Dan Pallotta believes nonprofits should be treated like businesses – not charity cases.
Dan Pallotta is on a mission to revolutionize how society thinks about the nonprofit sector. After a massively successful career raising hundreds of millions of dollars for causes ranging from AIDS to breast cancer research, Pallotta had an overnight fall from grace when news broke that his fundraising organization, Pallotta TeamWorks, came under fire for investing 40 percent of the gross money it raised for cancer research into so-called “overhead.” His sponsors dropped him, hundreds of his employees lost their jobs, and his fundraising organization swiftly went out of business. This despite the fact that Pallotta was bringing in tens of millions of dollars a year for breast cancer research.
The experience illuminated to Pallotta the unfair standard that nonprofits are held to compared to the corporate sector. How were charities expected to meet the complex challenges of the world, he opined, when they weren’t allowed to run themselves like businesses, which can invest in marketing and talented leadership? Posing these questions, Pallotta emerged as a respected thought leader in the nonprofit world, writing bestselling books that challenged society’s understanding of the nonprofit sector. This is the message he’s bringing to Nantucket on September 26th, when he speaks at the Community Foundation’s inaugural Nonprofit Leadership Conference.
As the keynote speaker, Pallotta will join four other distinguished speakers, local nonprofit leaders and community members in a day-long program designed to empower the island’s nonprofit sector. Prior to the conference, he shared some of his thoughts with N Magazine.
N MAGAZINE: Nantucket has over a hundred nonprofits on the island serving various subsets of the community, from health and human services to the cultural arts. These organizations are competing for the same fundraising dollars, especially during the high-season when high-net-worth donors are on the island. Can you suggest any innovative ways that these nonprofits could be collaborating more effectively, as opposed to competing?
PALLOTTA: If organizations in smaller communities came together to commit them- selves to a daring dream for the entire community, it would lift all boats. We keep preaching to nonprofit organizations that they ought to collaborate in the absence of any breathtaking dream that the collaboration would serve. Reclaiming our dreams is key. Also, I wouldn’t accept it as fact that it is a zero sum game. I wouldn’t accept it as fact that you have come anywhere close to saturating the market for philanthropy even in a smaller place like Nantucket.
N MAGAZINE: What do you think is the most detrimental misconception society has about the nonprofit sector?
PALLOTTA: That social problems somehow get solved using a different set of standards than that which we allow for the solving of business problems. That the giant consumer brands should be allowed to market and compete for consumer dollars with howitzers, while the nonprofit sector should be asked to use sling shots.
N MAGAZINE: There are a number of vital nonprofits on Nantucket that have a hard time fundraising because they’re not behind a big, sexy organization. What advice would you give them for improving their fundraising efforts and messaging, especially within the confines of a limited budget?
PALLOTTA: Once again, what is the dream? To what gigantic aspiration are they holding themselves accountable? That is what inspires donors to give him more. Also, find an outside source of capital that can be used to expand fundraising operations.
N MAGAZINE: What cultural shift do you think we need to see in American society to enable the nonprofits to thrive?
PALLOTTA: We need to give nonprofit organizations the same freedoms that we give to business. We have no problem telling the Red Sox they should spend whatever they need to spend to find the best players and coaches to win the World Series. And we will gladly pay the higher ticket price. Yet we ask the organizations trying to eradicate poverty and cancer to find talent on the cheap. When the general public comes to terms with the utter irrationality of this, then our nonprofit organizations can start to scale to the size of these problems. And nonprofit organizations have to be driving the public to change their thinking.
N MAGAZINE: Can you give us a reality check as it relates to the topic of compensation in the nonprofit world as it compares to the for-profit?
PALLOTTA: The head of Wounded Warrior Project was crucified for making $400,000 a year in a nonprofit setting. The head football coach at the University of Michigan makes $9 million in a nonprofit setting, and no one bats an eye at that. We don’t even need to go to the for-profit sector for a reality check.
N MAGAZINE: What questions should potential donors be asking when considering whether to donate to a nonprofit?
PALLOTTA: What are your goals, what progress are you making toward those goals and how can you improve?
N MAGAZINE: What red flags should donors be looking for?
PALLOTTA: Conspicuously low overhead and a lack of any statements about what the organizations’ goals are and to what they are holding themselves accountable.
N MAGAZINE: The Community Foundation for Nantucket is responsible for bringing you to the island as a featured speaker for its Non-profit Leadership Conference this month. What has your experience been with community foundations elsewhere in the country, and what’s their importance in the nonprofit sector?
PALLOTTA: Community foundations are more innovative than the larger institutional funders. They are a critical part of the fabric of civil society and could single-handedly among themselves change the way the culture thinks about charity and giving.
N MAGAZINE: Why do you think some criticize you for your work and positions in this field?
PALLOTTA: The vast majority of people that come to my talks seem to leave unable to stop nodding their heads in agreement. I think it’s just that people don’t have the time to actually think about these things. Also, Robert Kennedy said “One-fifth of people are against everything all the time.” You can’t let those people get in the way of progress.
To register for the Community Foundation’s Nonprofit Leadership Conference being held on September 26th from 8:30 – 4:30 at The Nantucket Inn, click here or call 508-825-9993.