Uncharitable: How Restraints on Nonprofits Undermine Their Potential

Introduction

INTRODUCTION All successful revolutions are the kicking in of a rotten door. —john kenneth galbraith The fact that charity exists at all is a testament to the tenderness of the human soul. We feel for others. When someone else is suffering, we suffer ourselves, and we have a powerful and emotional need to help. The very fact that charity is an emotional subject is further testimony to our love for one another. On the question of whether or not humankind is basically good, this reality speaks for itself. The system we have for channeling this inner charity is itself called “charity,” and just as we all have a desire to make a difference, we have all been taught by this system how best to do it. But as we look around at the persistence of poverty and need, of disease and suffering in a world of unimaginable affluence and productivity, we have to ask ourselves, Does the system work? Is it the best system we could have? What other systems are available? It is to these questions that this book is addressed. The possibility that there is another system that could take our love for one another and leverage it into social progress on a scale we have never even considered must be examined. Like most people, I never asked questions about our system of charity. Why would I? Who was I to question a system that had been around for centuries? It never dawned on me to ask questions about it. Then I spent two decades working inside the system. During that time an observation was gathering momentum—this system doesn’t work. Another observation was gathering momentum about a system that does. This book is about those observations. Specifically, it is about eradicating the nonprofit beliefs that are the basis of our system. This book advocates a reversal of almost everything we have been taught about 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Pallotta:Uncharitable page xi xii Introduction doing good, in order that we might achieve good on a scale not previously imagined. It is about freeing charities—and all of the good people who work for them—from a set of rules that were designed for another age and another purpose, and that actually undermine their potential and our compassion. It is about giving charity equal rights with the rest of the economic world and allowing it to use the system everyone else uses to get things done—free-market capitalism. Whenever I told people I was writing a book about freeing charity to use the tools of capitalism they would nod their heads, believing they were in total agreement, and proceed to say that we absolutely need to put more restraints on charity. This response was consistent. It made me realize something else—that the only way most of us can even conceive of improving charity is by constraining it further. I could see that this belief was so ingrained that it had compromised my friends’ hearing— literally. Our nonprofit ethos is a kind of religion on which we have been raised, and it doesn’t easily suffer the bigger picture. In fact, like most religion, it obscures the bigger picture. Suffice it to say, this book is not about adding constraints. It is about removing them, in the interest of the bigger picture. For example, after explaining to a friend that we need to let charities hire the most talented people in the world, he wholeheartedly agreed and then said something that didn’t logically follow: “It makes me angry to see people making high salaries in charity.” “Even if they’re worth it? Why?” I asked. “Because it’s supposed to be nonprofit,” he replied . Right there he gave expression to the entire problem. His logic was internally consistent but externally nonsensical. Still, I understood where he was coming from. Twenty years ago I felt the same way. In fact, I remember thinking it was unconscionable that a charity event producer I knew about was making a profit “off of,” as I thought of it at the time, people’s compassion. “Nonprofit” means you don’t seek gain for yourself. So when someone wants a high salary, of course it...