Nicholas Kristof had a very interesting column in Tuesday’s NY Times called “The Sin of Doing Good,” focusing on Dan Pallotta and his new book, “Uncharitable.” Kristoff leads off the column with this question: “If a businessman rakes in a hefty profit while doing good works, is that charity or greed?”
Pallotta ran a for-profit company that invented fundraisers like AIDSRides, events which “netted over $305 million over nine years for unrestricted use by charities” ($35 million / year, for those keeping score) while Pallotta pulled in a $394,000 salary, which is, in Kristoff’s words, “low for a corporate chief executive, but stratospheric in the aid world.” And if you want to get a whiff of the ire Pallotta inspires, check out this discussion on Philanthropy.com.
Let me start by saying that I know nothing about Pallotta outside of what I’ve read in this article and poking around some on the Internet, so I cannot vouch either way for his person, his values, etc. However, a bigger-than-life personality who is finding new and exciting ways to raise visibility and funding for important causes certainly catches my attention (hence the manifesto I wrote a few months back).
Here’s Kristof’s money quote from Pallotta, which really makes you think a little harder about this question:
We allow people to make huge profits doing any number of things that will hurt the poor, but we want to crucify anyone who wants to make money helping them. Want to make a million selling violent video games to kids? Go for it. Want to make a million helping cure kids of cancer? You’re labeled a parasite.
Interesting, huh?
So, for example, we’re OK with Jay Shipowitz, the current CEO of Ace Cash Express (one of the largest payday / predatory lenders in the United States, which makes high-interest loans primarily to poor people) earning more than $750,000 as COO back in 2003 (the last public data I could find; they went private in 2006). Never mind that that’s triple the average 2008 CEO salary for the largest nonprofits. (And I don’t even have time here to get into the complexities of Ace Cash Express making headlines by giving nearly $1 million to the United Way.)
The (provocative) question I’d like to ask is is: is making sure nonprofit leaders (and their staff) have pure motives and low salaries more important than getting the results we so desperately need? How do we, as a society, want to reward people for the paths they take in life?
And here’s the broccoli analogy: for years, whenever I made vegetables with meals, I thought, “these are going to be healthy.” Hence the boiled, flavorless broccoli. Guess how often I prepared (let alone ate) the broccoli. Pretty infrequently.
More recently, I’ve discovered if I make my veggies taste good, they become part of almost every meal. So now they often have olive oil, salt and pepper, and sometimes even bits of bacon or pancetta, but they taste delicious and they’re part of my daily diet, not the exception I dabble in when I’m feeling virtuous.
(And for the ultimate blogging aside: if you want to change your mind about Brussel sprouts forever, prepare them following Ina Garten’s recipe in her Barefoot Contessa Cookbook.)
So while there’s a woman who I met once – who I’m sure will live forever – whose diet consisted mainly of humongous bowls of salad (no dressing), I don’t think that’s going to work for most people. Large numbers of people are healthier when whole societies have cuisines that centers on fish and olive oil and red wine (go figure!).
So while I don’t know much about Dan Pallotta, I’m sure we need more openness to new ways of doing things in the nonprofit sector, and new ways to attract, motivate and keep the best and brightest. Maybe this is through contests or pay raises or incentive pay – for now I’ll defer to others to fill in the details. But I would love to live in a world where society stands up and says, “These problems are so big and important that we will align resources against them to get them solved.”
Better yet, if someone really were to make a great living solving one of the world’s big problems, don’t you think that person would be just as likely to plow the money they made back in as charitable donations?
Food for thought, anyhow.
Sasha,
Thanks for this post. There has been tremendous misinformation spread around about Pallotta TeamWorks and me over the years. Some stories claim our company kept 40% of proceeds – wildly inaccurate. 100% of proceeds went to the charities. They then reimbursed us for expenses (with no mark-up) and paid us a pre-agreed, fixed-dollar production fee. A hindsight calculation puts that fee at 4.01% of what we raised. Those fees were posted on our website for all participants to see, and were submitted with our contracts to the various states’ attorneys general as required by law in many states.
Readers can visit our website http://www.pallottateamworks.com for more information or go directly to this link for full financial disclosure: http://www.pallottateamworks.com/financial_detailed.php
What is ironic about our fees is that they were less than the money we paid to the media to advertise the events and recruit participants. So some very huge corporations – selling more papers by sensationalizing our work – were earning a greater profit as a result of our existence than we were ourselves.
