Source:Nicholas D. Kristof, http://www.pasadenastarnews.com
Nicholas Kristof: What's the sin in profiting from good deeds?
is that charity or greed? Do we applaud or hiss?
A new book, "Uncharitable," seethes with indignation at public expectations that charities be prudent,
nonprofit and saintly. The author, Dan Pallotta, argues that those expectations
make them less effective, and he has a point.
Pallotta's frustration is intertwined with his own history as the inventor of fundraisers like AIDSRides and
Breast Cancer 3-Days - events that, he says, netted $305 million over nine years for
unrestricted use by charities. In the aid world, that's a breathtaking sum.
But Pallotta's company wasn't a charity, but rather a for-profit company that created charitable events.
Critics railed at his $394,500 salary - low for a corporate chief executive,
but stratospheric in the aid world - and at the millions of dollars spent
on advertising and marketing and other expenses.
"Shame on Pallotta," declared one critic at the time, accusing him of "greed and unabashed
profiteering." In the aftermath of a wave of criticism, his company collapsed.
One breast cancer charity that parted ways with Pallotta began producing its
own fundraising walks, but the net sum raised by those walks for
breast cancer research plummeted from $71 million to $11 million, he says.
Pallotta argues powerfully that the aid world is stunted because groups are
discouraged from using such standard business tools as advertising,risk-taking, competitive salaries and profits to lure capital.
"We allow people to make huge profits doing any number of things that will hurt the poor,
but we want to crucify anyone who wants to make money helping them," Pallotta says.
"Want to make a million selling violent video games to kids?
Go for it. Want to make a million helping cure kids of cancer? You're labeled a parasite."
I confess to ambivalence. I deeply admire the other kind of aid workers,
those whose passion for their work is evident by the fact that they've gone broke doing it.
I'm filled with awe when I go to a place like Darfur and see unpaid or underpaid aid workers
in groups like Doctors Without Borders, risking their lives to patch up the victims of genocide.
I also worry that if aid groups paid executives as lavishly as Citigroup does,
they would be managed as badly as Citigroup.
Yet there's a broad recognition in much of the aid community that a major rethink is necessary,
that groups would be more effective if they borrowed more tools from the business world,
and that there is too much "gotcha" scrutiny on overhead rather than on what they actually accomplish.
It's notable that leaders of Oxfam and Save the Children have publicly endorsed the book,
and it's certainly becoming more socially acceptable to note that businesses
can also play a powerful role in fighting poverty.
"Howard Schultz has done more for coffee-growing regions of Africa than anybody I can think of,
" Michael Fairbanks, a development expert, said of the chief executive of Starbucks.
By helping countries improve their coffee-growing practices and brand their coffees,
Starbucks has probably helped impoverished African coffee farmers more than any aid group has.
But sometimes, so do the suits. Isaac Durojaiye, a Nigerian businessman,
is an example of the way the line is beginning to blur between businesses and charities.
He runs a for-profit franchise business that provides fee-for-use public toilets in Nigeria.
When he started, there was one public toilet in Nigeria for every 200,000 people,
but by charging, he has been able to provide basic sanitation to far more people than any aid group.
In the war on poverty, there is room for all kinds of organizations.
Pallotta may be right that by frowning on aid groups that pay high salaries,
advertise extensively and even turn a profit, we end up hurting the world's neediest.
"People continue to die as a result," he says bluntly. "This we call morality."
Nicholas D. Kristof is a columnist with The New York Times
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