We Need Change to Change the World -Do Not Confuse Frugality with Morality
We Need Change to Change the World
If you are running a company that sells expensive sneakers to inner-city kids, makes violent movies, or pushes sugary snacks and junk food to millions, your salary is tied to the scale of your business. But if you are running a charity to find a cure to a disease, for safer streets or healthier lifestyles, it’s quite another story.
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A few things to consider, from a recent Pallotta Q & A with the Fiscal Times:
There are 1.2 million nonprofits in the U.S. – and “yet the biggest of the watchdog agencies only looks at 7,000 charities. All they do is share tax information with you and maybe tell you a little about whether the charity has an adequate board of directors. None of the watchdogs – not Charity Navigator, not the Better Business Bureau, not Charity Watch – does any real research on the effectiveness of a charity’s programs.
TED:
Why Everything You Know About Charitable Giving Is Wrong
Here’s why: If you ask an organization about its overhead, you’re not going to get “information about the quality of what’s going on at that organization,” he says. “Let’s say it’s a soup kitchen. A low overhead figure doesn’t tell you about the quality of the soup, or whether the staff is friendly to its clients, or whether the place is open 24 hours a day. For all you know the soup might be rancid and the staff is rude and the place is closed half the time.”
Over time, the overhead figure “has become a proxy for indicating waste and fraud, but it doesn’t do either of those things. Waste can happen in any part of the pie,” says Pallotta. “And as for fraud, the way the overhead percentages come to the watchdog agencies or the attorneys general is through the organizations’ own tax forms – so unless people are really stupid, they’re not going to report fraud on their tax forms.”
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…A charity can tell someone, ‘Hey, go on there and give us a five-star rating.’ That’s pretty simplistic. It’s just telling you is that they have a good grassroots PR operation.”All of this speaks to why Pallotta feels the nonprofit sector needs to stick up for itself and develop an identity, as other sectors have. It’s why he’s begun the Charity Defense Council, which seeks to change the way people think about nonprofits.