The way we think about charity is wrong: lessons from Dan Pallotta

This year’s Giving Tuesday comes at a critical time. Society is on the brink of catastrophic and irreversible climate change. Meanwhile, decades of progress in the fight to end extreme poverty are undone and reversed. Although these problems may seem insurmountable, solutions already exist and can have a measurable impact for millions of people around the world. To succeed in making them evolve, we must change our way of thinking about charity.

Given the short attention span of today’s political elites, charities – and those that focus specifically on movement building and advocacy – fill a critical void by ensuring that the process of policy-making responds to the needs of the poorest nations and marginalized communities. Yet a perverse myth continues to hamper their ability to invest in the kinds of campaigns needed to break through.

In his book, Uncharitable, Dan Pallotta describes how the media and mainstream philanthropy have unfairly and systematically demonized “charity overhead,” effectively poisoning public perception. In doing so, Pallotta argues, they have unfolded a prolific narrative that has crippled the ability of charities to achieve the large-scale change we so desperately need. In reality, what is often referred to as “overheads” (i.e. salaries, administrative costs) are not just legitimate activities, but arguably the basic ingredients – including smart staff , hardworking and dedicated – needed for charities to pursue the kinds of large-scale activities and systemic solutions needed to address climate change, extreme poverty and hunger.

Through several case studies, Uncharitable demonstrates how investing in so-called “overhead costs” allows charities to have a far greater impact than they would otherwise have. Why criticize a charity for spending 25% of its budget on advertising and social media, for example, if it can have ten times the impact? Or would we prefer a charity to have far less impact on humanity in an effort to keep “overhead” below an artificial level?

For charities established for advocacy purposes, Pallotta’s argument hits home. An advocacy organization is primarily concerned with influencing policy makers and shaping policies in the interests of the marginalized and most vulnerable people in the world. Advocacy organizations recognize that solutions to global problems – like climate change and extreme poverty – are systemic and therefore require systemic solutions that cannot be solved without proper investment.

For example, extreme poverty is estimated to be a $350-400 billion a year problem. Obviously, no number of charity gala dinners or fundraisers, no matter how effective, will be able to raise this amount of capital each year. Nelson Mandela was right when nearly two decades ago he said that ending poverty was not an act of charity, but an act of justice. If ending poverty is in fact a multi-hundred-billion-dollar problem, then surely it requires multi-hundred-billion-dollar solutions? This is why advocacy organizations are concerned with campaigning with governments and corporations that can transfer capital at scale towards ending extreme poverty. As Hugh Evans, CEO of Global Citizen, has previously pointed out, “a campaign, well-crafted, with a really clear outcome, can captivate people from all corners of the globe to achieve something greater than all of us.”

If ending poverty is in fact a multi-hundred-billion-dollar problem, then surely it requires multi-hundred-billion-dollar solutions?

Philanthropists and donors can multiply their impact many times over by supporting advocacy organizations that run such well-targeted campaigns. I have seen this in our own experience at Global Citizen. For example, in 2020, three foundations each agreed to invest $1 million in a campaign to help raise the hundreds of millions needed to ensure COVID-19 tests, treatments and vaccines can reach everyone everywhere. . These foundations understand that it takes money to reach people. The campaign leveraged $430 million in cash pledges for WHO’s Access to Covid 19 Tools (ACT) Accelerator, and foundations that supported the campaign had a 430:1 return on impact. In other words, for every dollar they contributed to support this effort, the campaign helped mobilize nearly $430 in cash funding directly to ACT-Accelerator partners to ensure that tests, treatments and COVID-19 vaccines would be available to everyone, everywhere. , as quickly as possible.

The case for investing in advocacy-oriented charities speaks for itself. And yet, the need to fund the basic structure and ecosystems of advocacy remains poorly understood. As a result, risk aversion and lengthy grant application processes starve the advocacy industry. Funders are reluctant to invest in the capacity of advocates and activists who engage and inspire action takers because hard-working staff, social media capacity, impact assessment, publicity and all things needed to run a successful campaign simply don’t fit traditional stereotypes of charitable giving. Some countries still do not even recognize donations to advocacy as a legitimate charitable contribution, depriving many NGOs of much-needed funds for the large-scale political impact they would otherwise be able to achieve. As Darren Walker, President of the Ford Foundation, said in Uncharitable“This story has been around for far too long… and in the end [it] hurt people themselves [NGOs] were meant to help.

“this story has been around for way too long… and in the end [it] hurt people themselves [NGOs] were meant to help.

Hampered by this outdated view of what is and is not considered legitimate and acceptable charitable activity, activists and advocates are struggling to gain the attention of the world’s most powerful institutions to implement meaningful policies. that could have a positive impact on millions of people. And who do they face as they compete for the time and attention of decision makers? Highly paid corporate lobbyists and supporters representing big brands with seemingly unlimited budgets, able to inject long-term resources to shape agendas in their own interests. However, charities that pursue advocacy efforts are being told that they should not be fundraising and spending on such activities, as if a given 4 a.m. TV commercial slot is going to touch so many hearts and minds. minds than a prime-time advertisement. Yet, as traditional philanthropy dictates, as long as overhead is kept under an artificial benchmark, who cares if the impact is less than optimal? Who cares if poorly paid defenders struggle with burnout as long as “overhead” remains under an arbitrary benchmark? Pallotta responds to these questions by emphasizing that we are happy to have one set of rules for private sector business interests and another entirely for the charitable sector.

And who do they face as they compete for the time and attention of decision makers? Highly paid corporate lobbyists and supporters representing big brands with seemingly unlimited budgets, able to inject long-term resources to shape agendas in their own interests.

The negative impact of this outdated mindset is so evident when it comes to climate change. Philanthropic giving for climate change represents less than 2% of all philanthropic giving; giving to climate change is even less. In contrast, it can be said that what made fossil fuel interests successful and entrenched was due to two factors: 1) donors recognized the power of investing in communications and advocacy to further their agenda economic and ideological, and 2) they recognized that investment – in think tanks, research institutes and lobbyists – had to be sustained over the long term and maintained with a high degree of trust without being hampered by an obsession bureaucratic overhead.

However, when it comes to investing in the capacity of activists and advocates working to ensure a just energy transition for small, poor nations, and the billions needed to phase out fossil fuels and unlock a clean energy future for all , a similar level of commitment is in short supply from donors. After COP27, there remains a shortfall of more than $16 billion in the promise of rich countries to provide $100 billion a year to help developing countries adapt and mitigate the impacts of climate change. Without building a movement to hold these governments accountable – with creative, problem-solving advocates working in the corridors of power – these promises may never be fulfilled. We need those who hold the purse strings of philanthropy to make big bets and invest in political entrepreneurs and advocates seeking to make a difference. An investment of at least $1 million in advocacy for climate finance could have a return on investment of 16,000:1.

The clock is turning. Now is the time for society to abandon its outdated view of what constitutes legitimate charitable efforts. There are $2 trillion in global philanthropic assets waiting to be deployed, which could snowball into a much more positive impact if invested in long-term policy change. Even a fraction of that sum, spent differently, could help fund the kinds of ambitious advocacy campaigns calling for systematic change. As Pallotta previously shared, we need more people who will say, “I’m going to help fund the overhead to build this organization to make their dreams come true.”

This Giving Tuesday, we have the opportunity to be generous – not only financially, but also with the way we view and support the tireless work of local charities, advocates, nonprofits and organizers who devote their lives to uplifting humanity.

Our future cannot wait. Millions of lives are at stake. The longevity of the planet is at stake.

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