Equal Rights for Charity

For more than a decade now one of the cruelest and most dangerously disingenuous messages being preached to the nonprofit sector is that it should act more like business; cruel because we won'’t allow it to and dangerous because it creates the illusion that we do, pre-empting any efforts at change under the theory that they are already under way.


What we are really demanding when we say “"Act more like business,"” is more efficiency and less overhead, as if efficiency were a substitute for vision, and as if we know what we'’re talking about when we use the word “"overhead".” What we are really demanding is more blood from the stone. We aren'’t for a minute ready to give charity the big-league freedoms we really give to business.


We let businesses pay people according to their value. But we don'’t want people to make a great deal of money in charity. Want to make a million selling violent video games to kids? Go for it. Want to make a million ridding kids of cancer? You'’re a parasite. This has the effect of sending the best and brightest from the nation'’s top business schools directly into the for-profit sector. This we call ethics. We let businesses advertise until the last dollar spent no longer produces a penny of value. But we don'’t want our charitable donations spent on paid advertising. The result? Charities can'’t build market demand. Budweiser i’s all over the Superbowl. AIDS and Darfur are absent. This we call benevolence. We let businesses make big mistakes. We expect charity to spend our donated dollars cautiously. Disney can make a $100 million movie that flops –and it'’s considered part of a non-linear business model. If a charity tries a $5 million walk-a-thon that doesn'’t show a 75% profit the first year we want the attorney general to investigate. The result? Charities can'’t develop serious learning curves for revenue generation. This we call altruism. We let businesses think long-term. If it takes Amazon six years to turn a profit in an effort to build market dominance, so be it. But if a charity we ever to embark on a plan that showed no return for the needy for seven years we'’d demand a crucifixion. And last, we let businesses pay a profit to attract investment capital. But there is no stock market for charity. Profit is prohibited. The donation is its only financial instrument. Thus the for-profit sector monopolizes the capital markets. This we call philanthropy, as in "“love” of “humanity.”"


Put all of this together - – no competitive compensation, no advertising, no risk-taking, no long-term vision, and no capital markets, and you have a perfect storm of deprivation that puts the nonprofit sector at the most extreme disadvantage to the for-profit sector on every level, – especially in the competition for the consumer'’s dollar. Amazing that some would blame capitalism for the inequities in our society, and then refuse to allow charity to use the tools of capitalism to rectify them.  Capitalism isn'’t the problem. The lack of it is. It has been banished from the domain of the world'’s most urgent problems because of a Puritan ethic that considers it contaminating. As a result, charity is in a one-legged foot race with a competitor in a Ferrari.


The nonprofit sector is the custodian of America'’s compassion and generosity. That generosity, as measured by the 2% of our GDP we give to charity each year, is double that of the next closest nation. But the potential of our generosity is bound up by these irrational and counterproductive rules, handed down to us from another age, when charity was all about neighbor-to-neighbor assistance. They no longer apply to an age in which we ask charity to address the greatest macro problems humanity has ever confronted.  If we begin to give charity the same freedoms we give to business, we can achieve change on a scale we never previously imagined, and leverage our compassion for immeasurably more productivity. The amazing things that charity has achieved in this country with both hands tied behind its back should give us great hope about what it can achieve if we truly set it free. It’s time for equal economic rights for charity.

Dan Pallotta Uncharitable

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