American entrepreneur and activist Dan Pallotta wants to revolutionize the way we think about charitable and nonprofit organizations (NPOs). His TED Talk aligns with our mission at Public Square -- giving nonprofits what they need to make the world a better place. But our own perception of the way charities should operate hinders their ability to create change.
Social problems are massive in scale, but r nonprofits are too tiny to forcefully tackle them. It's our belief system that keeps nonprofits small and from amassing the resources they need. This belief system affects NPOs in 5 primary ways:
- We have a different opinion of how people working in nonprofits should be compensated. In the private sector , the more value someone produces for a company, the more they are compensated. However, when it comes to nonprofits, we have an issue with using compensation as a way to recruit and motivate employees. For many individuals, entering the private vs nonprofit sector can be a choice between doing well for themselves and their families, or doing good for the world. The for-profit sector can easily lure talent away from nonprofits that most need it.
“You know, you want to make 50 million dollars selling violent video games to kids, go for it. We'll put you on the cover of Wired magazine. But you want to make half a million dollars trying to cure kids of malaria, and you're considered a parasite yourself.” - Dan Pallota
- Traditional thinking doesn’t allow nonprofits to advertise for donations the same way for-profit businesses market their products. The idea of nonprofits spending on advertising is unfairly stigmatized, when in reality, it could massively increase donations. For example, spending almost nothing to print flyers and hang them locally, would yield significantly less donations than a well-orchestrated and invested digital campaign. While one option might cost more, the exponential difference in money that a cause can earn is enough to make it worthwhile. The issue is a lot of donors don’t like to hear that their money is going to internal efforts like advertising. And that’s where our mindset needs to change.
- Innovation and growth can’t happen without risks. But we don’t let nonprofits take them. Without risk taking, NPOs aren’t able to try new strategies and evolve in a changing world. However, the risk of failure in relation to an organization’s reputation is greater for NPOs than for-profits. As a result, NPOs are caught in a catch-22: they’re afraid to adoptinnovative fundraising tactics for fear of failure, but without innovation, they’re unable to get the revenue they need to grow and make change.
- We set unrealistic timelines for nonprofits to accomplish huge goals. Think of any large company you know. They took time to get where they are, years of investing in themselves, long term growth plans, and trying out different tactics until they found what worked. Their investors were patient. Unfortunately though, people would not be as patient if a non-profit spent time building up its scale and investing in itself without return (i.e money going directly to its mission). If we gave nonprofits time and patience, they’d be able to make greater change in the long run.
- NPOs have little profit to work with and attract new ideas, capital and growth. Perhaps the most obvious thing that private businesses have and nonprofits don’t? Profit. The for-profit sector can pay people for their ideas and their investments, which essentially locks nonprofits out of the investment market. Without the ability to incentivize sponsors or people in the same way as a stock, nonprofits are left without growth and idea capital.
Ultimately, it is our own perception of nonprofits that keeps them small. We have to stop focusing on what percent of our donation goes to overhead, and start focusing on the long term. What is the vision of this charity, and how can we help them get there? If we can adapt our mindset, we can empower our nonprofits to truly make change.
“Our generation does not want its epitaph to read, "We kept charity overhead low”. We want it to read that we changed the world, and that part of the way we did that was by changing the way we think about these things.”