This is what happens when we confuse morality with frugality. We’ve all been taught that the bake sale with five percent overhead is morally superior to the professional fundraising enterprise with 40 percent overhead, but we’re missing the most important piece of information, which is, what is the actual size of these pies? Who cares if the bake sale only has five percent overhead if it’s tiny? What if the bake sale only netted 71 dollars for charity because it made no investment in its scale and the professional fundraising enterprise netted 71 million dollars because it did? Now which pie would we prefer, and which pie do we think people who are hungry would prefer?
Here’s how all of this impacts the big picture. I said that charitable giving is two percent of GDP in the United States. That’s about 300 billion dollars a year. But only about 20 percent of that, or 60 billion dollars, goes to health and human services causes. The rest goes to religion and higher education and hospitals and that 60 billion dollars is not nearly enough to tackle these problems. But if we could move charitable giving from two percent of GDP up just one step to three percent of GDP, by investing in that growth, that would be an extra 150 billion dollars a year in contributions, and if that money could go disproportionately to health and human services charities, because those were the ones we encouraged to invest in their growth, that would represent a tripling of contributions to that sector. Now we’re talking scale. Now we’re talking the potential for real change. But it’s never going to happen by forcing these organizations to lower their horizons to the demoralizing objective of keeping their overhead low.
Our generation does not want its epitaph to read, “We kept charity overhead low.” We want it to read that we changed the world, and that part of the way we did that was by changing the way we think about these things. So the next time you’re looking at a charity, don’t ask about the rate of their overhead. Ask about the scale of their dreams, their Apple-, Google-, Amazon-scale dreams, how they measure their progress toward those dreams, and what resources they need to make them come true regardless of what the overhead is. Who cares what the overhead is if these problems are actually getting solved? If we can have that kind of generosity, a generosity of thought, then the non-profit sector can play a massive role in changing the world for all those citizens most desperately in need of it to change. And if that can be our generation’s enduring legacy, that we took responsibility for the thinking that had been handed down to us, that we revisited it, we revised it, and we reinvented the whole way humanity thinks about changing things, forever, for everyone.
Dan Pallotta, “The Way We Think About Charity is Dead Wrong”, TED (Long Beach, CA: 1 March 2013) [Available at https://www.youtube.com/watch?v=bfAzi6D5FpM]