My Thoughts on Dan Pallotta’s “The Way We Think About Charity is Dead Wrong”- Part 4: How Time is Viewed in Non-Profit vs For-Profit

Today I’d like to discuss the fourth point which Dan Pallotta addresses in his “TED Talk”: “The Way We Think About Charity is Dead Wrong” (you can find the video here in case you haven’t seen it: ), which is that there are different expectations for non-profits versus for-profit companies, in terms of how much time a company is allowed to invest in a big idea. 
Dan states that in the for-profit world, it is understood that (for example, with a new company), in the first few (or more) years, the company may not be able to return any profit to its investors. The investors understand that there is a long-term objective down the line, and are willing to be patient in order to “reap their rewards”. However, Dan asserts, if a NGO wanted to invest in a major project that would require that for several years no money would go to the cause, “we would expect a crucifixion” (DP). 
The non-profit world is structured in a way that we cannot invest funds into a big idea; the money must be distributed immediately to the cause. This is a very tricky situation, and I don’t think there is an easy answer. The only thing I can think of is, perhaps NGOs can be allowed to set aside some funds each year in order to eventually fund their big idea … although by then it may be too late …. 
Anyone out there have a suggestion or advice for this conundrum? 
Chava Ashkenazi
Jerusalem, Israel  
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4 Responses to My Thoughts on Dan Pallotta’s “The Way We Think About Charity is Dead Wrong”- Part 4: How Time is Viewed in Non-Profit vs For-Profit

  1. Fred says:

    One major difference is that investors in the for-profit world are willing to wait for a long time because the ‘financial rewards’ will be coming to themselves (yet they still will want info about the progress)… Investing in a non-profit project is investing in somebody else and thus the motivation for waiting is a lot less… (especially if there are no intermediate developments visible).

  2. chavaleh1127 says:

    Fred, you are absolutely right! Do you work in the non-profit field? Do you have any suggestions as to how non-profits can find a way to convince their donors to invest in long-term projects? Perhaps, as you say for the for-profit world, donors should be kept up to date on the progress of the projects with regular reports?

  3. Fred says:

    As for the need to report back to the donors regularly, that’s a definite yes! But because there is no financial gain involved for the donor, the trust built between the NP and the donor is also of major importance.

    • chavaleh1127 says:

      Excellent point! Trust is very important between the NP and the donor, especially when they wouldn’t see the immediate fruits of their donation. So that would lead me to conclude that it would be better to approach donors that are already “established” with the organization for this type of project, rather than new/potential donors.

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