Book review: “Uncharitable: How Restraints on Nonprofits Undermine Their Potential”

by Dan Pallotta

For 14 years or so I held leadership positions at various nonprofit organizations in the UK and US. Had I been given a dollar each time a donor asked me THE overhead question, I would be a rich man today. From the onset of my nonprofit career, I was struck by the focus on so called “overhead” and the often-crude reductionist arguments put forward to demonize charities for investing in their long-term success. Instead of asking about impact, sustainability, aspirations, too many donors focused instead on an arbitrary “admin” percentage to determine whether the organizations I worked for were worthy of support. Only this week, I was contacted by a nonprofit CEO trying to grapple with this issue of overhead and how to approach the issue transparently with his donors when “the competition” insisted on using gimmicks and “GIK” to hide the real cost of doing business. If you find yourself on either end of this discussion, purchase yourself a copy of UnCharitable by Dan Pallotta.

“Uncharitable”; serves as a powerful critique of our society’ s deeply-rooted perceptions and beliefs about charitable organizations. Dan Pallotta, an entrepreneur and activist known for his innovative thinking in the world of philanthropy challenges the traditional paradigms surrounding charity work, making a compelling case for a radical rethinking of how we measure the success of nonprofits.

At the core of Pallotta’s argument is the idea that society holds nonprofits to different, often unrealistic standards compared to the for-profit sector. While businesses are encouraged to spend on advertising, take risks, and prioritize revenue generation, our nonprofits are frequently criticized for these very same practices. While I personally don’t want to see nonprofits adopt all of Corporate America’s approaches, and while I recognize there are thankfully fundamental differences between our two worlds, Pallotta posits rightly that this double standard hampers the potential of charities, constraining their growth and impact.

One of the book’s standout features is its exploration of the history of charitable acts, tracing back the origins of our collective beliefs about philanthropy. Pallotta delves deep into the Puritan ethics that have shaped American views on charity, revealing how age-old beliefs may not be serving our modern world’s needs.

The book is also peppered with Pallotta’s own experiences in the nonprofit world, notably his involvement with multi-day charitable events that raised significant funds but also drew criticism for their overhead costs. These personal anecdotes serve to highlight the broader issues he discusses, grounding his theoretical arguments in real-world examples.

To be clear “Uncharitable” is undoubtedly provocative, you won’t agree with everything Pallotta says, I personally don’t. Some of his ideas may be challenging to fully embrace. His arguments for allowing nonprofits to operate more like businesses, including spending more on overhead and advertising, are important however in changing how we all think about overhead costs.

This book is a must-read for anyone involved in or passionate about the nonprofit sector.

Whether you find yourself nodding in agreement or shaking your head in disbelief, Dan Pallotta’s insights will undoubtedly spark essential conversations about the future of philanthropy and the potential of charitable organizations. By challenging the status quo, Pallotta invites us to envision a world where nonprofits are unleashed to make transformative change on a scale we’ve yet to see. Once you’ve read the book, make sure your staff, volunteers and board members have read it.

If you’re a nonprofit leader, you should absolutely make sure to spend every dollar diligently and efficiently in service of your mission. Where you have unnecessary expenditure you should aim to cut it, and when you invest in growth you should of course be focused on getting a big bang for your buck. Once you’re happy with your investments and organizational budget however, you have two options ahead of you regarding the issue of overhead costs. You can try and hide the real cost of operating a competent, healthy, sustainable, and impactful organization, or you can be confident and proud of your numbers. Regardless of how others around you are behaving, you should instead set out on a path to educate your current and future supporters and become part of this important movement to change how we all think about charity.

Review by Oussama Mezoui