The social sector is a hot mess and guess who’s to blame? (Hint: same folks responsible for your work ethic and sexual hang-ups)
“What we’ve been taught about social change is backwards, upside down, and standing in the way of real progress,” said Dan Pallotta during his keynote at Monday’s ReVisioning Value conference. The social entrepreneur and author, who shattered records by raising $300 million to fight breast cancer and AIDS, spoke about the mindsets that prevent social organizations from achieving transformational social change.
His key arguments:
- We’re counting the wrong things. For too long, argued Pallotta, we’ve relied on a misleading question to evaluate a social organization’s cost effectiveness: What percentage goes to the cause versus overhead? This question presumes that it’s possible to achieve great results without building great institutions. We need to look at impact.
- Social organizations are kept on a “12-month leash.” IRS 990 Tax Forms marry donor expectations to an annual cycle that isn’t conducive to building institutions. If results aren’t visible in a year’s time, organizations get labeled ineffective and funding may be withdrawn. This stands in stark contrast to business ventures like Amazon.com, where major front-loaded investments carried the firm for six years until it became profitable.
- Social impact groups can’t pay enough for talent. The average salary for a Stanford MBA 10 years after graduating is $400,000, while the CEO of a mid-size hunger charity makes around $84,000. This disparity, argued Pallotta, tells young people there is “a stark, mutually exclusive contrast between doing well and doing good.” Many are unwilling to take such a large financial hit. Closing that gap (even partially) could redirect more talent toward social change.
- We’re still slaves to Puritan ideals. Pallotta traces the current state of affairs to the Puritans, who came to America with a conflicted mixture of religious and commercial motives–that’s why they established businesses like the Massachusetts Bay Company. As Calvinists, however, they believed “that making money would get you sent permanently to Hell,” he added. “Charity became this economic sanctuary where they did penance for their profit-making.” We’re still stuck in this mindset.
What’s to be done? Pallotta calls for an International Charity Defense Council which could act as “a charity anti-defamation league, legislative force, and public awareness campaign.” The council would fight to protect organizations doing effective work against reflexive Puritanical charges that they are not being sufficiently sacrificial.
Let us know what you think. Could a Charity Defense Council transform our social sector?
For more on Pallotta’s ideas, check out his book, Uncharitable: How Restraints on Nonprofits Undermine Their Potential.