Today’s blog post is from Soles4Souls’ CEO, Buddy Teaster:
There’s been a lot of buzz this past week about a TED talk from Dan Pallotta, titled “The Way We Think About Charity Is Dead Wrong.” Pallotta meant to make a statement with that title and with more than half a million views and pages of comments, it seems he has been very successful.
I hope you’ll take the 18 minutes to watch it if you are the least bit interested in how the nonprofit sector fits into the larger American picture. Having worked in both the for-profit and not-for-profit sectors for the past 20 years, I believe he makes really valid points about how the charitable sector functions at a disadvantage in five areas:
1. Compensation
2. Advertising & Marketing
3. Risk
4. Time to produce results
5. Capital markets
I won’t critique his presentation point by point, but I do think it’s worth talking about how these five things interact. It is simplistic to think that simply paying more would attract people to the sector. While the gap can be rather large, it’s possible that you need to pay more to get someone to flog toothpaste than help end poverty, because there is a huge psychic benefit to doing that work that, for some meaningful portion of the population, is worth it. It’s equally simplistic to think that having a “stock market for nonprofits” would allocate capital more effectively. If he wants all this, then I think what he wants is a for-profit, social enterprise. For many social problems, I believe social enterprises are an appropriate, sustainable solution. But it won’t work for everything, which means this discussion is far from over.
For me, the biggest and most important takeaway is about results. Where I agree with Pallotta is that as donors and supporters, you should care intensely about the impact Soles4Souls is having with your contributions. And it should be a big impact because we’re working on a big problem – trying to end poverty. But it may not be so important what percentage of our budget we spend on fundraising, for example, if the results are worth it. It is very shortsighted to think that you can gauge an organization’s success by looking only at overhead ratios. It is part of my job as CEO to make sure that we are always balancing efficiency and effectiveness - but I have no doubt that making the biggest dent possible is what really matters.
There’s a lot here to think about, certainly for professionals in the nonprofit sector and those who support it, and I look forward to you sharing your thoughts and comments.