Show This To Your Board, Or Go Sit On Your Thumb
Last week, Roger did a good job of rattling the cage with his post, What Is The Watchdog Watching? He basically said: P*** on the obsession with fundraising overhead.
But that was just a warm-up.
Watch this TED presentation — The way we think about charity is dead wrong — by Dan Pallotta, an extraordinary fundraiser and author of Charity Case.
If you’ve watched the presentation, watch it a few more times … as many times as it takes to ‘re-program’ you and inspire you to take action in your organization.
The first action: make your CEO, CFO and Board watch it. If that doesn’t generate a re-think in how your organization goes about fundraising — specifically, how you invest in fundraising — then find a job in an organization that ‘gets it’.
Dan says that our thinking about giving and charity — the current nonprofit ‘rule book’ — is all wrong. The current rules quash the growth and scale charitable giving needs to effectively address the worthy needs we aim to meet.
What is the wrong thinking in the current nonprofit rule book?
1. Failure to pay commensurate to the for profit sector.
2. Aversion to spending on marketing.
3. Aversion to taking risk to generate new revenue.
4. Aversion to allowing time for scale to develop.
5. Inability to conceptualize ‘profit’ in the nonprofit sector so as to attract capital.
The fear of public criticism — for ‘diverting’ resources from ‘program’ — that lies behind this mistaken thinking is the reason the nonprofit sector in the US has remained at 2% of GDP since this measurement first began in 1970. And the reason only 144 US nonprofits grew to revenue over $50 million in the period from 1970 to 2009.
At the core of the problem, says Pallotta, is a mindset that treats ‘overhead’ as the enemy, instead of as a vital enabler of the mission.
At the end of his presentation, Dan asks: after devoting our lives trying to solve huge social challenges, do we want our epitaph to read … “We kept charity overhead low?”
Watch Dan’s presentation today. This presentation is not just substantively powerful; it’s exceptionally well-delivered as well. Believe me, it will hold your — and your Board’s — attention for 18 minutes.
If anyone has ever deserved an Agitator raise, Dan does!
Tom
P.S. In his post Fundraising Desperation And Chaos In 2013, Roger opened the year by urging Agitator readers in the same direction. He challenged fundraisers to “Think bigger and demand bigger”:
“What our sector desperately needs for growth is liquidity. Money to invest in growth, without diverting funds from programs and mission. But sadly there are lots of preconceived “no-no’s” and just plain ignorance when it comes to investing in growth – and ‘cost of fundraising’ leads the list. There’s no reason to deny a nonprofit access to proper financing options other than our own squeamish fear of what some watchdogs might think.”
4 responses to “Show This To Your Board, Or Go Sit On Your Thumb”
Behavioral Science Q & A
Integrating an individual giving appeal with other communications from a charity can have both positive and negative effects, and the outcome largely depends on how it’s executed. Advantages of Integration Brand Consistency: Maintaining a consistent appearance and messaging across all communications can reinforce the org’s brand identity and strengthen brand recognition and trust among your […]
Read Full Answer
I’m not aware of any in-market tests specifically comparing recurring vs. gift frequency language. I suspect the answer might not be the same with all gift frequencies, nor with all people. It sounds like a great opportunity for you to test and find out what works for your audience. Based on the literature, here’s a couple […]
Read Full Answer
Based on what we know from existing data, those renewal notices can actually be pretty effective in getting people to donate. They tap into our psychology – creating a sense of urgency, reminding us of past support, and using personalization to make the message hit home. They’re playing on our natural tendencies to feel obligated […]
Read Full Answer
Interesting question. I had a quick look at the testing done on this topic. On the positive side, in all cases, over half of donors decide to cover the fee. In some cases, it goes as high as 65%. Not a negligible percentage at all. Here’s another test from iRaiser showing consistent results (see point […]
Read Full Answer
There’s just one thing to consider when designing a supporter journey: the supporter. More specifically, you need to take into account: Who the supporter is i.e. their identity, which is the reason they support this cause, and their personality, which describes the way they “see” and process the world. These will determine the kind of […]
