Charity activist Dan Pallotta took the stage Monday night at Hanna Boys Center with a firm message to the many event attendees who hailed from the local nonprofit world – we need to rethink our frugal funding of nonprofits.
Perhaps best known for his involvement in multi-day fundraising events like the Breast Cancer 3-Day Walks, the AIDS bicycle rides, and Out of the Darkness suicide prevention night walks, Pallotta addressed the sold-out crowd at the latest talk sponsored by the Sonoma Speaker Series with humor, passion and a roadmap for charitable giving.
Drawing a distinct correlation between the for-profit world and the nonprofit sector, Pallotta clicked through a series of slides that helped illustrate the ways in which Americans tend to view charity. As the founder and president of the Charity Defense Council, Pallotta believes that true social innovation will come from transforming the way the donating public thinks about giving.
He said that, in most instances, “donors to charitable organizations want their contributions to go 100 percent to the cause to which they are giving” rather than to what many perceive as “overhead” – i.e. salaries.
As an analogy, Pallotta drew a comparison to how society might view the salary of a head basketball coach at a prestigious university. The coach is paid a large sum to recruit top talent to the team, therefore keeping that university in the spotlight, promoting interest and growth – and the university’s donors are invariably on board with that level of spending.
By contrast, said Pallotta, the CEO of a nonprofit that fights hunger makes a 10th of that salary, is expected to achieve nearly the same rate of growth for his organization but isn’t given the ability to spend the same amount of money to bring awareness to the cause. The difference, said Pallotta, is not that the head coach is overpaid, but the CEO of the nonprofit is underpaid – after all, both have the same goal: to grow an organization.
“The social issues facing us today are massive in scale but the organizations that support them are tiny up against them and we have a belief system that keeps them tiny,” said Pallotta. “We have two rule books: one for the nonprofit sector and another one for the economic world.”
Pallotta went on to list the five areas in which the economic world discriminates against the nonprofit world – all of which revolve around an aversion to overhead.
The first is compensation and a belief that we don’t like nonprofits to use money to incentivize people to produce more for social services.
The second is advertising and marketing. The for-profit world can spend millions on advertising but in the nonprofit world, philanthropists don’t want their donations spent on advertising - they want their money to go directly to the needy. Pallotta noted that charitable giving in the United States has remained stuck at 2 percent of the Gross Domestic Product ever since economists started measuring it in the 1970s.
“In 40 years, the nonprofit sector hasn’t been able to wrestle any market share away from the profit sector,” said Pallotta. “Because you’re not allowed to advertise all the good that you do or the problems that you’ve helped solve.”
The speaker series event on Jan. 28 was unique, according to organizer Kathy Witkowicki, in that more than 200 seats were taken up by executive directors, board members and major donors from Sonoma Valley nonprofits. Sixteen local organizations contributed toward the fee to bring Dan Pallotta to town in exchange for tickets to the event, including:
• B&G Club Sonoma Valley
• SV Hospital Foundation
• Transcendence Theater Co.
• SV Education Foundation
• SV Museum of Art
• Pets Lifeline
• Sweetwater Spectrum
• Sonoma Community Center
• Sonoma Rotary Club
• Hanna Boys Center
• SV International Film Festival
• La Luz
• Sonoma Ecology Center
• Sonoma Valley Fund
• Community Foundation Sonoma County
• Impact 100