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March 31, 2010

Charitivism: The Gloves are Off

This morning I was scanning my Tweetdeck stream for yesterday's Artez Interactive DC fundraising & networking conference and noticed this from Care2's Jocelyn Harmon (my favorite Frogloop blogger):

Still musing on @danpallotta talk at #artezdc. We R handicapping ourselves by perpetuating the myth that low overhead = effective charity.

Indeed, I think everyone was.

It would be unfair to say that Dan Pallotta's presentation, "Uncharitable: How Restraints on Nonprofits Undermine Their Potential," stole the spotlight. It was bookended with talks by people like Katya Andresen, Ted Hart, Dharmesh Shah, Judy Chang (Principal Product Manager, PayPal) and Care2's Jocelyn and Eric Rardin, all of whom knocked the ball out of the park. (A few highlights: Ted set the tone by declaring that we have moved from the era of "direct marketing" to "direct influence," and to fundraise online effectively, we'd have to "stop fundraising and start communicating"; Katya gave her first live presentation of her must read ebook, Homer Simpson for Nonprofits, which she'll repeat at the NTEN conference next week; and Dharmesh probably converted everyone in the room into avid bloggers, SEO buffs and tweeters, if they weren't already.)

But Dan's presentation was definitively special. For those who don't know, Dan is the author of Uncharitable, a rather insurgent book which argues that "society’s nonprofit ethic undermines our ability to eradicate great problems, and, ironically, puts charity at a severe disadvantage to the for-profit sector at every level."

In his talk, Dan pointed to the flurry of warnings issued by media outlets and state attorneys general about donating to relief organizations in the aftermath of Haiti's earthquake, to highlight the erroneous assumption that people ought not donate to nonprofits that report high overhead costs. 

Stop and think about this.

How exactly is a Haiti relief organization supposed to implement solid programs without skilled staff, technology and organization? There is no doubt that some nonprofits are more or less efficient than others, but why are overhead costs the litmus test?

Put another way: You should not donate to the soup kitchen that reports 30% overhead expenses (don't bother to find out that it has highly professional facilities and staff, and serves healthy organic soup). You should donate to the soup kitchen that reports 5% overhead expenses (don't bother to discover that their facilities are dilapidated, their staff rude, and their soup bereft of nutritional value).

Dan believes this stigma hearkens back to our country's Puritanical belief system that rewards capitalist entrepreneurship and humbles charity to an almost parasitic level. That is, you're not doing your job if you're working on a Macbook Pro and have complimentary coffee in the office kitchen. You are expected to run highly sophisticated software on donated IBMs circa 2001 and call hospitals in Haiti from a shared rotary phone.

Meanwhile, corporations that want to sell sugar water to children and exploit lax labor laws in poor countries are rewarded with billions. Yes, something is certainly wrong with this picture.

Perhaps the worst consequence for the nonprofit industry is that this culture forces it to lie to itself. Dan cited the statistic that a third of nonprofits with a budget of $5 million had reported no fundraising expenses.

So how is the sector expected to become more efficient when our culture forces it into dishonesty?

Dan's answer to this problem is as common sense as it is profound. Replace words like "overhead" with "implementation," or, if it's not a stretch, "vision." He closed his presentation saying, "Revisit your great dreams and infuse them with courage, and the determination to make them real."

I later ran into Dan by the elevators as he was leaving and told him I planned to use his talking points in my own work with nonprofit organizations. "Do it," he said, "we've got to get this movement going." 

He meant every word, I thought.

March 24, 2010

You, The Citizen Philanthropist

Last night I attended the Citizen Effect: A New Approach to Philanthropy event at the swanky new U Street office of Affinity Lab, which is a brilliantly organized space for creative businesses, non-profits and start-ups — a geek commune done right.

In the tradition of Global Giving, Care2, and Facebook Causes, Citizen Effect is yet another attempt to connect socially concerned people with the cause of their choice. Or so I thought.

Citizen Effect's founder, Dan Morrison, opened his presentation with a story-telling Malcolm Gladwell charm (minus the hair), telling us about the people who inspired him, and moving into Citizen Effect's founding principles, which go something like this:

When you hear "philanthropy" you think of Bill Gates, the Rockefeller Foundation, and the other titans of industry that set aside some of their riches to help solve the world's challenges. But when I hear "philanthropy" I think of high school students, young professionals, yoga instructors and accountants.

Ok, that was pretty much ripped from the event description. But it mirrored, in a nutshell, Dan's build up to the Citizen Effect product. And what separates it from the better known crowd-sourcing philanthropic competitors is the way it centers the focus on the Citizen Philanthropist — you.

The notion of the Citizen Philanthropist (CP) is not new. It explains why there are so many small nonprofits devoted to specific areas of concern. Everyone has a friend who joined Peace Corps and returned to start a nonprofit to help some village in Zambia. Citizen Effect cuts to the chase, lining CP's up with their passions.

I applied to be a CP myself, and was most impressed with the application process.


As I ticked the boxes indicating my regional interests, the amount of money I want to raise and the number of lives I hope to impact, my wheels got turning: I don't have to end world hunger, I can help feed 300 people in India. I don't have to start a national campaign, I can throw a house party.

After you submit your application, you're encouraged to peruse Citizen Effect's searchable marketplace of nonprofit programs, which are broken down by region, focus area, lives impacted and fundraising target. Most ingeniously, each program has its own blog, events and announcements, so the CP can connect with others who are campaigning on the same project.


The projects themselves are administered by qualifying nonprofit organizations, who submit their own application to and are vetted by Citizen Effect.

I asked Dan how they cope with the demand among their nonprofit partners for unrestricted funds. After all, any savvy nonprofiteer understands the marketing value of specificity and personal stories, but every nonprofiteer wants control over how money is spent.

Dan told me that while his nonprofit partners are required to earmark much of their CP donations to an actual project, they may direct a portion to its implementation costs. "But we make sure they're very clear about this on our website," he added.

My wheels were turning again.

Of course, the best thing to do is check out Citizen Effect's website, become a CP, and learn how it all works.

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