I recommend
you watch this short ted talk by Dan Pallotta entitled The
Way We Think About Charity is Dead Wrong. What stuck out the most to me in
this video was when Pallotta showed the relationship between fundraising and cause. I
never thought about charities limiting their risks of fundraising in order to
raise the revenue they make. Pallotta mentions that taking risks on new revenue
ideas is limited in the non-profit sector. This is because if a nonprofit
failed to run a successful fundraiser, they run the risk of having their reputation ruined; a failure is seen as a waste of money that could have gone to helping their cause.
However, if a corporation, such as Disney, were to release a film that did
poorly in the box office, this would not affect their reputation. Why is it
that a nonprofit can be treated differently in this respect? Do you agree with
Pallotta when he says, “when you prohibit failure you prohibit innovation”?
Personally, I understand why these are different but I don’t think its fair
limit people’s advances because of the risk of failure. In order to better help
those that need it, it is better to run the risk of failure because the end
result could be even greater.
I think
that it is necessary for nonprofits to spend money on all the same things
businesses do. For example, Pallotta states that businesses spend money on
advertising and marketing where as nonprofits accept donations to help spread their
message. In order to be successful, people need to know about the organization,
what they do and what their goal is in order to donate money to them. If people
saw adds on TV to donate to homeless people just as much as they saw ads for
cars, I think this method would be effective. The ASPCA often runs ads on TV,
the ones with the super sad songs. Everyone knows these commercials so clearly
they’re making enough impact so that people talk about what’s happening and
what their goal is. If this was seen as ineffective, they would not run
commercials. There are other methods of advertising and marketing that do not
include TV commercials, such as using the internet and social media to
advertise organizations. Do you think nonprofits should invest more in fundraising,
advertising, and marketing?
Overall, I
found it very thought provoking that businesses are treated differently than the
nonprofit sector. Although this seems like common sense, I found it interesting
to study the ways in which they differed and the responses to each of these if
a failure was to occur. Unfortunately, I think the risk of failure hurts the
success rate of nonprofits. Pallotta states
“philanthropy is the market for love”. I believe this is true to a certain
extent but love should not be measured by how much harm or good is done to help
a cause.
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ReplyDeleteThis TED Talk really opened my eyes on the difference between the non-profit sector and business. Due to my ignorance of the topic, I thought the difference between the non-profit sector and businesses was black and white- with business being very self-motivated, keep your eyes on the money mentality, and non-profits being driven by passion and dedication. I still believe to a certain extent that is true, but through Pallotta's talk and the way he backed up his convictions with valid statistics, I can now see that this topic is not black and white: there is grey connecting the two areas I once thought were defined so rigidly. The problem is, many people today can't see this connection, or can see it but have this "double standard" between a non-profit spending money and taking a risk, or a business doing the same. I admit, I believed in the double standard. I'm the type of person who flips through clothing magazines that come in the mail, but if someone from a charity came to my door as many times as I got one of those magazines- I might go insane. I've learned that non-profits need to take a risk, just as businesses. It's really not that different, but for some reason we tend to see it that way. But why can a business make money on video games and its a crime if people make money helping other people? If we claim we are people who stick to our morals, why can't philanthropy and businesses coexist without any stigmas associated with what they do? Pallotta also makes a thought-provoking allusion to the Puritains, who lived during a time where non-profits and for-profits weren't defined. They came to America to make money, but at the same time needed to be selfless and were destined to go to hell if their profits were used for themselves. What was their logical solution? Charity. They embedded ethics and charity into our culture, and it still persists today. If you have time, try to read John Winthrop's "A Modell of Christian Society", it goes in depth on the tenants of "philanthropy" during the Puritan times (it's a hard read, try to find an abridged version if it's tough to understand). To conclude I would like to pose one question. Before watching this Ted Talk think of an action that defines what it is to be a philanthropist. Is it writing a check for $100,000 dollars to a charity? Maybe. Then reflect afterwards on that action again, and see if Pallotta poses any ideas that may influence your response- you may change your mind on what it takes to be a true philanthropist.
ReplyDeleteI found your post, as well as the TED Talk to be both very interesting and informative. I think that the idea of using money given to a charity, to make more money for that charity can be very appealing. I also thought Pallotta made a compelling argument as to why nonprofits should take risks to make more money. The history he provides of nonprofits increasing there revenue by taking risks can be described as a testament to how his method may work successfully. That being said, I think it is important to understand why there is a stigma for nonprofits to take risks as opposed to for profit businesses. To break this down, it is important to look at the similarities. Both businesses and nonprofits stand to make a considerable amount of capital if they take a risk. They also both face the possibility of losing their money when they take a risk. The difference between the two is who is negatively impacted if the risky endeavor fails. A business that takes a risk and fails only stands to harm itself, losing whatever money they invested. On the other hand, if a nonprofit runs a risk and fails, then all the beneficiaries of that nonprofit are negatively impacted. This could mean a child going a night without food or something similar. So then, the conversation moves to how is the money better spent? Should a million dollars be spent on a commercial or on food? It is very hard to say. Pallotta seems to think that the risks often pay off, and he appears to have empirical evidence to back that thought. In my opinion, it could be very beneficial for nonprofits to invest similarly to businesses, but they should do so knowing that the consequences of failure are much more severe than those of a for profit business.
