Hello SOTGC community,
Those of you who know me know that I’m a proponent of change. And, for this blog post, I will stand on my soapbox and shout that it’s time for the nonprofit sector to heed this advice. Why? Because the way nonprofits are working isn’t working smart enough.
Too many nonprofits are required to be frugal at the expense of what they are able to accomplish. Nonprofits need to take cues from big corporations. Why does that statement make a lot of nonprofit supporters squirm? Do they believe that “thinking like a for-profit” means that the greater good of philanthropy will suffer? Isn’t it time to be unconventional?
I recently saw Dan Pallotta’s TED talk where he encouraged charities to reexamine the way things are done. Not their mission of helping others, but the roadmap in which they accomplish the end result. Just because it has always been done a certain way, doesn’t mean it is the best way. I was nodding my head through the entire presentation. (Source: http://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong.html
In the presentation, Pallotta outlines five ways nonprofits are handicapped by the current rules:
- Compensation: The average salary for a CEO of a hunger charity is $80k; the average salary for someone with an MBA, after ten years of school, is $400k. And actually, it turns out it’s more financially advantageous for these talented business minds to take the big paycheck, give $100k to a hunger charity each year, reap the tax benefits and get the label of “philanthropist,” says Pallotta.
- Advertising and Marketing: Nonprofits are expected not to advertise – unless the advertising space and airtime is donated.
- Taking Risks on New Revenue Ideas: Fear of failure kills innovation.
- Time: For-profit businesses are given time to build their infrastructure needs, nonprofits are not afforded this luxury.
- Profit to Attract Risk Capital: Nonprofits can’t go after capital because they can’t be on the stock market. How do you build scale without capital?
If nonprofits and for-profits used the same rulebook could we make the world a better place faster and more efficiently? “Our generation does not want its epithet to read, “We kept charity overhead low,” concludes Pallotta. “We want it to read that we changed the world.” I agree. Do you?