TED Talk: Non-Profit

As I’m interested in issues of economics and morality, I found this TED talk by Dan Pallotta a pretty compelling watch.

Dan Pallotta is an activist and fundraiser, and the main premise of the talk, which is embedded below, is to criticize the double standard that is placed upon the non-profit sector, a double standard that he feels is undermining the causes that non-profits are created to champion.  He breaks the double standards down into five areas of discrimination, and it’s the first of these that raise questions for me: Compensation.

Leaders of non-profits are not expected to make very much money.  “We have a visceral reaction to (non-profit CEOs) making a lot of money helping people, but we don’t have a visceral reaction to people making money NOT helping people.”  Pallotta says.  He’s probably right that there is a double standard, that people are more sensitive in regards to non-profits, but clearly people DO have a visceral reaction to the money made by folks who are decidedly not helping people, as the furor over the bonuses given to bankers during the economic crisis can attest.

A chart is produced, showing the median income of a Stanford MBA at age 38 (with bonuses) to be $400,000.  This is compared to the average salary of the CEO of a hunger charity: $84,028.  This puts the non-profits at a decided disadvantage is attracting “$400,000 talent” as it’s put.  I find that phrase interesting.  It shows how deeply we’re conditioned to confuse dollar signs for value.  Does someone who earns $400,000 possess $400,000 worth of talent?  In a narrow tautological sense, sure, they possess the talent of getting someone to pay them $400,000 (a talent I wish I had), but in a broader sense it’s no guarantee of any real “talent” at all.

And do we want people with mercenary motives heading up charities?  People of the type who are looking for a huge pay day?  Is the same skill set needed in the non-profit sector as in the for-profit sector?  I have almost total ignorance in this realm, but it seems far from certain to me that an Ivy League MBA type motivated by the big score would be the best choice to helm a non-profit.  But maybe it’s precisely those $400,000 talents from Stanford that non-profits need to take their efforts to the next level…I don’t know, but I am skeptical.

Towards the end a compelling case is made for less concern about non-profit “overhead”, about what percentage of a donation goes to the cause and what percentage goes to other things.  I’ll admit I was guilty of assuming anything but a tiny overhead was a bad thing and should be criticized, but if you started out like me, you’ll probably come away with a less strict view on the matter.

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