Interview with Dan Pallotta, Author of “Uncharitable”
The first time I saw Dan Pallotta, I was in a small theater watching his safety video for the 2000 California AIDS Ride, and his remarks left such an impression on me that I sought him out as an adviser to my magazine. Two years later, I became part of Dan’s special team at Pallotta Teamworks, and also helped him produce the X PRIZE space flights in 2004. Our working friendship has now spanned seven years. His newest book, Uncharitable, re-ignites his passion for charitable giving and calls for a drastic overhaul of the philanthropic machine. I think when you see him speak (and read this interview) you’ll totally get why I wanted to work with him.
Are there any charitable organizations really “doing it right” in your view?
No charity that receives the majority of its support from the general public can dare to do it right. In the current climate, it would almost be irresponsible; they’d lose their support — they’d be subject to scandal.
In the book, I talk about five double standards between the nonprofit sector and the rest of the economic world. We let business pay people based on value. But we don’t want people making money in charity. Want to make a million as a CEO selling violent video games to kids? Go for it. Want to make a million curing kids of cancer? You’re a parasite. So our top business school grads gravitate to the for-profit sector. We let business advertise ‘til the last dollar no longer produces a penny of value, but we don’t want charitable donations spent on advertising. So charities can’t build demand for causes. Budweiser’s all over the Superbowl. AIDS and Darfur? Absent.
Sounds like there’s kind of a double standard going on.
We let business make mistakes, but expect charity to spend contributions cautiously. It’s OK if a $100 million Disney movie flops, but if a $5 million charity walk doesn’t show a 75 percent profit year one? Call the attorney general. So charities can’t develop learning curves for revenue generation. Amazon could forgo investor returns for six years to build market dominance. But if a charity embarks on a long-term plan with no return for the needy for six years we expect a crucifixion. Business can offer profits to attract investment capital. But you can’t pay a profit off of investment in charity — it’s illegal. So the for-profit sector monopolizes the multi-trillion dollar capital markets.
You get the picture: anything a charity might do to test the rules brings a guillotine down on its reputation.
Was the timing of the book release (after the election) a coincidence?
A complete coincidence, unless of course you believe in some kind of divine synchronicity in the universe — which i do. I think it’s a fertile time for imaginative ideas and transformative thinking.
Should government have a role in changing the ways charitable organizations work?
Yes, absolutely. Government can make a big difference, on two fronts in particular. The government should fund a large national charity data agency — what I call the “Super Database for Charity,” that would have an iTunes-like, easy-to-understand user interface on front of a massive database of up-to-date narrative, audio, video and financial information on every major human service charity in America.
Yeah, it blows my mind that something like that doesn’t exist already.
Americans give $300 billion a year to charity. Know what we spend to make sure the giving is smart? Almost nothing. There are three national “watchdog” agencies — the Better Business Bureau, Charity Navigator, and the American institute for Philanthropy. Collectively, they have about 40 staff and annual budgets of less than $5 million — a statistical zero percent of the $300 billion we give away each year. They look at fewer than 5,000 of the 1.6 million registered U.S. nonprofits, and they don’t look at program quality — which is all any of us should give a damn about.
Okay, so what do we need from the government, specifically?
We need an agency that has teams of surveyors that visit every major charity each year to conduct a week-long study and gather rich multimedia data on the charity’s work that the public can view online. This would require somewhere in the neighborhood of a billion dollars (less than half of one percent of the money we give away each year). For a billion dollars a year we could transform charity as we know it — get people to stop asking only about overhead, get them rich information on charity programs and long-term goals, which is what really matters, increase faith in charity, and increase giving as a result.
We also need to change the tax code in two areas: first, to allow people to make a financial return off of capital investment in charity so charities can raise growth capital, and second, offer tax-deductibility for social good embedded in consumer goods.
If asked to be the “Charity Czar” in Barack Obama’s administration, what advice would you give the president?
Fund “the Super Database for Charity” and change the tax code.
You live and work in Los Angeles. Is L.A. a particularly charitable city?
Not with respect to dating when you get older, but fortunately, I have a partner for eight years now.
This is your second book. Did you learn anything about yourself as you were writing it?
I learned that I really love history — I spent six months doing in-depth research on the earliest Puritan settlers to America and their ideas about charity. It was like detective work. I found the smoking gun. I also learned to trust my instincts — I didn’t know that in the days when we were being pretty viciously attacked for trying things in a new way.
How do you think social networking sites (i.e., Facebook, Twitter, MySpace) should be leveraged to change the ways charitable organizations work?
They’re a form of marketing, and charities should put a lot of resource into reaching out through them, as well as into other forms of marketing. marketing builds demand, demand builds revenues, revenues create social change.
Has being a father changed the way you think about these issues?
Absolutely. I worry now about the world my children will grow up in. More than ever, I want a serious say in what that world will look like. I believe we can create a world that works for everyone, and i want to play a role in creating it.
I’m going to leave that up to God a little bit – but three things that interest me – running for public office, creating the Super Database for Charity, and re-creating Pallotta TeamWorks and making good on its vision of creating the “Disney of Meaning.”
For more, check out the book’s website.