“The way we think about charity is dead wrong.” This is the title of the TED Talk given by Dan Pallotta in March. Watch it at ted.com. Pallotta talks about how we give to charities. He says we tend to focus too much on how the charity allocates money – to staff? programs? marketing? – and we frown on what we call “overhead.”
Instead, Pallotta says, we should be asking how the organization is impacting the world and fulfilling its mission. A charity that spends only 15% on staff may seem worthy of donations, but it may have little impact if it needs more staff to implement the programs well. Likewise, a charity may spend 60% of its budget on fundraising and marketing and that may be effective if fundraising and marketing are growing the overall impact.
Pallotta’s ideas are worth considering, especially for Women of the ELCA. We are many things, but we are, especially, women who donate, raise and manage money for charities – including Women of the ELCA, the ELCA, and thousands of local congregations and organizations.
How we think about charity is important. According to Pallotta, charities have great potential to solve social problems that will never be addressed by the markets, but, he says, “it’s never going to happen by forcing these organizations to lower their horizons to the demoralizing objective of keeping their overhead low.”
Listen to the TED Talk and give it some thought. In my next blog post, I’ll consider what his ideas might mean for us as donors, fundraisers and managers of money. Among Women of the ELCA, most of us serve each of these roles at one time or another.
Pallotta ends his TED Talk with this recommendation: “The next time you’re looking at a charity, don’t ask about the rate of their overhead. Ask about the scale of their dreams…how they measure their progress toward those dreams, and what resources they need to make them come true, regardless of what the overhead is.”
What if we took this challenge seriously?
Emma Crossen is director for stewardship and development.