Dan Pallotta, Con Artist

For some reason, the subject of Dan Pallotta came up again on Twitter. You may have seen his very popular TED talk, or read his remarks on the subject of charity at Huffington Post, which largely echo his TED talk. The bottom line seems to be that Pallotta thinks charities should be more like corporate America in their drive, pay for employees (particularly executives), and willingness to expand. That is to say, he represents virtually everything I have railed against when it comes to large charities, converting vices into virtues by mere rhetorical dodges. As Charity Navigator executives Ken Berger and Robert M. Penna wrote (also in HuffPo),

No one can dispute the fact that Dan Pallotta is a good pitch man, is certainly effective at selling himself, and can convey his message quite convincingly. We believe his message has gained tremendous popularity for one simple reason -- he ultimately is arguing that charities should be held to virtually no accountability standards. Yes, we know Dan says people should look at results rather than overhead; but if you look under the hood for details, there is little in his argument on exactly how to go about measuring those results. For example, he speaks of vague notions such as "Charity is in the business of inspiration, so it is particularly problematic for charity that the value of inspiration is not measured;" and "it is not a matter so much of what we must do as what we must stop doing," yet at the same time he implicitly -- and sometimes explicitly -- justifies doing away with most clear standards of accountability. Unfortunately, it is evident that this is music to the ears of many leaders in the charitable sector. Indeed, many of them seem drawn to the notion that if they follow the Pied Piper of Zero Accountability, they can basically do whatever they want and get paid millions while waving the flag of Pallotta's books and TEDTalk.

Jennifer Amanda Jones in Nonprofit Quarterly penned a point-by-point takedown of Pallotta's arguments a couple years ago, from which I excerpt her last and strongest point:

Pallotta’s argument: The percentage of an organization’s total budget spent on overhead is not a good measure of effectiveness.

Buchanan’s response: Buchanan agrees that overhead expenses are not necessarily a good measure of overall effectiveness. But, at the same time, argues that overhead is an important measure to pay attention to. “Donors have a legitimate interest in understanding what proportion of their dollars ends up in the hands of for-profit fundraising professionals. A recent, widely discussed investigative report by The Tampa Bay Times and the Center for Investigative Reporting (CIR) identifies “America’s Worst Charities” on the basis of the proportion of funds raised that were paid to for-profit solicitors. (Topping the list is the “Kid’s Wish Network” which raised nearly $128 million over the past 10 years—$110 million of which went straight to the solicitors they hired to raise money!)”

Pallotta demands donors close their eyes to potential problems, should cease to care about who is helped and how many, and his airy assertions about "inspiration" will make up for it all. That's hardly comforting. If he wants charity to be run more like business, he also needs to recognize that businesses are obliged to satisfy their customers or fail; with charities, no equivalent feedback loop exists in the absence of oversight.