The capitalist nonprofit? Dan Pallotta speaks in Vancouver

Cancelled dreams
Image credit: Chris Devers and Banksy

Dan Pallotta, author of Uncharitable, recently spoke to a sold-out crowd in Vancouver, hosted by Vantage Point and sponsored by TELUS. I wasn’t sure at first if his speaking style could sustain the hour+ talk, but he won me (and the audience) over early with his humour and his substance. I had the pleasure of watching the presentation twice – I listened the first time, and tweeted the second.

The basis of Pallotta’s talk was based around two ingratiating issues that face the nonprofit sector. I’ll outline them briefly here, but I also recommend reading the book.

Be like business, without all the benefits of business

Nonprofit organizations are often told they should “be more business-like” or “become more professionalized”. However, the tools that business use to succeed are not available to nonprofit organizations (or perhaps are available, but organizations are harshly judged when they use them). Hence the subtitle of Dan’s book: how restraints on nonprofits undermine their potential. Charities must respond to the great inequities that the powerful tools of capitalism have created, but without using those same powerful tools.

What percentage of my donation is going to the cause and how much to overhead?

This is just a less educated way of asking “are you effective at advancing your mission?” Because evaluation of programs is difficult to do and to share effectively, and the only way that charities officially report on progress is through CRA reports and return, the easiest (but not the most valid) way of measuring charities’ effectiveness at advancing their missions is through financial ratios that show how much money goes to programming (aka “the cause”) vs other costs, like administration and fundraising (also “the cause” but somehow not understood as so).


Dan deals with these two issues with describing the constraints they put on nonprofits.

  1. Compensation: “Nonprofit salaries should be low.”So, apparently it’s OK for people to get paid well if they play football, or refine oil, or create magic weight loss pills. But if they are doing good, attempting to rebalance the inequities of our world, getting paid well is taboo. Because of the feel good “psychic benefit” we’re told.The nonprofit compensation debate in Canada came to a head recently when Liberal MP Albina Guarnieri proposed Bill C-470 (which Dan rebutted in an op-ed piece), which seeks to limit nonprofit compensation. However, I would like to note that financial incentives indeed are important for furthering the good in the world. There is a reason that we offer tax receipts for donations to charities. The feeling of doing good doesn’t do it all. And if we truly want hunger eradicated, our rivers protected, and our diseases cured, should we be attracting the best and the brightest to do it?Someone I met recently attacked the salary (not even the level of salary, just the fact that there was a salary) of the SPCA CEO. “A volunteer could do that,” he said. Umm, a volunteer could run an organization with a budget of over $10 million dollars and a staff in the hundreds? We wouldn’t imagine asking that of a private sector CEO.
  2. Marketing. “Nonprofits shouldn’t pay for advertising.”Dan argues that it would be irresponsible to put a new product out on the market and not advertise. But somehow nonprofits are held to a different standard, even though nonprofits are fighting for a market share of consumer spending like any other business.
  3. Risktaking. “Nonprofits should not take risks when fundraising.”If an event or campaign isn’t profitable in its first year, it will likely be squashed. However, success is built on experience, which means that new, innovative and perhaps risky fundraising opportunities are not sought out. Many businesses are not profitable in their first year(s), but again, nonprofits in general and fundraising campaigns more specifically are held to a different standard.
  4. Long term investments. “Nonprofits results have to happen now or else.”Nonprofit funding from large proportions of their revenue bases (government, foundations, corporate giving) is often done on a yearly basis. Which means that any outcomes of the program have to happen within 12 months. However, the private sector benefits from huge investments over years in research and development before final products go to market. Nonprofits lack that advantage.
  5. Profit incentives. “Nonprofits can’t offer profit incentives in order to grow.”Private and public companies benefit from being able to offer the opportunity for financial profit over time in exchange for an influx of growth capital. Small examples of this exist in Canada (CDCs, or community development corporations) but a whole new corporate model needed to be created for these types of organizations. Revenue generating arms of nonprofit organizations miss out on this opportunity.

Dan asks: if organizations with purposes of community benefit aren’t able to do these five things, how can they be expected to succeed?

Perhaps we should remark upon was has been done to date in spite of all of these expectations and constraints existing since the beginning of charity.

So what about the issues with “overhead”? The CBC infused fear into the public’s perception of nonprofits when it ran a series on nonprofit overhead and costs of fundraising. This has been responded to (fairly pathetically, I might add, but hey, nonprofits aren’t supposed to pay for advertising at therefore have weak relationships with news agencies, so it’s OK that the alternative voice was heard so weakly, right?) by many, including Vantage Point and Imagine Canada. Sure, there are crooked organizations in the nonprofit sector, but these are crooks, not nonprofits.

