I was thrilled when I first saw Dan Pallotta’s TED Talks presentation. I thought to myself, “Finally! Someone said it!” And, I wondered why it wasn’t me.
But now that he came out (in more ways than one— Dan is gay), I thought I should make sure all of my subscribers are aware of Dan’s lightning bolt speech.
In case you don’t have time to watch it, below you will find some of the points he describes as shackles that prohibit charities from making real change in the world. You’ll have to watch the video to see how he proposes we fix things.
1. It’s unfair that we have a visceral reaction when we see that people working in the nonprofit sector make money. Why should the CEO of a nonprofit be capped at a couple hundred thousand dollars a year when the CEO that sells sugar water to kids can earn tens of millions and celebrities can earn even more? How can we expect to recruit the best and brightest into our sector if we don’t compensate them?
2. It’s unfair that the nonprofit sector is not allowed to spend more money investing in marketing and advertising to generate more funding. If they do, their overhead increases and donors are led to believe that the nonprofit is wasteful. As a result, donations have been stuck at 2% of GDP for several decades. In other words, why is a bake sale that generates a net of only $194 with ZERO expenses a good thing while a nonprofit that generates a net of $194 million with 40% overhead a bad thing?
3. It’s unfair that nonprofits are not allowed to take risks. How come movie studios and other businesses like Facebook or Twitter can lose millions of dollars yet if a nonprofit loses money on one single event, the media wants to investigate them and call the Attorney General?
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