Tuesday, 16 April 2013

Five problems I have with Dan Palotta’s TED talk

The non-profit world seems to have been buzzing lately at the TED talk by Dan Palotta, “The way we think about charity is dead wrong”. It’s easy to see why. Dan puts forward some compelling arguments that the cultural attitudes which view ‘admin costs’ (or overheads as he terms them) as a bad thing rather than as an essential part of a charity’s work. I particularly like Dan’s observations about confusing morality with frugality and his quote, “When you prohibit failure you prevent innovation”.

Of course, Dan’s arguments are nothing new. I can recall hearing fundraising expert Prof. Stephen Lee speak on this very topic years ago. He argued that when people object to, for example, 10% admin costs, fundraisers should respond by saying something like, “Thank you for your donation of £100. We spent £90 helping our clients and are using the other £10 to help raise another £100”.

For all that’s good about Dan’s talk - and it really is worth checking out if you haven’t seen it yet - I have five problems with it.

First, he seems to assume for-profit is bad and non-profit is good. His examples illustrate a mindset that private business is out to make things worse for people whilst non-profits are out to make things better. Of course, he isn’t entirely wrong - there are some truly appalling companies. But the truth is that there are for-profit businesses that genuinely want to make the world a better place (and make some money in the process) just as there are some non-profits who, sadly, exist to benefit the few at the exclusion of the many. In a world of grey, Dan’s assumption of black and white absolutes is flawed.

Second (and related), Dan seems to work from a basis that there are clear delineations between for profit and non-profit. Perhaps that comes from a differing cultural start point - he is American and looks at the issues in a USA context, hence the lack of reference to a public sector - but surely the boundaries are increasingly blurred. Take Dan’s own start point of social entrepreneurship as a case in point, a concept that sees private and voluntary sectors blurring together in different ways from old concepts of them being distinct and separate.

Third, Dan seems to assume that non-profits are driven to change the world, addressing the root causes of the problems their beneficiaries face rather than just treating the symptoms. But is that really the case? For some organisations the answer is a resounding yes. For many though, I’m not so sure. 

If you genuinely want to solve the problems of the world - or at least a group of individuals - then your fundamental belief has to be that your purpose it ultimately put yourself out of business. Why? Because your non-profit will no longer be needed when the problem is solved. 

When NSPCC sought to do this via their Full Stop campaign (seeking to end child cruelty) they were criticised by some for being naive in assuming that such a goal could ever be achieved. 

We also seem to have a worryingly prevalent mindset in some corners of the sector that charities exist to give people paid employment. Losing a job is a painful process - I know, I’ve been there - but if it is so the vulnerable can be better served then objections indicate that we actually believe that sector jobs are more important than the people we are employed to support?

Fourth, Dan seems to imply that large organisations are good. His argument is that whilst non-profits are hampered from growing so they are being limited in what they can achieve.  In other words, the bigger a charity is the more it can do to change lives. This may be true sometimes, but where is the evidence? Some large non-profits are incredibly wasteful, inefficient, unresponsive behemoths out of touch with the beneficiaries. And some aren’t. Big does not automatically mean better.

Finally, Dan speaks as if the only resources that can be deployed to solve social problems are those that can be bought. In keeping with the general trend in the narrative about the UK voluntary sector, he keeps talking about money raised as if it is the only way to resource the work of non-profits. This simply isn’t true. Such a belief misses out on the incredible riches of volunteering. 

The vast majority of the UK voluntary sector is led, driven and run by volunteers, not paid staff. Only a comparably small number of charities employ people but, because of their size, the have a disproportionately loud voice so they are the ones we hear about. Failing to acknowledge the contribution of volunteers to good causes is to ignore perhaps the most precious and valuable asset any non-profit has. This is the key missing ingredient in Dan’s otherwise helpful talk.


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  2. Thank goodness for this commonsense appraisal of Palotta's talk. At my end of the world most of my concerns relate to cultural differences. I am also seeing a risk of fund-raising taking precedence over the value of volunteers and their contributions to organisations.

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