From My Bookshelf: The Everyday Philanthropist – A Better Way to Make a Better World by Dan Pallotta

According to Dan Pallotta’s book, “The Everyday Philanthropist – A Better Way to Make a Better World”, each one of us is a philanthropist when we demonstrate love for others by making an investment in the quality of their lives, no matter the amount. The term “philanthropy” is not simply reserved for the ultra-wealthy or large, institutional foundations. It can apply to everyone, including you and me.

So if everyday people can look in the mirror and say “I’m a philanthropist”, we should all have some guidance for smart, impactful giving, right?

For a full guide, I encourage you to grab a copy of Dan’s book. It’s a quick, easy, and enjoyable read. But if you’re not interested in “adding to cart”, keep reading here for my thoughts and takeaways.

Pallotta points out in his book that of the $480B given to nonprofits annually in the US, only a small portion of that (~13.5%) goes to health and human services organizations. Most of the nonprofit philanthropy “pie” goes to hospitals, higher education, museums, the arts, and religious institutions. Though that 13.5% may still sound like a lot of money, it only goes so far with trying to move the needle on the large social, health, and climate issues to be solved. Keep in mind that there are ~1.5M nonprofit 501(c)3 organizations in the US according to the latest report by Candid.

With all of that said, if you’re giving in an effort to make a difference, how you give matters.

It’s the end of the year and typically folks begin thinking about end of year giving if regular giving isn’t already part of their way of life. Some people give regularly to their religious institution through regular tithes or donations. Others give annually to their college alma mater.  Some focus their giving during specific times of need, such as a GoFundMe for an ill friend or to the Red Cross during a major natural disaster.

Here are some considerations for you to ponder as you think about what organizations you may want to support with your end-of-year or “anytime” donations:

(1) Your Cause

Unfortunately, we live in a world where there are many different social ills to be addressed. That means there is no shortage of causes that you can support. You may be passionate about donating to organizations that support specific populations often underserved (e.g. – women and girls, people with disabilities, certain ethnic groups, aging/seniors, veterans, farm or companion animals, etc.) or specific causes (e.g. – chronic diseases like dementia and cancer, exposing and encouraging youth to pursue STEM careers, rallying certain populations to get out and vote). What’s *your* cause? What area are you most passionate about?

(2) Acute vs. Chronic Issues

Once you’ve chosen that cause that you’d like to support, there are additional considerations, such as the organization’s approach to solving the particular problem they are addressing. There are some organizations and “giving opportunities” that are focused on issues in the here and now such as a GoFundMe for your young cousin’s treatments for sickle cell anemia.  On the flip side there are organizations that are focused on funding a cure for this disease that impacts over 100k people in the US and 8M worldwide (according to the NIH).  Which type of organization are you more interested in supporting – one focused on an immediate need or long-term solution? There’s no right or wrong answer. The choice is yours.

(3) Services vs. Solutions

Even when you’ve narrowed down the cause you’re most passionate about supporting and determined if you want to support short-term or long-term approaches, you will find that there are a host of organizations with different support strategies. Some organizations focus on direct services vs. other organizations which may be focused on long-term solutions. An example is a homeless organization providing temporary, emergency shelter to those in need vs. another organization that may be focused on long-term solutions and policies aimed at ending homelessness altogether. There are a wide range of support strategies. Direct services may be the area that comes to mind when you think of a charity or nonprofit (e.g.- a homeless shelter), but outside of direct services, approaches could include research, policy, advocacy and systems reform, capacity building, network-building…just to name a few.  Many organizations work on issues using more than one approach. What type of approaches are you interested in supporting?  Or does it even matter to you? Again, there is no right or wrong answer.

(4) What not to consider

Pallotta spends much of this book discussing the importance of NOT considering overhead ratios when determining what organization you’d like to financially support. If you are not one of the 5.6M people who’ve watched Dan’s 2013 TED Talk titled The way we think about charity is dead wrong, you might not be familiar with his important message around how nonprofits are rewarded for how little they spend -- not for what they get done. (If you’ve got 18 minutes, I recommend watching this talk.) Overhead is generally defined as a combination of “management,” “general,” and “fundraising” expenses (per the National Council of Nonprofits). Pallotta strongly states that neither the CEO’s salary nor overhead ratios can tell you as a donor about the impact the organization is making with your hard-earned dollars that you’re donating. 

He states “More often than not, to do a lot of good a charity has to invest more in overhead. The ones that tell you they have no overhead are probably not investing in training of their staff, the quality of their programs, their innovation, their growth (which is key to reaching everyone affected), or the other things it takes to do a lot of good and to do it really well.” I’ll let that one just sit there….

(5) Three questions to ask

So you’ve figured out the cause you want to support and may have narrowed down a few organizations that you think may be doing great work to help move the needle. We’ve talked about what NOT to consider (overhead ratios and CEO salary), but what *should* you look into as you’re determining which organization(s) to support?  Pallotta suggests asking the following three questions:

(1) What are your goals?

(2) What progress are you making toward them?

(3) How will you improve?

I think these are great questions.  Stay tuned for my next article where I’ll share more insights from his book on *how* to find the answers to these questions.

In the meanwhile, I encourage you to take a little time to think about how you’d like to make an impact on the world as you consider your personal role as a philanthropist.