Dan takes issue with three factors.

  1. A focus on overhead leads to overhead being taken to be separate from “the cause”. Overhead is part of the cause. The fundraiser, the accountant, the HR manager, the receptionist, the maintenance staff – these are all important roles that make an organization function. Without them, the programs (aka “the cause”) wouldn’t exist, or would function less effectively. Just as in the private sector, a product is more that just the sum of its parts.
  2. A focus on overhead leads nonprofits to forgo things that are needed to advance causes. In an effort to keep overhead low, nonprofits may be unable to hire experienced, strategic staff that are going to advance a cause more effectively. They may cut out professional development, which means the nonprofit would lose out on enhanced skills, productivity, and likely high staff retention. They cut out marketing costs, which may decrease awareness of the cause and donations to the cause.Dan counters, “Fundraising isn’t sexy but it’s where the hope lies. If we want to ramp up impact, we need to invest in fundraising.”
  3. A focus on overhead gives donors bad information. The problem with looking at overhead is that overhead only addresses efficiency, but not effectiveness. Would you buy a pair of uncomfortable shoes littered with holes and made from toxic materials if the overhead of the shoe company was low? “Sure, the shoes are shit, but man, that overhead, wow is it ever low!”Yet somehow, we measure the value of our nonprofits based on overhead, not how well they are advancing their missions. Even Charity Navigator, one of the most often referred to charity evaluator in the US, says that evaluating the effectiveness of charities’ programs is out of their scope. They measure some sort of efficiency, which does not give the full picture to donors.

Dan offered a variety of humourous anecdotes to shed light on these issues, but what was missing was how to tangibly change the public discourse around these issues. He was speaking to a room of converts, and the room was overflowing with self-reassurance and pats on the back. However, how do we respond to questions and criticisms about our practices and our overhead? Dan covered the “what?” and “so what?”, but missing was the “now what?”

But, as this post is going on way longer than I expected (really, if you’ve got as far as this, you should probably just read Dan’s book), I’ll propose some “now what?” in a future post.

So in the meantime, I want suggestions. How would you respond to these questions and comments?

  1. Wow, I heard how much your CEO makes. That’s ridiculous. She’s siphoning off money that should be going to the <insert disadvantaged population>.
  2. I’m not sure about donating to your cause. How much of my donation is going to actually go to the cause instead of overhead?
  3. I saw your ad in the front of Vancouver Sun. How can you justify those sorts of costs?
  4. You shouldn’t be expecting a high salary if you work for charity, because doing good makes you feel good.

Balancing paper and prospects

This rant on paper waste is a part of
Blog Action Day 2009 | Climate Change

Image Credit: striatic

Many people that I work with know me to be obsessive about using less paper. First I reduce, then I reuse, then, at last, I recycle.

This carries over beyond my work life and into my personal life. I’m one of those people that calls my service providers to be removed from solicitation lists (did you know you can even get the paper inserts taken out of your credit card statements, even if you can’t get bills online?). I’d love to get zero mail (confession: birthday cards are still OK;).

This carries over beyond my work life and into my philanthropic life. I donate online.

I’ve worked in fund development before. I know that it’s important to meet donor preferences.

But this rule seems to breakdown when it comes to reducing paper.

Exhibit A

  • I donated to at least 5 different organizations last year. All of them I donated online with.
  • Of those five, four of them followed up with print material – direct mail, invitations, newsletters, etc.
  • Of those four, I emailed each of them asking them to remove me from their (paper) mail lists, though I added that I was happy to receive any information by email.
  • Of those four, NONE have sent me any email. I actually had to email two of them after getting paper mail an additional time. I have received no further solicitations from any of them otherwise.
  • Of those original five, only one continues to connect with me via email. Very intermittently – nothing to be considered spam. I also have found out about their campaigns via Twitter and Facebook. I have followed their campaigns’ success online.  And surprise, they’re the one I donate the most to and have begun to donate most regularly to.

It (figuratively) breaks my heart to see nonprofits not getting it. Traditional ways of communicating with donors (ie mail) are still important for connecting with traditional donors. But “new” ways of communicating with donors (though “new” is debatable – the web has been used commonly for over a decade) are important to connect with and retain new donors AND cut down on paper.

Reduce and prosper?

Nonprofits should play their part in reducing waste (in both paper and the cost for stamps) by – at the very least – respecting the methods donors have gone out of their way to request to be solicited.

Read on:

Never underestimate the power of a Word document

There are few tedious things in life that I could do for hours on end in a complete state of joy. Algebra problems are one (really, who doesn’t love algebra?). Caulking bathtubs is another. But making Word documents look good, well, almost makes me shed happy tears.

