Dan Pallotta: January 2009 Archives


New Reviews

Uncharitable was well-reviewed in The Economist and in IN Los Angeles Magazine this week.I also made an appearance on Air America's program The Young Turks. I'm in Boston this week to do a presentation at the Hauser Center for Nonprofits at Harvard and to tape Emily Rooney's "Greater Boston," on WGBH.

Los Angeles Launch Party

My good friend Rick Jacobs and his partner Shaun hosted a launch party for Uncharitable at their home in Los Angeles. About seventy-five people attended. Questions after the presentation were great all-around. It's obvious that people are hungry for change in this whole arena, and even people from outside the sector get the need to give charity the same operating freedoms we give to business. It's very encouraging to see that, just with a few minutes of explanation on why the question, "What percentage of my donation goes to the cause?" is deeply flawed, even the average lay person is ready to stop asking it. They want to know what questions they should be asking. They're extremely open to another way.

Boston Globe Review and Response

Rich Barlow of the Boston Globe reviewed the book this morning (click here to view). I added a comment, which appears below, but it wasn't nearly as good as Paul Horne's comment:

"Sorry Rich, I can't let you get away with such a careless review of Pallotta's book. "Executives compensated like sultans?" "Promiscuous spending on overhead?" If you think that is honestly Pallotta's recommendations for charity, then it doesn't sound like we read the same book, if indeed you read it at all. Pallotta's ideas for me represent the sea change we need, and I was offended by the hyperbole you used in your review. Even the term "do-gooder," which Collins and American Heritage both define as "a naive idealist who support philanthropic causes" is blatantly incorrect. Pallotta has dedicated his life to these causes, and to suggest his approach to fundraising is naive, given his extraordinary track record, does your readers a disservice. "Uncharitable" opened my eyes to what's possible in philanthropy and lit a fire under me to re-dedicate myself to the causes I'm passionate about. More than just "not bonkers," I think this book is a game changer."

My Comment on the Piece:
Thank you so much for the review and for reading the book. A few corrections and comments:

"...glitzy advertising, massages and cucumber eye masks for event participants - siphoned too much money from charity."

Dozens of committed volunteers provided massages for free, at zero cost to the charities (these were grueling events involving up to 10 miles of cycling or 26 miles of walking a day, often creating extreme muscle stiffness.) Some of the more humorous volunteer-run water stops provided cucumber eye masks on the road, also at zero cost to the charities. 

As for the advertising, it was primarily on radio stations and in major metro papers, like the Boston Globe (which earned a profit off of the advertising) - it always began with compelling statistics about AIDS and breast cancer. It is a powerful example of the double-standards we have between the for-profit and nonprofit sectors that we call it "building demand" in business but "glitzy" in charity. It is further evidence that in charity we see money spent on advertising as money taken away from charity, when in fact, without the advertising, there would have been no money going to charity. The advertising is what drove people to the events. We don't deny furniture stores or department stores the ability to use full-page ads in the Globe to drive customers to their stores, why would we deny it to charity? It only keeps our causes muted, and, therefore, small.

"Our Puritan ancestors insisted that giving be motivated by love of humanity, not the desire for gain; profit and its attendant risk-taking, they felt, polluted charitable acts."

Actually, the New England Puritans were capitalists and were accused of extreme profit-making tendencies. Charity was a way of doing penance for that. Puritan giving was motivated primarily by anxiety about eternal damnation, reciprocity (if I help you now you will help me later if I am in need) and the desire for community standing. They were often more concerned about how their own benevolence rated them in the eyes of God than they were about the objects of their benevolence. Most important, they viewed the divide between rich and poor as ordained by God - inevitable - and something that would always be with us. Not a great worldview if we want to eradicate poverty. 

"...pay investors in fund-raising events a return from the net take."

Close, but what I am actually advocating is a stock market for charity, whereby people and institutions at all socio-economic levels (including retirees with 401ks, union pension funds, and even college endowments) could invest desperately needed growth capital in their favorite charities, helping the charity to grow and getting a financial return themselves. It's not for the sake of the investor that I advocate this, but for the charities, who are currently deprived of the capital they need to scale up to the problems they confront.

"Pallotta's critics contended his company fell short on disclosure."

The company was a model of disclosure. Participants could go onto our website, or could get an annual report right at our events that disclosed our company's fee for each event, dollars raised, dollars spent on marketing, dollars spent on logistics, and dollars netted after all expenses. That data is still available at http://www.pallottateamworks.com in the "Full Financial Disclosure" section. We were not required by law to post any of this on our website - we did it because we cared about disclosure. One would be hard-pressed to find other event companies (or charity events) that provide this level of disclosure, if any.

"...a 1996 AIDS ride promised participants that 60 percent of the take would go to charities, when they actually got only 19 percent."

One hundred percent of all funds raised went to the charities, into lock box accounts under their exclusive control. They then reimbursed us for expenses on a dollar-for-dollar basis with zero mark-up. We were paid a fixed-dollar production fee for each event - never a percentage. A hindsight calculation puts that fee at about 4.01% of the total dollars we raised. We never promised percentage returns. Post 1996, all of our pledge forms indicated that we never guaranteed percentage returns, and that those returns depended entirely on the number of participants that registered and the dollars they raised.

Again, thank you for the thoughtful review.

Kind regards,

Dan Pallotta
Author, "Uncharitable"
Founder, Pallotta TeamWorks


This Morning's KQED Interview

I did an hour-long show on NPR San Francisco with Dave Iverson this morning. The show is called "Forum." Dave is a great interviewer and was genuinely into the subject matter. Good call-ins too.  Click here to listen.