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The way Dan Pallotta thinks about charity is dead wrong

I’ve noticed Dan Pallotta’s ‘The way we think about charity is dead wrong’ TED talk seems to be spreading around the internet quite quickly. The title grabbed me, but the content couldn’t be more off. So I thought I’d weigh in with an alternative perspective.

Firstly, where I agree with him: many of the ways our charities work, stifle innovation.

Definitely. But his approach is to turn the charitable sector into an extension of the free market. Even with an opening in which he acknowledges that human stories can’t be monitized, he goes on to prescribe market solutions for the rest of what the non-profit world should be doing. ‘Philanthropy is the market for Love,’ he tells us, hinting at the lens he views the world through early on in the talk.

But there is no ‘market for Love,’ and markets are not where the solution lies, in my opinion. Two of his specific arguments truly irk me:

1) That more talented people go into higher paying jobs, and thus are put off working in the non-profit sectors

2) That change is best achieved by massive organisations addressing massive social issues.

Mo’ money, mo’ talent?

Just look at the most highly paid jobs in a market economy and how many of them have even a minimal social value? Conversely, how many of them have a sum negative impact on the world? The financial sector (in the broadest terms), attracts those who are primarily interested in making money – to the detriment of all else.

I don’t believe that ‘the most talented people’ the world has to offer are the ones who have laid-off so many workers in the name of ‘staying competitive,’ or who have decided that wars and climate change are simply the ‘costs of doing business.’  These actions require a certain kind of deliberate ignorance, which is not a trait civil society organisations need. Quite the opposite!

As charities begin to reinforce the market logic that you should spend your time making as much money as you possibly can for yourself, it will only reinforce the many social and environmental side-effects that such an attitude has in an unchecked free market.

The motivations that often get people working in a charity or NGO, such as passion for and commitment to a cause, or a better world, more generally, are at odds with this. They see life’s goals as more pluralistic than simply ‘get as much as you can for yourself.’ That attitude is killing our species, our societies and the planet we all call home. Infinite growth, whether for an individual bank account, or a global economy, cannot be maintained on a planet of finite resources. It is the problem.

We need different ways of understanding value and success.

Further, the kinds of university programmes Pallotta describes as producing ‘the best talent’ still seem to churn out private sector MBAs who exchange everything in the world, for short-term profits, and who have been at the core of countless broader scandals and crises. Our ‘Ivy League’ institutions are indeed part of the problem. Some may come out with their moral compass reasonably intact, but the vast majority learn to run a kind of ‘efficient’ organisation that can only see budget lines, at the cost of anything that can’t be measured in money.

Dan Pink has written extensively about costs of trying to link money and motivation, and argued convincingly that intrinsic motivation (like passion for your work) is far stronger than extrinsic motivation (like a bonus, or a high salary). When our systems cater to the latter, lots of bad things start to happen, encouraging a range of ‘gaming’ tactics, in which dishonesty becomes the norm, and the true objectives are sidelined for the short-term targets with personal self-interest attached. Basically, these kinds of motivations (Pink calls them ‘if-then’ motivators) pit self-interest against collective interest, encouraging people to act selfishly, rather than trying to align ‘what is best for me’ and ‘what is best for us.’

Bigger is better?

There’s another idea that ‘bigger organisations are more efficient, and thus more equipped to address big social ills, than smaller ones.’

But this doesn’t hold much water, either.

Big organisations seem far better at producing quantitative results, at the cost of qualitative ones. And to the point where the ‘quality’ can actually be a sum negative impact (rather than just ‘not as good as it could be’ one). Stories abound of big NGOs that have ended up doing more harm than good, as their disconnect from the on-the-ground realities of so many of their own projects, means that for all their ‘efficiency savings,’ they were actually doing the wrong thing in the first place!

Billions and billions in governmental and philanthropic funds are channelled into the sphere of aid and international development each year, but many of the problems keep getting worse. We mean well, but for all our best intents, most of those costly, large scale efforts aren’t achieving what they are meant to.

When it comes to complex social change, context and relationships really are everything. Just because something worked well in one time and place, doesn’t mean it will easily be carried over to another. ‘Scaling up’ – a notion at the core of so many large programmes – is a doomed idea, as tantalising as it can be. Organisations which try to replicate one solution, in another place, often miss the critical non-replicable factors of individual relationships and nuanced context that were at the core of any initial successes.

