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My response to Dan Pallotta’s TED Talk: The way we think about charity is dead wrong.

A new TED Talk is making the rounds and stirring up conversation on a much dreaded nonprofit topic: fundraising for overhead. Dan Pallotta, author of Charity Case and president of Advertising for Humanity, makes the case that until the philanthropy community stops fearing investing in fundraising and talent we will never truly bring charities to scale and create the change we work towards.

The Issue

Pallotta argues that investing in the human capital and strategies like advertising that prove successful in forprofits would bring radical change to the sector, but there is a stigma about investing in nonprofits that stops this from happening. The result he claims is despite decades of research into cancer or programs to lower the homeless, no actual declines in these issues are occurring.

Consider these stats: 

Dan Pallotta_ The way we think about charity is dead wrong | Video on TED.com-2
Dan Pallotta_ The way we think about charity is dead wrong | Video on TED.com-3

Dan Pallotta_ The way we think about charity is dead wrong | Video on TED.com

Facing the Dilemma

As any fundraiser knows, talking to a donor about investing in staff or marketing isn’t an easy sell. They want to know their dollars are making a difference. We as fundraisers need to challenge ourselves to prove that investing in those areas will make a substantially larger difference.

Even Pallotta’s own nonprofits struggled with this dilemma. Following a new model of event fundraising, his events for aids and breast cancer research capitalized on peer fundraising by investing in traditional advertising channels to raise awareness. He started his breast cancer walk with an investment of $350,000. Overhead adverse donors would argue that they would want the $350,000 to go to the services. But Pallotta believed that rather than hiring one top researcher for $350,000 the startup capital should be invested in fundraising. The result was that in five years the $350,000 investment turned into $194 million.

Dan Pallotta_ The way we think about charity is dead wrong | Video on TED.com-4

That would be a pretty major success in the business world. However, in the nonprofit would it was frowned upon. The media put the races under fire for spending so much money on overhead costs and sponsors pulled out of the race. Ultimately, a cultural shift needs to happen where corporations, foundations and philanthropists start allowing nonprofits to operate more like businesses and invest in talent and fundraising.  

What we can do about it

Like me, you probably are thinking this issue is too big to change on your own. And it totally is. But each individual nonprofit can play a role in creating this shift by building their own case for investing in overhead and proving that it will make a difference, instead of running away from the topic in fear.

A quick way to start would be to take 19 minutes out of your next board meeting and show this video. It’s not enough for us as fundraisers to know the issue exists; we need to work together to open our stakeholder’s eyes.

Watch The Ted Talk Video Now