Do We Have a Double Standard for Nonprofits?

by | Sep 4, 2013

Are our attitudes toward nonprofit fundraising undermining the causes we love and our desire to change the world? Dan Pallotta, the founder of the AIDS Ride and Breast Cancer 3-Day events, gave a bold speech on the subject for TED, a nonprofit devoted to “Ideas Worth Spreading.” Pallotta argues that there is a double standard for nonprofits. Unlike our expectations for the private sector, we unfairly hamstring nonprofits by expecting them to make a difference while requiring that they spend as little time and money as possible attracting talent, marketing, taking risks on new ideas, and attracting capital. Is he right? Is our thinking about charity in America entirely backward?

In May, Transform Consulting Group shared a perspective on how nonprofits and other charitable-based organizations are being evaluated with new scrutiny. Funders want to know how their money is being used and whether they are getting the most ‘bang for the buck.’ Transform has also highlighted that while financial efficiency is an important measure of a nonprofit’s effectiveness, skimping on overhead can create a vicious cycle that limits a nonprofit’s ability to achieve impact. This echoes Pallotta’s argument that overhead is not a problem to be minimized but a necessary part of a nonprofit’s growth.

Pallotta argues that overhead is part of the cause, not something that should be minimized. He posits that low overhead forces charities to forego what they need to grow. Do we really care what the overhead of a charity is if it is successful at solving social problems? “Our generation does not want its epitaph to read, ‘We kept charity overhead low.’ We want it to read that we changed the world,” says Pallotta.  Watch the video here.

At Transform Consulting Group, we agree that an organization’s impact is critical to success. We can develop a plan and implement systems that document and validate your organization’s impact on our community. We can also help organizations use those outcome measurements to make the case to funders. Contact us today for a free consultation!


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