Alternatively, Margaret Wheatley and Deborah Frieze have advocated ‘scaling across’ – a more grassroots process, in which smaller, local projects can share ideas directly with one another, spreading value where it is needed, without imposing it as a blueprint to be followed to the letter.

‘Scaling up’ comes from the kind of managerialism still taught in many of the institutions Pallotta advocates non-profits get their execs from. It is the notion that distant, well-paid ‘experts’ know better than people who are experiencing an issue themselves, how best to address that issue.

The hubris of this long-standing belief is staggering, and is at the core of why many smaller, local efforts, often do better work than larger organisations – even when appearing ‘inefficient’: people understand their own situations better than anyone else.

If you knock down those two pillars of Pallotta’s talk, I think the rest crumbles with it. What he advocates is more of the same ‘NGOs should be more like the private sector’ approach that has been advocated – and often applied, at considerable cost – to the world of social change organisations for decades.

I say no. ‘More like people’ isn’t afraid to learn things from a range of places, but the lessons Pallotta advocates specifically undermine the sense of humanity that we need more of. If we want to make more of a difference through our organisations, let’s not rely on MBAs, devoid of any ethical grounding, or large scale development projects that have no way of really knowing what’s going on at street level. We don’t have to be puritanical, as Pallotta suggests, to avoid adopting the greed that creates so many of the social ills our organisations work against. We just need to stay in touch with the values that motivate us to create change in the world.

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Posted in accountability and equality and funding and hierarchy and leadership + management and professionalism and social change.

3 comments

3 Replies

  1. There’s no getting away from Dan Pallotta’s slick and polished talk resonating with audiences or that his arguments are built on plausible points (like the pressure to keep overheads down).

    A Non-Profit monopoly on putting the world right
    Is it the role of NGOs to feed every hungry mouth, cure every disease, eradicate all poverty? If so, what remains of the duty of governments or businesses?

    Self-funded mass-scale intervention can actually be a zero sum game, reducing the need for government and business to act, despite some of the world’s need arising from what governments and business do and don’t do. It isn’t the voluntary sector’s mission to replace the state: that smacks of the right-wing delusion that broke down in the PM’s failed big society initiative. Rather, we are stakeholders in all 3 sectors and all 3 need to tackle the world’s problems.

    Whatever happened to the State/Society/Corporate Relationship?
    Sure, sometimes grassroots social movements should and do act in a way that by-passes government and business. But We The People need to be influencing government and business and shaping society. However shallow and frustrating our democracy may be, we need to engage even with a government and with businesses that don’t want to engage with us.

    A vital part of the charity role is to criticise and challenge public and corporate policy, and lobby and campaign for change – all absent in Dan Pallotta’s talk. (There again, action to safeguard the independence of charities isn’t a priority any more with the sector’s leadership.)

    Proud to be different
    We live in a world run by those who are obsessed with power, sex and money. If we abandon our distinctiveness when it comes to investment, then our trad voluntary organisations will become even more like businesses rather than becoming More Like People and our lost ethos will pull our causes down.

    “Money can’t buy me love” was a hit but “A Market of Love for All” never will be, whether performed by ‘Altruistic Sacrifice’ or Bob Geldof.

    Our greatest resource isn’t cash but the people in our community.

  2. Olaosofia Mar 15th 2013

    Yes, some things should not need a business model for them to make sense that we should just do in our society. For example a charity might be a way for a society to temporarily (even over 50 years) address an issue that the tri-sectors aren’t addressing. I will always give to Amnesty International not because of their business model. I have no idea what that is, as a donor. But because I think that no matter what my money situation, there are few things that are more important than supporting people in different parts of the world that are having their human rights violated. That is personal to me of course [incidentally I advocate the scale-across model. Amnesty it has a certain prestige that is useful and needed at certain moments when negotiating with governments, and size does bear influence in this case though perhaps in time it too can become more human as an organisation] We probably all have things we care deeply enough to just give to.. Giving unconditionally is one of the best feelings in the world. Being in a state where you are not measuring what you are getting for what you are giving feels free and far away from the transaction-based exchanges of a market. Thank goodness I get the chance to get away from that domain from time to time. I think that is what charities enable for humanity. Trust won’t *necessarily* be higher because of efficiencies – some causes are not easily priced and evidently efficiency in the long term can appear as an inefficiency in the short term.

  3. j Burke Nov 1st 2015

    https://philanthropy.com/article/Nonprofits-Need-a-Stronger/156053#comments-anchor

    a good rebuttal— my two cents —Dan got rock star status…. right place, right time— to drum up gabillions on the side of AIDS.


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