effort to help others. In other words- “You wanna make $50 million dollars selling violent video games to children- go for it! We’ll put you n the cover of wired magazine. But you wanna make half a million dollars trying to cure kids of malaria and you’re considered a parasite?” It seems to me our thinking in this regard is quite a ways backwards.

The second area of discrimination is advertising & marketing. We don’t like to see our donations spent on advertising in charity works- rather we think, ‘get the advertising donated, I want my donation to go directly to the needy.’ Having led two charities which were wildly successful (see AidsRidesUSA and the 60 mile 3-day breast cancer walks) Dan Pallotta argues, advertising has the potential to bring in even greater donations of time and money. “People are yearning to measure the full distance of their potential on behalf of the causes they care about deeply- but they have to be asked.”

Three: taking risk on new revenue ideas. “Non-profits are reluctant to attempt any brave, daring, giant scale new fundraising endeavors for fear if it fails their reputations will be dragged through the mud.” Fourth on the list is time. Would we actually put up with a non-profit which donated not a single dollar to the needy in its first six years of existence because instead it dedicated its time and energy into developing a large scale dream? Dan Pallotta thinks not and I think most of us would agree with him. The final category of discrimination is profit. You can’t pay profits in the not for profit sector so charities starve for growth, risk and idea capital. In combining all of these discriminations you place the non-profit sector at an extreme disadvantage in comparison to the for-profit sector.  

So the lesson is this: Non-profit organizations need to invest heavily in education in order to change our minds about how money is used. And sponsors need to continue funding those not for profit organizations who are willing to bend the rules- even if both entities risk be ridiculed by the media. Having close relationships with many people working in social services, I know for a fact the largest hurdle for these companies is fundraising and direct access to money. It’s clear to me that by re-inventing the way we think about charity we might help non-profits raise even greater sums of money, and better yet the capacity to attract those most willing to help.

 

“The Way We Think About Charity is Dead Wrong”

Dan Pallotta. TEDtalks 2013

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