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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)

   /   Apr 30th, 2010News

“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 If results aren’t visible in a year’s time, organizations get labeled ineffective and funding may be withdrawn.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.

Colorful synopsis of Dan Pallotta's keynote by Nitya Wakhlu, Founder of Nitya Wakhlu Innovations.

Image 1: Somegreybloke.com
Image 2: Nitya Wakhlu

7 Responses

  1. Danya says:

    This piece was so on the money. This is why, I think, so many people of my generation (Gen Y: the most socially conscious generation since the 1960s, according to recent research by ‘Future Workplace’ – http://www.futureworkplace.com/) are kind of stumped and very preoccupied with finding a way to combine both of these spaces.

    We don’t want to have to take this huge pay cut — at all. Why should we? That feels backwards and uninviting. 400K vs 80k? What an awful disparity. Why should you feel “guilt” around being financially stable or abundant? Odd. Those aren’t our values. They were passed down from somewhere (as you so humorously pointed out).

    And we also don’t want to have to take this big cut in purpose, or agree to this compromise on our highest values. Those aren’t our values, either. I literally left a top-ranking hedge fund largely because it wasn’t personally fulfiling (despite it being an amazing place to work.)

    So what we want, is to find some great balance of doing good and doing well. There are only a few examples of this in the world, currently. Oprah (or “Harpo”) would be one for me, personally. TOM’S Shoes (http://www.toms.com/) would be another example

    But this is, for some reason, a new phenomenon, and it’ll be our generation and those coming right after who begin to show this can be done.

  2. [...] and the people devising creative solutions to our world’s most pressing problems. Not one but two stories of hers went live on the site recently. All of Robinson’s Dowser pieces can [...]

  3. Manuel Rosaldo says:

    Great comment, Danya. What have been the most helpful resources in your search for a career that lives up to your financial and ethical criteria? What would be the most helpful information or resources could we provide at Dowser to that end?

  4. Danya says:

    The most helpful resources in my search for a career that lives up to my criteria? There’s no One Place – it’s an amalgam of a variety of sources: TED.com, Harvard Business Review, YouTube videos of folks who inspire, spiritual resources & retreats, etc.

    I suppose it is up to Dowser to determine what it wants to be, ideally. But any platform that gives us not only information about nice causes or charities (too soft), but really about lifestyle design and impact: about creating lives that work, that are savvy, that are sexy yet socially engaged, relevant and useful could be interesting. I think what Millenials are very interested and concerned with is lifestyle design.

  5. Danya says:

    And btw – thanks!

    • Manuel Rosaldo says:

      Thanks so much Danya, these are very helpful suggestions! I love what you write about lifestyle design “creating lives that work, that are savvy, that are sexy yet socially engaged.” We’ll work on that!

  6. Danya says:

    Anytime! Thank you for creating and enabling this space! It’s needed.

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