After writing the post about Dan Pallotta’s (USA, 1961) view on how our mindset toward non-profit organizations is partly to blame for them being far from achieving their goals, I’d like to share my personal take on the debate he opens up.
Here you can read the article about Dan Pallotta and watch his TED Talk.
Whether we agree or disagree, in whole or in part, what is beyond doubt is that what Pallotta proposes is thought-provoking and opens the door to a very interesting—and therefore beneficial—debate, both for the sector and for us as a society.
Not everything can be monetized
One of the points I agree with most is his statement that not everything can be monetized and given an economic value. The for-profit sector can satisfy a large share of our needs, but things like love, dignity, feeling valued or respected, and being able to laugh and smile are universal human needs that the non-profit sector in particular helps provide.
That’s why when you make a donation—which by definition means giving something in return for nothing—in my opinion you do receive something. In market terms, you are ultimately buying something, even if it’s not for you: you’re buying someone else’s smile, improving their situation even if only for a few seconds, or even just feeling good for 5 seconds (or at least not feeling as bad as if you hadn’t done it). You do get something in return.
And therein lies a problem: we think we shouldn’t feel good about helping because then it seems like the act of charity stops being altruistic, and therefore stops being charitable. But I disagree; you can feel good, at least for five seconds. This doesn’t mean that making a donation solves the problem or frees us from our share of guilt for enjoying well-being built on the misery of others, but at least making a donation is better than not making one.
Window dressing
Like when we criticize prominent public figures, corporations, tycoons, artists, etc., who make a large donation that is nonetheless laughable compared to their wealth. I think our perspective is flawed. We accuse them of doing it for promotion, image laundering, or directly trying to atone for their potential “sins,” but in reality, what they did is a good thing. I won’t be the one defending tycoons and multinationals; in fact, I’m among those who believe it’s very hard, almost impossible, to amass such sums of money completely honestly. But in reality, donating is a good thing; if only we all contributed the equivalent proportional share of our income to help others. Even though it’s undeniably not the same sacrifice to donate 1% of one’s income for someone earning €500 a month compared to someone earning €500,000.
The origin
As Dan Pallotta explains, this mindset stems from Puritan and Calvinist beliefs dating back 400 years. Continuous, unchecked profit conflicted with religious beliefs by turning those who profited into sinners, thereby barring them from heaven.
To solve this problem, charity was created, whereby giving 5% of your income to those most in need in exchange for nothing purified your soul, allowing you to give free rein to your desire for profit without any moral conflict with your soul and your God.
This “solution” has largely persisted to this day, bringing us to the second point on which I agree with Pallotta.
The contentious compensation
If, for example, a company makes a lot of money speculating on the stock market, we understand that this executive or employee is very talented at understanding finances and making investments, and will therefore be well paid. It doesn’t matter so much that their success and work may have been based on investments in countries where human rights are not respected, basic food supplies in developing countries, weapons for armed conflicts, or simply the debt and hardship of struggling countries. What’s clear is that the guy is great at what he does and deserves to earn a lot of money. How, or at what cost, he makes that money is another debate. But that’s a different debate.
Now, let’s think about someone who leads or works for a charity, makes a lot of money, and earns a salary on par with a multinational corporation. In this case, it won’t matter if they are the best at managing their organization or that they have the ideas and talent to successfully achieve their organization’s goals. None of that matters; what is clear is that the guy and his organization are selfish and despicable for making a lot of money while helping others.
If we have a nurse—a good nurse who volunteers to help in a remote village in Africa—we will appreciate his altruism, and we might even be willing to cover his room and board. But would we look favorably on paying him a salary for it? Or would we think that he’s no longer sacrificing himself for others? He’s doing it because he’s getting paid, and besides, that money could be used to buy more medical supplies and medicine for those who really need it.
Now think about the best surgeon in the world. Where will he be working? Where will he dedicate his talent and efforts? Probably and logically, he will be at one of the best private hospitals, where only those with very high purchasing power can access his treatments. And that’s normal—we certainly don’t judge him for it. This surgeon would be a prime example of how you can make a lot of money helping others.
But if this surgeon decided to work for a charity and earn €8,000 a month for his services, turning down the €80,000 offered by the private sector, he would probably be criticized or scrutinized for making €8,000. In doing so, rightly or wrongly, consciously or unconsciously, we are forcing it to be more worthwhile for him to work in the private sector 11 months a year and, if anything, sacrifice his vacation the other month to volunteer. We would respect him much more: he’s the best surgeon in the world, he earns €80,000 a month, works one month for free to help others, and maybe even makes a large donation. He would be widely admired, and with good reason—if only there were many like him.
And there are, but not so many. Or not enough. And one of the reasons
is that our mindset that it’s wrong to make money helping others somehow causes talent to flow mostly to the for-profit sector instead of the non-profit sector.
Not exclusive to the non-profit sector
And this way of thinking doesn’t just affect the non-profit sector. For instance, when it comes to music, film, and piracy, you’ve probably thought about or heard criticisms leveled at a singer or filmmaker who, say, makes a song or movie advocating social justice or a similar topic and earns a lot of money, while at the same time defending their copyright and opposing piracy. People sometimes argue, to justify piracy, that what they should care about is having their work or message reach as many people as possible, and therefore they shouldn’t expect to make money or be against people accessing it for free through piracy. Something that isn’t demanded as much from those whose work lacks such a message, by the way. But if we criticize our favorite artist for seeking compensation for the work we love so much, we are once again discouraging them from doing it. And so history repeats itself: earning money by doing something good becomes a reason for criticism.
