The Double Standard
Irvin, Renée, Stanford Social Innovation Review
The Double Standard Review by Renée Irvin UNCHARITABLE: How Restraints on Nonprofits Undermine Their Potential Dan Pallotta 312 pages, Tufts University Press, 2008
Dan Pallotta has written Uncharitable as a response to ev- ery media report about a charity spending $400,000 to raise $1 million, every donor who wants at least 90 percent of her donation to go toward the cause, and every nonprofit executive director who eschews marketing for fear that donors will consider it extravagant. "Enough already!" the book explodes. And it does so with such good reason and blunt candor that it deserves to become the nonprofit sector's new manifesto.
Pallotta reviews the frugal, almost prudish constraints the public expects from nonprofits, everything from a ban on paid advertising to substandard wages for nonprofit employees. But if we want the nonprofit sector to do without the successful tactics of the business sector - say, marketing - how can we expect the nonprofit sector to aspire to greatness? How will it ever grow, get results, and reach new supporters? Why, for instance, did the American Cancer Society spend only $1 million on anti-tobacco legislation in 1998, when, during that same year, the five largest cigarette manufacturers spent more than 6,000 times that amount in advertising and promotions?
Not only must nonprofits be allowed to use the tools of commerce to thrive and accomplish their missions, Pallotta argues, but the public also needs to get over its mistaken and tenacious fixation on fundraising costs and overhead ratios. He goes on to show how misleading, easily manipulated, and plainly irrelevant these ratios are, and suggests we instead ask 16 questions that would reveal "What has the organization achieved, and what can it achieve with my donation?" Everyone who cares about nonprofit organizations and their potential accomplishments - from journalists sophisticated donors to foundation officials - should read this section of the book. They'll surely be convinced that fundraising ratios and program expense ratios are a silly, useless, and even fraudulent way to compare "efficiency" across nonprofit organizations.
Every nonprofit professional, meanwhile, should read Pallotta's section on how nonprofits can use the power of advertising. If donors and staff members complain that "a dollar spent on advertising could have been spent caring for the needy," he advises the nonprofit manager to explain that exposing new supporters to the cause could result in a tenfold increase in donations. Indeed, as John Kenneth Galbraith noted in The Affluent Society. "The engines of mass communication, in their highest state of development, assail the eyes and ears of the community on behalf of more beverages but not of more schools. Even in the conventional wisdom it will scarcely be contended that this leads to an equal choice between the two."
Pallotta goes on to speculate why the public expects nonprofits to behave so differently from for-profits and points the finger at Americans' Puritan heritage of selfdenial and frugality. …