I find nonprofit people often fall into one of three Word categories:

  1. The Designer: These individuals use InDesign, Photoshop, Illustrator, or other fancy, somewhat expensive software programs that take a bit of learning. They are smart people, and are good at making things look pretty. These people sometimes resist Word because they see limitations in what the finished product can look like. They are surprised when I can make text boxes and make images line up all the way to the edge of the page.
  2. The Try Hard: These individuals use Word or maybe Publisher to get their message across in brochures, posters, notices, and resources, but don’t consider how the medium is impacting how that message gets across. They uses Times New Roman and Arial font and are a fan of centering their paragraphs. They emphasize text by CAPITALIZING, italicizing, bolding and underlining, ALL AT ONE TIME.  They try really hard to make things look pretty, but don’t always succeed.
  3. The Cause: These individuals focus their time on important work like serving clients, moving the cause forward, raising money. The know it would be nice if their documents all looked consistent and were easy to use, but really don’t have the time to make work like this a priority. They don’t try hard to make things pretty, they are just relying on the words to get their message across.

But here are the problems. Relying on The Designer means having to rely on someone else to do something for you, however small, that you wish you could do yourself. This is fine when you are a large organization with graphic designers in house, but this isn’t the case for most small and medium nonprofits. Being The Try Hard means the message you are trying to get across can get lost in the medium you are using. Being The Cause means that this sort of stuff gets pushed aside.

What Word can do for you.

It is possible to make a pretty damn good design in Word that gives your organization’s documents a consistent look. Doing it in Word means that if you need it updated in the future, almost anyone can open a document and do it. Plus, you can easily convert the document into a PDF and look super professional when sending documents.

In my current job at SFU we create a lot of Word documents for external use – resources for students, community organizations, etc. What has been incredibly wonderful has been to have a template with which to create all future documents. The title font, the section headers, the text, the text boxes, the bullets are all predetermined. It makes creating new document designs incredibly easy, as the design work is already done for you. Your organization’s logo is in the header or footer – always in the same place. It means that documents are branded, are recognizable, easy to work with and easy to create. From there it’s easy to create PDF that looks professional, can be sent nicely over email, and can be printed easily. Note that if you are doing huge print jobs and are using a professional printer (ie beyond Staples), you’re going to need The Designer after all.

Who can get this done?

There are really two parts to getting things done: 1) creating the original template, and 2) implementing the template across all existing documents. The design can be done by a design savvy person at your organization, by a professional paid designer, or by a skilled volunteer. Implementing the template could be done by the same person, or by any staff or volunteer at your organization familiar with Word. Kitsilano Neighbourhood House recently posted a skilled volunteer opportunity like this on through Volunteer Vancouver looking for almost exactly these two tasks. I’m thinking about applying for it. Like I said at the beginning – happy tears.

Shock Doctrine: Changing tech practices after an emergency

Naomi Klein’s The Shock Doctrine discusses the idea of disaster capitalism – how “big business” takes advantage of disasters and emergencies such as hurricanes and wars to introduce broad policy changes while “the people” are too shocked to notice. Now my emergencies take place on a much smaller scale, and I’m no transnational corporation, but…well, I guess the analogy is weak, but it’s a catchy title.

Here’s the context. I like information. Love it. I enjoy learning new things, reading about ideas, storing resources for future use. I read Tom Rath’s Strengthsfinder 2.0 and did the test — two of my strengths are Learning and Input. I joke about having read results from the first time I completed the MBTI and not agreeing with what my profile said about liking to gather lots of information before reaching a decision. So what did I do? I read all other 15 MBTI profiles, circling and crossing off characteristics, before I reached a decision about my profile.

So needless to say, when it comes to storing information available electronically, I’m a saver. I download files in a variety of hierarchical folders, and save bookmarks of interesting websites similarly.

And then my harddrive crashed. Kaput.

All the files and journal articles I had downloaded for a literature review of promoting volunteerism to the Millennial generation – poof. All the bookmarks I had saved on websites relating to a project on social marketing of engaged citizenship – gone. My favourite guitar tabs – not in my head, that’s for sure.

Why did I not embrace Delicious earlier? Delicious, “the world’s leading social bookmarking service.” I would consider myself a fairly early adopter, but I guess I didn’t really understand Delicious’ value – I thought it was about promoting and sharing good websites (which it is, I list my recently tagged websites on this blog). More importantly, Delicious means when your hard drive crashes, your bookmarks still exist. All you need to do is log in. If you don’t currently use Delicious or a similar web-based bookmarking tool, get on board. If you’re a small nonprofit without a server, do it now. Embrace the change before the disaster.

Have you had a tech emergency that caused you to change practices? Share!