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Harvard’s Dan Pallotta visits Penn/Wharton to talk about social entrepreneurship and nonprofits

March 16, 2010

Dan Pallotta, founder of Palotta TeamWorks (left) with Eileen Heisman, President & CEO of the National  Philanthropic Trust (right), last night at The Wharton Graduate School of Business.

Yesterday evening I had the pleasure of attending a lecture given by Dan Pallotta, a Harvard graduate and former chair of the Harvard Hunger Action Committee, founder of Palotta TeamWorks, author of Uncharitable: How Restraints of Nonprofits Undermine Their Potential, and blogger for the Harvard Business Review.

Many Penn and Wharton students, staff, and faculty were in attendance, such as Eric Ashton and Kenwyn Smith of SP2. I also saw Yuanxia Ding, who is organizing the Strategic Philanthropy panel for this Friday’s Wharton Social Impact Conference, which will feature our executive director, Kat Rosqueta, as moderator. I even tweeted up with a local, Philadelphian researcher at Pew Charitable who attended the talk.

Eileen Heisman, President & CEO of the National Philanthropic Trust and a lecturer at the School of Social Policy & Practice, introduced Dan with a story of how she was inspired by the Breast Cancer 3-Day Walk, the concept of which was created by Pallotta TeamWorks, now renamed as the Susan G. Komen 3-Day For The Cure. Dan’s lecture covered many topics from his book, Uncharitable, that are currently in need of change in the nonprofit sector including compensation, advertising, vision, learning, and capital. As I was “live-tweeting” the talk, I was able to capture (as accurately as I could) a few key points and resources that he mentioned, which I have included below.

  • Dan’s experiences with fundraising events began when he was chair of the Harvard Hunger Action Committee and they raised money for Oxfam. (1) He stated, “I wanted to do something big but I didnt have any big ideas.” (2) Then, one year, he asked people if they would bicycle across America during the summer to end world hunger. Over 30 people agreed and raised approximately $100,000 for Oxfam. (3)
  • When Dan returned to California after graduating from Harvard, he was surrounded by the deaths of many friends and associates who were dying of HIV/AIDS. It was then he realized the AIDS community needed something, so he organized a 7-day bike ride in LA and added the condition that people had to raise a minimum of $2,000 to participate. This resulted in approximately $1,013,000 being raised. (4) The 7-day bike ride sparked the concept for the 3-day Cancer ride. In 2002, the Cancer ride netted approximately $81 million. (5)
  • Dan described these events as follows: “There was an emotional beauty to these events… It was joyous to see the true nature of human beings (6)… Producing these events for 10 yrs gave insight on the way the public thinks about charity.” (7)
  • In his book, Uncharitable, Dan discusses the idea to give nonprofits and charities the freedom to raise and spend money and not demonize their expenses on overhead. (8) He said, “I don’t ask how to improve nonprofit performance. Instead I ask, ‘Is this whole system capable of achieving ‘Apollo-like’ results and within what amount of time are these results possible?'” (9)
  • Dan also doesn’t agree with the attacks on the nonprofit sector regarding compensation. He stated, “Pepsi markets sugar water to kids and their CEO gets $14 million a year but the CEO of the Boys & Girls club who makes $988,000 per year is seen as outrageous.” (10) (Note: He is referring to the recent controversy in the news regarding the Senate Finance Committee asking for justification of spending by the Boys & Girls Club.)
    • Note: The criticism of nonprofit executives who receive high salaries also reminds me of the emotions and expectations related to the recent topics surrounding Philanthropy and Guilt, and also the expectation that nonprofit workers should not be compensated at the same amounts as workers in the for-profit world. (See also the recent articles on Executive Compensation in the Chronicle of Philanthropy.)
  • He went on to compare the different standards by which the nonprofit and for-profit sectors are held accountable to and the inequalities in perception of how they should operate.
    • “Nonprofits spent $1.6 billion vs For-profit $729 billion in 2006 on advertising. Save the Children spent $6.4 million vs Disney $2.2 billion on marketing in 2004.” (11) (See also Dan’s article on the Harvard Business Review, Haiti Is a Marketing Lesson)
    • “It’s rare you can produce success in a 12 month window but nonprofits are held to this standard each year while for-profits are not.” (12)
    • According to an op-ed, co-written by Sean Stannard-Stockton and George Overholser, only 144 nonprofits passed $50 million in revenue compared to 46,136 for-profits. (13)
    • “The notion that overhead is not part of the ’cause’ forces charities to forgo things they need.” (14)
    • Two great references Dan referred to are:
  • Dan rounded up his talk by stating 3 steps that need to be taken to change the nonprofit sector: (17)

I’m glad to have attended this lecture and to have been able to listen to the Q&A discussion afterwards on how the nonprofit world can change the way the public perceives the work that we do and how we can effectively confront the challenges ahead. Please feel free to comment on these ideas as we encourage feedback and intellectual participation. Thanks to Dan Pallotta, Eileen Heisman, and Eric Ashton, and others who made last night’s event possible.

6 Comments leave one →
  1. May 5, 2010 4:22 pm

    Innovation and Entrepreneurship is the key to long term success in growing a non profit organization or a for profit company. Innovation and Intrapreneurship create not only new jobs, but new products or services, and strong growing companies As a successful serial high tech focused Intrapreneur (PR1ME Computer’s PR1ME Leasing, Anaconda-Ericsson Finance, Corona Data OEM Private Label); Senior Executive at TeleCommunications Inc; and successful entrepreneur creating, building and selling of RETIX, and as an academic scholar (author of “Intrapreneurship Success: A PR1ME Example”) I have personally witnessed the power of Innovation in building successful companies and first had seen them grow from just a small startup to major NYSE traded companies in just a few years.
    Howard Edward Haller, Ph.D. CEO & Founder, http://www.IntrapreneurshipInstitute.com

  2. August 2, 2010 9:48 am

    Resources like this article are incredibly helpful. Nice post . Keep up the good work

  3. October 2, 2011 10:51 am

    Thank you for this article. It’s good to know that there are still people who are willing to facilitate fund raising in order to help. Reading this article makes me think that it is indeed true that in every problem there is always a solution if there is cooperation.
    Very inspiring!

  4. October 4, 2011 8:24 am

    When giving to non-profit organizations, the main concern for most contributors is how much of their dollar is going to the actual cause the non-profit organization. That is a big reason why people do business with non-profits. Thus, when news discloses that the CEO is making $988,000, people think their dollar is being gouged before getting to the cause the organization represents.

    As long as people know how much of their dollar goes to the charity (and there is no case for accounting fraud), how much a CEO makes is less relevant, in my opinion.

Trackbacks

  1. Going Up? Taking Charity To Scale With Dan Pallotta « Social Enterprises
  2. The Call for Charities to Take Charge on the Business of Philanthropy: Dan Pallotta Sounds Off « High Impact Philanthropy

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