If you haven’t yet seen Dan Pallotta’s 18-minute TED talk, the viral video of the month (April 2013) with more than 1.2 million views, here’s your chance. Pallotta, who founded AIDS Ride and raised $581 million for AIDS and breast cancer research over nine years, argues that philanthropy is being undermined by our beliefs about it – in particular, the belief that low overhead is worthy of praise. He contends that overhead – including investments in fundraising and marketing capacity – is the only way to grow nonprofits large enough in scale to tackle society’s most intractable problems. What makes more sense, he asks: 94% of a small pie, or 60% of a pie 100 times larger?*
Palotta argues that in a capitalist economy, nonprofits are restricted from playing by the same rules as every other type of organization. While others feast, nonprofits compete against one another for the crumbs – for four decades, a consistent 2% of Gross National Product. Or, it seems to me, nonprofits may be the last Americans who act as though they still believe in the Trickle-Down Theory.
*For the math-impaired: 94% of $1 million = $940,000; 60% of $100 million=$60 million.