Vistas Blog Archive
- April 2009 (3)
- May 2009 (8)
- June 2009 (11)
- July 2009 (10)
- August 2009 (8)
- September 2009 (4)
- October 2009 (7)
- November 2009 (8)
- December 2009 (8)
- January 2010 (7)
- February 2010 (8)
- March 2010 (9)
- April 2010 (9)
- May 2010 (8)
- June 2010 (23)
- July 2010 (14)
- August 2010 (11)
- September 2010 (1)
The New Nonprofit Paradigm: Fusing Compassion with Capitalism
by Guest Blogger on Jul 10, 2009 - 11:49am
AIDSRides Breast Cancer 3-Days Dan Pallotta Pallotta Team Works philanthrocapitalism Review Stephanie Fritsch Uncharitable: How Restraints on Nonprofits Undermine Their Potential venture philanthropy
By Stephanie Fritsch n6w2475abxa a>
Dan Pallotta is an interesting – and controversial – guy.
His for-profit company, Pallotta Team Works, invented two high-profile events: the AIDSRides and Breast Cancer 3-Days, raising over a half billion dollars and netting $305 million in eight years. The company raised more money more quickly for these causes than any private event operation in history, and was the subject of a 2002 Harvard Business School case study. Despite this stellar success, Pallotta drew fire from critics who took issue with his brazen, business-like tactics, which came at a time before notions like “venture philanthropy” were in vogue.
Pallotta’s ideas and methods are counterintuitive to all that is known about nonprofit development: for starters, ask people to do the most they can do instead of the least. His company’s events challenged participants to journey long distances for days on end in the name of causes they cared about deeply. Add to this an equally daunting challenge: to raise a mandatory minimum of four-figures (i.e., $1,200, $2,500, etc.) in order to participate. How did he get 182,000 people to walk, ride, and vigorously fundraise for his events? He marketed the heck out of them using aggressive, consumer brand practices that shocked some in the nonprofit sphere – and caused others to rethink the way nonprofits go about the business of charity.In his book “Uncharitable: How Restraints on Nonprofits Undermine Their Potential,” don’t expect to see simple solutions for replicating these successes with a few tweaks to your organizational model or event marketing machine. Pallotta doesn’t come close to suggesting ways to improve performance within the existing nonprofit paradigm. Rather, he argues that the paradigm itself is the problem, and calls into question our fundamental canons about charity. His thesis: society’s nonprofit ethic undermines our ability to eradicate great problems and puts charities at a severe disadvantage to the for-profit sector at every level.
Some compelling points made:
Compensation: We allow the for-profit sector to pay people millions, but don’t want anyone paid a high salary in charity. This sends most top talent directly into the for-profit sector and gives young adults the mutually exclusive choice between making a difference and making money.
Advertising: We let Apple and Coca-Cola inundate us with advertising, but don’t want important causes “wasting” donations on paid advertising. As a result, the voices of our greatest causes are largely muted while consumer products get lopsided access to our attention, 24 hours a day.
Vision: We let for-profit companies invest in the long term, but want our charitable donations spent immediately in the fiscal year to help the needy. That means charities can’t set aside funds to develop long-term solutions.
Learning: We aren’t upset when Paramount makes a $200 million movie that fails, but if a charity experiments with a bold new fundraising initiative that disappoints, we want heads to roll. So charities are petrified – too scared to try any new endeavors and unable to benefit from the valuable learning curve that comes with exploration and innovation.
Capital: We let for-profit companies raise massive capital in the stock market by offering investment returns, but we forbid the payment of a financial return to charity. The for-profit sector monopolizes the capital markets while charities are left to beg for donations.
In essence, Pallotta urges the nonprofit sector to break free from traditional modes of operation in favor of “philanthrocapitalism.” Charities must start to act more like for-profit businesses in order to compete for more funding and to make legions more headway in their chosen causes.
Another critical area where charities must compete is in the acquisition and retention of dynamic, dedicated leadership. For this, it will take a fundamental change in our collective mindset to make a difference. As long as Americans see charity as a field in which people must suffer in the name of doing good, says Pallotta, we are preventing much good from being done.
Stephanie Fritsch (stephfritsch@verizon.net) is a marketing and communications consultant based in Montclair, N.J.
-
- Comments (6)
Dan Pallotta
It's very difficult to change cultural perceptions, but as shown here, it's possible. I'm for it.
No Controversy Here
I'm delighted by Duff's comment as well as Elaine Cohen on JustMeans. Using business tactics in the nonprofit can be a good thing. Elaine said, "This is a good article, thanks for posting. reminds me of a Stanford Social Innovation Review article published a couple of years back called Capitalizing on Convergence. http://bit.ly/BDuWn
"Good" can be innovative and creative too
Having worked with quite a few nonprofits on developing communication and promotion materials, I completely agree with Mr. Pallotta. Most organizations are stuck in the tried and true, and are completely cut off from the here and now.
If nonprofits remain in this mode, they will indeed suffer, and potentially perish. It comes back to the theory of “adapt or die.”
The way we live now – and with the current economy, we need more “good” than ever. How is “good” compromised by across-the-board for-profit innovative and creative thinking if the organization's vision remains the clear? Semantics?
Turning Up the Heat on Nonprofit Marketing
I'm delighted that nonprofit consultants understand that nonprofits need to turn up the heat on their marketing efforts. Would love to hear from nonprofits to see if they agree with the consultants who advise the.
Took me time to read all the
Took me time to read all the comments, but I really enjoyed the article. It proved to be Very helpful to me and I am sure to all the commenters here! It’s always nice when you can not only be informed, but also entertained! I’m sure you had fun writing this article.
re:
Compassion is a virtue, one in which the emotional capacities of emphathy and symphathy are regarded as a cornerstoneof greater social interconnectedness and humanism equivalent to the highest principles in philosophy, society and personhood. State of Compassion at askdiana.com
Post new comment