At first glance, Dan Pallotta’s recent essay in the Wall Street Journal made me cringe. The caption “Why Can’t We Sell Charity Like We Sell Perfume?” appears above the article text, beside an elegant model holding up a perfume bottle with an American Red Cross label emblazoned on it. But just as I prepared to disagree with everything Pallotta wrote, I noticed the subheading suggesting that philanthropies should operate more like businesses, paying for talent and advertising aggressively, so that “[m]aybe then capitalism could finally save the world.” Pallotta, an expert on philanthropic innovation, makes a compelling case for Americans to change how they think about social reform and how to best operate a charity, arguing that nonprofits should be able pay their key personnel competitive wages based on the value they produce, without being punished by donors who think low salaries for nonprofit employees are part of an ethical imperative. He also suggests that the deep disparity between nonprofit marketing and marketing in the rest of the economy is responsible for charitable giving remaining at 2% of GDP in the U.S. for the last four decades: “In 40 years, the nonprofit sector hasn’t been able to take market share away from the for-profit sector. But how can it if it isn’t allowed to market?” What is stunning about Pallotta’s argument for “selling” charity is his recognition of capitalism’s potential to innervate charity and change the world:
Business can’t solve all of the world’s problems. Capitalism can—but only if it is permitted in the nonprofit sector. If we free the nonprofit sector to hire the best talent in the world, take fundraising risks, use marketing to build demand and invest capital for new revenue-generating efforts, we could bring private ingenuity to bear on those problems and would not need to look to government to fill in the gaps.As the author himself points out, allowing capitalism into the nonprofit sector doesn’t so much require a change in our laws, but a change in the way Americans think. Changing the minds of Americans about the ability of competitive practices to energize charity and enable it to solve serious world problems may not fully “save the world,” as Pallotta suggests, but it might help save capitalism. By accomplishing social change that neither for-profits nor government could accomplish alone, a more competitive nonprofit industry might dispel notions about the amorality (or immorality) of capitalism, and help convince Americans that our present march toward democratic socialism is not the only path available. If that’s the case, many Americans might be even more “sold” on the idea of selling charity.