ReplyDeleteKaitlyn, you highlighted a good point that Pallotta mentioned. The idea that non-profit sectors are criticized for spending money without making an effective impact versus Disney who can get away with producing a poor-rated movie, while spending a lot of money to fund an entertainment business is unjust. Although I agree that it is unfair for the non-profit to be blame for its particular unsuccessful project, I believe people feel more attached to the money they donate to a charity compare to the money they use to watch a poor-rated movie. When someone donates to charity, he believes he is doing something good for a specific cause or for a specific person. When he sees the money being used without making any impact, he may begin to question the leader’s decision of the non-profit. This is also the question we will have to ask ourselves in class when deciding how to distribute the money. “Do we want to see the impact of our money or just know and believe this organization will effectively make a difference with the funds?”
ReplyDeleteTo address your second question regarding non-profits and advertisements, I believe non-profit sectors should be able to invest their money into marketing strategies just like businesses. Raising awareness and targeting specific audience can promote the organization to certain demographics that are willing help the organization. As a marketing major, I do see the potential in advertising and spreading the word about a non-profit sector. Even though as a class, we focus on the local organizations, someone farther away can feel really connected with the organization’s mission and donate too. In fact, there are many ways to promote without paying a lot. Using social media campaigns, a co-creation, can be helpful to non-profit organizations. It interacts with the community and also keeps the community up to date. Non-profit should be creative in spreading the news, but at the same time they should be cautious of where they spend their resources because it also affects their clients.
Kaitlyn, I found that this Ted Talk and your post brought up numerous good points about how to better the nonprofit sector and make it much more efficient at solving modern day problems. In order for the nonprofit sector to make as big of a difference as many people hope, it needs more money than people are willing to give. Unfortunately, 2% of this country’s GDP is not even close to enough money to effect the change that is necessary, so how can nonprofits accumulate more money?
ReplyDeleteLast week, when we read the “Strategic Philanthropy” reading, something that stuck out to me was that philanthropy, and nonprofits in general, have taken ideas from different fields such as biology by introducing independent systems, physics when they utilize cause and effects, and behavioral economics by analyzing human behavior. Now, instead of taking ideas from completely different areas, it is time to take ideas from the for profit sector. Nonprofits should start to invest and spend more money on advertising so that they can create more revenue and enlarge their “pie.” In class, we have often spoke about Doris Buffett and how she is the true philanthropist in the Buffett household. Doris is the real philanthropist, but Warren Buffett is the business man, so I think that it would be a good idea and an enormous step in the right direction for all nonprofits if Doris learned from her brother and started investing knowing that the possible rewards outweigh the risks. On the other hand, the main problem with nonprofits starting to invest and fundraise is that if they fail, they hurt many more people than just themselves, they also hurt the people who that money would have been given to and used to help. Also, when people give money to organizations, most people would like to see their money go directly to the cause and not to some commercial, even if that commercial makes double the money that they gave. However, for the nonprofit sector to grow, someone must take that first leap and not back down when they are scrutinized. They may be under watch for a while, but one thing will bring the scrutiny to an end: success.
Kaitlyn, I thought that your post was really interesting and brought up many good points to reflect upon. I definitely agree that nonprofits should not be held to the same measures of success or failure as traditional businesses, because their success and contributions to society aren't always as concrete as returns or profits in businesses. However, changing the culture of how nonprofits are evaluated in more of a business sense could potentially be a huge challenge, as many large-scale investors and "stakeholders" in nonprofits are successful business people (ex: Bill Gates). When I consider their backgrounds, I can see where those kind of people would be quick to criticize a nonprofit that is receiving their money and not producing the level of results that were expected. But, it would be great if more people would recognize the distinct differences between nonprofits and businesses and know that the kinds of positive change nonprofits can achieve in society is worth the investment even if there are ups and downs along the way.
ReplyDeleteIn addressing your question about advertising, I think that raising awareness about the nonprofit sector and the work they do is extremely important. Last year I took a public affairs class where my group researched policy solutions for decreasing childhood poverty in the urban area near my hometown. In talking to different people who worked at various nonprofits and people who received services from the nonprofits in that area, one issue that kept coming up was that people don't always know what services are available to them that could help them, especially from small or local nonprofits. So I think that raising awareness is important not only for donors or in order to increase fundraising, but to also help connect people in need with services available to them and to increase networking and collective impact between organizations striving for a common goal in a particular geographic area.
One of the main questions that you asked and that was brought up in the TedTalk was why is it that a nonprofit can be treated differently than a for-profit organization. This view point that a non-profit can't advertise or fundraise is really interesting and I do understand the points that Dan Pallotta makes about losing the public's trust if they fail, but Business News Daily presents a different view altogether (http://www.businessnewsdaily.com/3629-business-charity-lie.html). In this article the opposite viewpoint is taken and instead they present the idea that nonprofits are treated more leniently and have more slack with the public than profitable organizations do. They feel that this is because even if a NGO does mess up somewhere along the line, they have built up a moral standing that can't be tarnished. A research assistant at the University of Washington's Foster School of Business even put it this way, "Imagine the person who attacks an organization such as 'Save the Children' or 'Doctors without Borders.'" This is a really valid point but also only applies to major organizations that have a high-standing reputation. The problem really lies with small NGOs that interact will local communities rather than the national or international community. These are the organizations that will be scrutinized if they fail, but like Palotta said, "when you prohibit failure, you prohibit innovation." Small non-profits need to take risks and use their resources for all that they are worth. If they don't take any risk then there can hardly be any reward.
ReplyDelete