Dan Pallotta’s recent TEDTalk “The Way We Think About Charity is Dead Wrong” reminded me of a number of problems that I have witnessed in the common attitude toward funding and philanthropy.
I spend a significant amount of time as director of the Stanford Center for Compassion and Altruism Research and Education (CCARE), a center whose work is renowned worldwide. However, funds that would allow me to do this work full-time are currently nonexistent. A great amount of my CCARE time needs to be spent on fundraising, which takes away from a complete focus on the center’s mission. Our present method of philanthropy is at the root cause of this type of problem.
It seems to be an all too common perception among philanthropists that if one has chosen to work in a nonprofit environment, one has concurrently accepted a vow of poverty. Asking for a wage comparable to a for-profit equivalent position somehow seems sinful or “signifies a lack of commitment,” as one billionaire remarked to me. Why is this? Many of these same individuals have no problem spending immense amounts to recruit a talented executive for a for-profit company. In fact, it would seem nonsensical to even debate salary in that situation. Can the best and the brightest be blamed for not choosing to dedicate their lives to charitable or nonprofit causes because they don’t want to live at the poverty level? Don’t get me wrong, many dedicated individuals have accepted this present reality at extraordinary sacrifice, but is it fair and is it not too much to ask? I know of one very dedicated individual with a Ph.D. from an Ivy League university working for a significant non-profit as executive director who must work a second job just to cover rent, food, and childcare. In no way does she live an extravagant lifestyle.
Another too common reality that I have run across again and again is that philanthropists who consider providing funding don’t want any of their money to go to overhead costs. At major academic institutions such as Stanford there is a dean’s tax for overhead that oftentimes is 13 percent or more. Every organization has some amount of administration or overhead costs. Again, in the private sector would anyone dismiss the need for such costs? Where would this money be found?
I was recently talking to a potential donor worth hundreds of millions of dollars who spent the greater part of our meeting denigrating organizations that spent any funds on overhead. I am not aware (nor was he) of any funding organization of non-profits that explicitly states they wish to only fund overhead costs. Such thinking creates another onerous and distracting burden on non-profit organizations and those that run them.
An issue that Pallotta points out eloquently in his TEDTalk is the reality that it costs money to make money. Yet, it is heresy in the non-profit world if an organization reports in their financials that $100 million was raised but it cost $25 million to do so. Again, the immediate response would be that something unseemly is going on. However, it would not have been possible to raise such a sum without paying a fundraising or marketing professional appropriate compensation. As any successful professional knows, you get what you pay for.
One of my entrepreneurial activities was founding a company that created centers that provided a form of cancer therapy. That experience confirmed that if money weren’t spent on advertising to attract patients, it had a profound effect on the number of patients who were referred. If money is not spent on getting the message out, how can you expect the message to resonate? Simply looking at the movie industry demonstrates this reality. The difference between a good movie and a blockbuster often depends on how much is spent upfront on marketing. This is a reality not only in the for-profit world but in the nonprofit world as well.
My point is not to denigrate philanthropists, nor to ignore the fact that the U.S. is the largest donor per capita of any country. Rather, it is to highlight that for charities to reach their full potential, donors must look at their giving in a different way. By applying those principles that have been so successful in the for-profit world, one’s contribution has the potential to go exponentially further and inspire the best and the brightest to chase their passion to serve others.
About the Author
James R. Doty, MD, is a Clinical Professor in the Department of Neurosurgery at Stanford University and the Director of the Center for Compassion and Altruism Research and Education at Stanford University School of Medicine. As Director of CCARE, Dr. Doty has collaborated on a number of research projects focused on compassion and altruism including the use of neuro-economic models to assess altruism, use of the CCARE developed compassion cultivation training in individuals and its effect, assessment of compassionate and altruistic judgment utilizing implanted brain electrodes and the use of optogenetic techniques to assess nurturing pathways in rodents. Dr. Doty is also an inventor, entrepreneur and philanthropist having given support to a number of charitable organizations including Children as the Peacemakers, Global Healing and Family & Children Services.