Understanding the Business of Charity
Think about running nonprofits as an enterprise. Don’t ask them to lower their overheads, ask about the size of their dreams.
Sustaining a passion-driven effort needs hard cash. Charity is not about alms, it’s about taking a cause and growing it into a movement. Says Dan Pallotta in his emotional TED talk, The way we think about charity is dead wrong
…in the for-profit sector, the more value you produce, the more money you can make. But we don’t like nonprofits to use money to incentivize people to produce more in social service. We have a visceral reaction to the idea that anyone would make very much money helping other people. Interestingly, we don’t have a visceral reaction to the notion that people would make a lot of money not helping other people.
Dan urges us to focus on the change agenda instead of trying to keep overheads low. He calls out the double standard that drives our broken relationship to charities. Too many nonprofits, he says, are rewarded for how little they spend — not for what they get done. Instead of equating frugality with morality, he asks us to start rewarding charities for their big goals and big accomplishments (even if that comes with big expenses). In this bold talk, he says:
Let’s change the way we think about changing the world.
Who cares about the overhead if these problems are actually getting solved?
My wife joined a nonprofit (Nai Disha Educational and Cultural Society) a few years ago to bring her extensive corporate experience to their operations. Notice, they don’t even have a functioning website. Why is that? It’s overhead. Why they can’t get a sponsor for a proper website effort, is because they’re too scared to ask for funds toward what they preconceive will be seen as overhead.
In India, profit has always been a bad word, especially with the middle classes. Profit is tainted with its “-eering” connotation making it even worse for those trying to make a positive change in the lives of the underprivileged.
Quoting from Dan’s presentation, nonprofits are at a serious disadvantage -
- They can’t use money to lure talent away from the for-profit sector;
- They can’t advertise on anywhere near the scale the for-profit sector does for new customers;
- They can’t take the kinds of risks in pursuit of those customers that the for-profit sector takes;
- They don’t have the same amount of time to find them as the for-profit sector; and
- They don’t have a stock market with which to fund any of this.
You’ll do well to listen to Dan’s talk. I’ve heard it many times over with a deepening impact each time …
What do nonprofits need money for beyond the scope of their agenda? Well, for one they need to professionalise their operations. Use design, technology, social media and everything else that other businesses need just to keep going. They need money for experimentation, innovation and brand building. They need funds to share their rich stories powered by the reach of modern-day information channels. They need to engage with all the stakeholders. Think about it, could you run anything successfully without even the basic tools of social empowerment, and expect to change the world?
… one more time — we need to change the way we think about charity.
More reading:
- The great debate happening here -
2. Becoming Rich by Designing for the Poor: Low cost is not about poor quality. It is about optimising at every level. Including design.