Please note that the figures on the site were the same data used as the basis for our reporting to the various states’ attorneys general, usually signed under penalty of perjury and in most cases co-signed by the charities with which we worked prior to submission.
We netted $305 million in nine years as you correctly state. 182,00 people participated in our life-affirming and life-altering events. Many have gone on to do the most amazing things for charity on an ongoing basis. We brought in $3 million and showed the world a new, much more powerful methodology for special event fundraising. Our event concepts and ideas continue to generate about $100 million a year in gross revenues for various charities around the world.
I urge you and your readers to visit our site, and again, I thank you for your post.
Kind regards,
Dan Pallotta
P.S. Oh yes, also – hope people will buy the book!
Great posting and some great points. It takes me back to that discussion about teachers and other community service personel (police and fireman/women) who teach our children and keep us safe. Shouldn’t they be some of highest paid professionals in our society based on their contributions. I personally have no issue with well paid non-profit employees…you do get what you pay for in many cases. And many of the people who lead non profits are expending the same energy as corporate professionals while trying to manage volunteers as employees. John Maxwell challenges us to look at how effective a leader is by looking at how well they manage volunteers. If you can motivate and mange people who are giving their time with no financial compensation then you deserve to be compensated well for it. And as Sasha points out if it was financially rewarding for our best and brightest to serve the better good, what would our world look like?
Sasha,
Thanks for your two cents on this. I’ve been following the discussion over at The Chronicle and the one happening on Sean’s blog. I’ve recently ordered the book, and now I’m kicking myself that I didn’t splurge for the “not-free” shipping…
In any case, I wanted to say that while I appreciate your analogy it is important to know that vegetables lose much of their nutritional value when they are cooked or otherwise made to “taste good.”
Maybe the work we do isn’t supposed to be glamorous. Maybe we should be paying attention to much more than the results. Maybe we should be putting as much of our budget towards programming as possible.
I’m on the back 9 of my undergraduate college education – and nervous about looking for jobs when I get out. Nervous about being able to provide my new family. Nervous that I won’t be getting paid what I’m worth. So I’m interested to hear what Mr. Pallotta has to say. But at the same time, I’m hesitant to subscribe to a faith in Black & White. The income to expenses ratio that works for the DC Central Kitchen is not going to work for the Juvenile Diabetes Research Foundation – doctors don’t like to get paid minimum wage, even if they are working towards the eradication of a disease.
My point is that this: If we never ate broccoli, we of course would not be a very healthy society. But conversely, if broccoli was all that we ate we wouldn’t be much better off. Like Gary Coleman says, it takes different strokes for different folks…
Cheers,
Sam
Sam, thanks so much for commenting. Just a couple of quick thoughts in response:
1. My understanding is that boiling for a long time is the worst thing you can do nutritionally for broccoli or other veggies. Short cooking times are better, which often equates with better taste
http://www.whfoods.com/genpage.php?tname=george&dbid=34
2. The analogy, which I don’t want to take too far, is just meant to say that things that are mainstream are likely to have more impact than things that are marginal. So I’m really asking whether the nonprofit sector has found the right equilibrium in terms of compensation as a way to attract and retain the best people. I honestly don’t know, but I definitely think we need to explore some creative options.
3. I honestly don’t know what it means to have as much as possible “go to programs.” For example, while I do have some real questions about Dan Pallotta’s expense ratios, I have no doubt that increasing awareness, education, and interest in AIDS had huge positive impacts — even though this money didn’t, strictly defined, go to “the cause.” My point is that we need to think harder and more broadly about what “the cause” really is.
Thanks for your comment.
I think, if I read correctly, that what we’re talking about is overcoming long-held beliefs…again, pushing the veggie metaphor, but we’ve learned to love brussels sprouts around here, in spite of hating them as kids.
I worked for a non-profit agency that was promoting fair play in youth sports (about ten years ago). It was hard to work for a place that I believed in, while being paid barely above poverty wages. Eventually, we all have to accept that doing good has to go beyond sacrifice and volunteerism. Sometimes it takes well-qualified folks working for reasonable pay. Better yet, it takes people who truly care and who are exceptionally qualified to work at non-profits. That way, the mission statements might actually stand a chance at being fulfilled.