Read Full Answer
I’m not an expert in this but a quick search surfaced this article on the effect of tax reforms on 2019’s charitable giving. The researchers didn’t find a reduction. Actually, they observed an “increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their […]
Read Full Answer
Agree that Dan deserves the raise. Amazingly, there are huge discussions about this talk going on now in LinkedIn forums, and not everyone in the sector agrees. After 30+ years in the nonprofit trenches I’m still amazed at how small many of us think. I’m constantly trying to remind folks to think bigger. In 2008 all I heard was cut, cut, cut. No one wanted to talk about how to grow, grow, grow so that more (not less) needs could be met. Yes, some efficiencies were created. But did they result in sustainable organizations? Deep down we all know you must spend money to make money. We expect it of the for profit sector. Yet somehow when we cross the threshold of the nonprofit all our common sense seems to leave our heads. We pat ourselves on the backs for being self-sacrificing (“overworked and underpaid” was a common refrain, and spoken with a deal of pride yet an underlying, gnawing sense of outrage and/or lack of self worth).
Have often wondered why we’re the only sector that defines ourselves by what we’re NOT. Nonprofit. Why not what we ARE? Social benefit. Maybe when we begin to value what we do more, then so will the rest of the world.
Brilliant, thanks for sharing this!
I have been thinking this for a long time… that the society is too hard on the nonprofit sector and that our focus on low overhead is limiting success. This TED talk had got my mind spinning. We absolutely need to change the way we think about charity, and the organizations themselves need a massive change in mindset if we are ever going to tackle these BIG problems, and really change the world!
Thanks – you guys are always enlightening!
Jenny
Interesting. Thanks for bringing the talk to our attention, Tom.
Although I generally agree, what troubles me is that this talk isn’t about philanthropy, but really about capitalism. People are paying for a service/items (like participating in a walk) not because they have a passion for the cause, but because they want to participate in the walk. That really isn’t philanthropy. I’m curious about how many of those participants they were able to convert to real donors someone who would include the charity in their estate plans. My guess is few. I’m also curious how long they would have been able to continue to have that level of success with all the many competing walks. I’m not down on the idea, I just think it more belongs in marketing than in development.
When I worked in the arts, we put philanthropy into development and people who wanted to just buy tickets into marketing because our organization was serving both types of supporters, so we needed to approach each segment differently. I think that makes sense, and helped our development staff really build toward that estate gift while it helped marketing build faithful season ticket holders. We worked closely, of course.
I like Claire’s suggestion to call us “Social Benefit Organizations”. Nice! 🙂
I LOVED Pallotta’s talk, and did indeed forward it on to my board and staff! For all his insight, however, I think he had two blind spots:
1. The huge gap between the need for nonprofit services and the nonprofit sector’s ability to meet that need was forged not only by a values system that starves nonprofits of the resources that they need to scale up. It was also forged by the retrenchment of government services, for which the nonprofit field has attempted to compensate. What is the value system that led to this change? How can networks of -even large – nonprofits possibly replace a more centralized, mammoth-sized system of social services?
2. The gap between HUGE nonprofits such that Pallotta describes and smaller nonprofits is monumental. If our ultimate goal is an equitable, strong safety net for those who need it, then what purpose do small pockets of excellence serve? If it’s for innovation, then how does that innovation spread and become more systemic? We currently don’t have a system for taking “incubated” social benefit projects and integrating them with existing nonprofit systems for service delivery. So, we end up with a lot of incubated social benefit projects that rarely – if ever – combine forces to achieve the same goals. Wouldn’t it be great if there was a culture and mechanism around integrating innovations into existing nonprofit program structures? If you have a great program idea, you can “pitch” it to a larger organization and hope that they buy it from you, in the same way that an inventor hopes to sell his or her technology to Google or Apple.