Friday, November 26, 2010

Book Notes - Uncharitable

Uncharitable: How Restraints on Nonprofits Undermine Their Potential by Dan Pallotta

The First Error - Constraints on Compensation: Charity and Self-Deprivation Are Not the Same Thing
+ pay scale for people that work in the NPO space should be competitive with for profit businesses.
The Second Error - Prohibition on Risk: Punishing Courage, Rewarding Timidity
+ donations are tied to specific programs which don’t allow the NPO to innovate, stifling future growth.
The Third Error - Discouragement of Long Term Vision: The Need for Immediate Gratification Institutionalizes Suffering
+ donations can't sit - they need to be used right away as opposed to earning capital
The Fourth Error - Discouragement of Paid Advertising: If You Don't Advertise Here, Your Competition Will
+ the big machine of advertising, design, ad campaigns, etc. for charities is seen as bad
The Fifth Error - Prohibition on Investment Return: The Limits of No Return, and a Stock Market for Charity
+ stigma of investing in the future

If we have the courage to be true to our most daring ideas, the ideology will have to surrender to their magnificence and our determination to make them real.

Harvard Business School's interest in social entrepreneurship led them to commission a case study on our methods in 2002. On a functional level, the events broke with tradition in three ways. They lasted days instead of hours; they required participants to raise a mandatory minimum of contributions that ranged from $1000 to $10,000, depending on the event; and they were marketed to a mass audience using funding levels and methods that previously were largely the domain of big consumer brands. On an emotional and philosophical level, the events asked people to do the most they could do, instead of the least. Tens of thousands of people responded. It was like a coming out for their humanity.
From 1994 to 2002:
+ 556M in total donor contributions
+ netted $305M, after all expenses, for direct charitable service
+ The company produced seventy-nine large-scale multi-day events, each with an average of 2,279 walkers or riders, each traveling anywhere from sixty miles on foot to six hundred miles by bicycle.
+ A total of 180,043 people rode or walked.
+ Tens of thousands of people volunteered for days on end as crew members on the roads and campsites of the events.
+ Approximately 7.4M individual donations were made to the events.
+ The average participant raised $3039 from his or her friends and family.

Methods and Controversy
+ For-profit structure, for-profit sector compensation philosophy
+ The most you can do [asked of the participants]
+ Paid, professional advertising and marketing
+ Brand building
+ Desegregation of causes
+ Taking risks [trying new markets or revenue streams]

Great read, but skimmed a lot of it. It's definitely thick with a ton of information in it. The author hits on the 'Puritan work ethic' quite a bunch, which I could have done without. But his overall points are very intriguing and are worth thinking about. The end section on his company and their Methods and the Controversy surround the methods makes the book well worth the read.

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