13 April 2016
Dan Pallotta is an activist and fundraiser and has raised in excess of half a billion dollars through his 2 charity events, the Breast Cancer 3-Day Walk and the Multi-day AIDS Rides. He aims to transform the way society thinks about charity because he believes, “the non-profit sector is critical to our dream of changing the world”.
Can nonprofits change the world?
We dream that one day we’ll be able to change the world. We hope that, at least in our generation, we’ll begin to make the alterations that lead society in the right direction to changing the world’s problems. But what part do nonprofits play in changing the world?
It’s believed that for-profit businesses will have the power to lift up the developing economies and social businesses will take care of the rest, however there is always that small percentage that get forgotten and left behind. In a world of profits, markets, facts and figures it becomes hard to take the time out to truly show compassion to the disadvantaged and it often becomes difficult to find a business solution to a social problem.
Dan believes that to have a world that works for everybody, the non-profit sector and philanthropy have to be a big part of the conversation. However, the current set up for charities and non-profit organisations doesn’t seem to be working. Cancer charities haven’t found a cure, homelessness is still a prominent issue in all major cities, and poverty has remained at 12% of the US population for over 40 years. Dan believes that the reason why the non-profit sector’s support doesn’t seem to work is because, ‘these social problems are massive in scale, our organisations are tiny in comparison and we have a belief system that keeps the tiny”.
The two rulebooks
The reason why the non-profit sector remains tiny in comparison to its social issues and the rest of the economic word is because there are two rule books. One for the non-profit sector and one for the for-profit sector, which Dan believes discriminates against the non-profit sector in 5 different areas.
-Advertising & Marketing
The research that Dan complied when looking at how the for-profit sector raised their profits compared to how the non-profit sector raised their donations highlighted the concern that there was particular rules for one and conflicting rules for the other. These two rulebooks leave the non-profit sector at a disadvantage because they aren’t able to grow and gain the support they needed to truly conquer the social issues that surrounded them.
The top 3 conflicting rules include:
We don’t like to see charity donations spent on advertising. In the for-profit sector it’s encouraged to spend money on advertising to bring in more business. However, for the non-profit sector it’s frowned upon to see the money going to anything but the cause, as if it wouldn’t be able to bring in any extra funding and support. This hinders the charities ability to create innovative ways to engage people in order to raise support. Dan believes that, ‘If you kill innovation in fundraising, you can’t raise more revenue; if you can’t raise more revenue, you can’t grow; and if you can’t grow, you can’t possibly solve large social problems”.
Dan used Amazon as an example of how the for-profit company went 6 years without turning a profit because their investors had patience. They had the confidence and the patience to see the long-term goals of the business that allowed them to develop the company enough to dominant the market sector. But for a non-profit to propose that they wouldn’t be donating directly to the cause immediately in order to build the company to the large scale it required, it would be seen as a waste of time and unhelpful to the root problem.
Profits and money become the crux of the issues that hold back the non-profit sector from truly solving the cause they are fighting for. Non-profits struggle to attract the capital they need because they can’t pay in profits. Charitable giving has remained stuck in the U.S at 2% of GDP ever since the 1970’s, this shows that the non-profit sector has not been able to gain any market share away from the for-profit sector. There are clear economic benefits and gains from joining the for-profit market, which means thousands of people who could make a real difference to the non-profit sector make the decision to reap the benefits of a for-profit company.
The big picture for the non-profit sector is that with no way to grow and expand their support networks, there is no way to grow and support the funding to help the vastly growing social issues. It’s up to society to change it views on charity and to encourage the non-profit sector to broaden it’s horizons, to not worry about it’s over head costs and to focus on growing their support network. Even if this includes spending donations on advertising to increase further donations, taking time out to create a solid plan and market growth strategy and even taking risks with new ideas to help spark new interest, regardless of the risk of failure.
‘Our generation does not want its epitaph to read, “we kept charity overhead low” we want it to read that we changed the world!’