Another example would be how we frown upon the high salaries of our politicians, and looking at their performance, we have good reason to do so. But where does the idea of well-compensated political representatives come from? Originally, political offices were unpaid to uphold their altruistic nature. But in practice, what happened was that only the upper class, with their needs already met, could afford to dedicate themselves to it, which made political work biased to say the least, and certainly unrepresentative. When the salary incentive was introduced, it wasn’t done to take advantage of the system, but so that people who weren’t from the nobility or aristocracy could devote their time to political representation and take part in decision-making. That’s why I agree that politicians should be paid and, given their responsibility, they should be paid well. Mind you, punishment for fraudulently using their office and power should be swift and exemplary, unlike today… But what is clear is that, “in theory,” political work is fundamental to the well-being and progress of society, and therefore it should be compensated. This doesn’t mean a good salary guarantees talent—just look at the current landscape. But the idea and approach keep recurring. If we demand low or non-existent salaries for our politicians, we would be making the same mistake all over again, perhaps driving talent away once more.
This is an issue that surfaces time and again in our economic and value systems, and it’s worth discussing. Imagine the opposite: a job or task no one wants to do because it poses a moral dilemma. There are plenty. Surely one comes to mind. The system needs it done, but can’t find many applicants—or none at all—so it offers high compensation to get someone to fill it. Nobody wants to do it, so you have to pay well to convince someone to take the job. Which brings us back to the same premise: we agree on paying well to someone who has to do something morally questionable, yet we question someone earning money by doing good.
Even so, there are many exceptions
There are countless examples of the flaws our system has in this regard. And by this, I don’t mean that you can’t make money doing good. If there’s one good thing about the capitalist system, it’s the system of incentives and rewards.
And don’t get me wrong. I won’t be the one here defending capitalism, its excesses, and its rampant greed. But the truth is that thanks to its incentive system, countless benefits and breakthroughs have been achieved for humanity. Sometimes accessible only to a few, and other times accessible to all. There’s the previous example of the surgeon, but we also know of endless technological and scientific advances that have improved our living conditions, along with many other examples. Whether we like it or not, in many cases the pursuit of that financial incentive is what prompted or facilitated those advances and improvements.
A double standard
Why is it, then, that when it comes to a product or something tangible we don’t make moral judgments, but when what is being sold to us is help, affection, care, protection, love for others, etc., we as a society impose the rule that this often beneficial incentive and reward cannot exist when the for-profit sector uses it to do good things?
Perhaps simply because one sector is for-profit and the other is not. And that’s one of the things where I don’t entirely agree with Dan Pallotta. He argues for enabling dividends and access to investors in the non-profit sector. He says the sector misses out on an enormous amount of funding, and he’s not wrong. But let’s remember that this is the non-profit sector, and it is for a reason. This may seem like a contradiction to what I supported earlier, and perhaps it is, but it’s the only difference between a non-profit organization and a company that solves a social problem—and they do exist.
I agree with incentivizing people to dedicate their effort, talent, and skills to the non-profit sector, but not so much with paying back more money than they put in. I believe a non-profit organization needs to be effective in growing its capital and therefore its capacity to act, but always to channel it toward furthering its goal; and if that requires incentivizing others to devote their time and talent to it, I agree, but not so much to incentivize those who, from the comfort of their homes, might invest in weapons for conflicts they wish to prolong while simultaneously investing in building the hospitals that those very weapons ended up destroying.
Contradiction?
I’m not sure if this last point isn’t a contradiction on my part. If those investments increase the organization’s capacity to act, following my earlier stances, perhaps I shouldn’t care about the morality of the people behind them. After all, even if their other actions are negative, this specific one is positive… Should we refuse to accept it if doing so makes it harder to achieve our purpose of helping others? Maybe not, or maybe so. Perhaps if we reject that money, it will flow to an even more questionable destination. But would we also justify an organization raising funds for refugees fleeing war while simultaneously partnering with banks that invest in the very weapons causing that suffering? Perhaps the ideal approach in these cases is to filter who you collaborate with and who you don’t. And as complicated as it may be, at least draw a red line.
This can generate many contradictions, and what is clear is that it is very difficult not to fall into them. What matters in my opinion is setting at least some red lines, and considering the pros and cons of Dan Pallotta’s arguments, this is where I draw them, for now and as of today.
Regardless of what I think here and now, I believe what is truly positive is delving deeper once again and analyzing our ethical and moral judgments on the matter.
Just as I call for rethinking our morality in favor of non-profit organizations, this by no means implies they shouldn’t be scrutinized. In fact, in other aspects, I support exercising stricter oversight, judgment, and accountability over them. When a charity commits fraud, it seems far more serious to me than when a pyramid scheme company does it, for instance. Both have deceived their “supporters,” but deceiving or playing on people’s greed is one thing, and doing so with their goodwill is much worse. While both are reprehensible, one is functionally and morally more harmful.
Let’s take it step by step
Rethinking all of this doesn’t solve everything, but at least steps are being taken toward improvement. And from these reflections, a path forward opens up in the search for that solution—which is ultimately what makes Pallotta’s approach so compelling, whether you agree with him or not.
He hits the nail on the head to open the debate and spark a much-needed reflection. This is mine as of today, but it is not the same as yesterday’s, and I am open to changing it tomorrow.
For those of you who have made it this far reading, here is Dan Pallotta’s latest TED talk, “The dream we haven’t dared to dream,” as a “prize.”
(You can watch it with Spanish subtitles in the video settings)