This fall, three moms at my daughter’s school were diagnosed with breast cancer. The news was surprising and upsetting. Of course I would express my support and drop off a meal, but I felt like I needed to do something more. Something bigger. Something to help them and other women diagnosed with this common disease.
As I was considering various options, I heard an ad on the radio for the Susan G. Komen 3-Day Walk. The walk raises money for breast cancer research and requires each participant to walk 60 miles over three days and raise at least $2300. Thousands of people participate and the logistics are complicated. Two nights are spent in giant tent cities, where walkers eat, take showers in portable shower trucks, receive first aid, and sleep. The advertising for the event rivals any major marketing campaign using radio, TV, print and Internet ads.
Before I registered, I thought about the logistics and the advertising – it was a lot. That stuff is really expensive. Was it right to ask my closest friends and family members to donate to a cause where their money might be used to pay for my pasta dinner instead of scientific research? Would I be better off holding a small fundraising luncheon at my house and donating all the money to local research efforts?
Then I thought about Dan Pallotta, the founder of the 3-Day Walk, and the author of the book, Uncharitable. Uncharitable is based on Dan’s experience operating the 3-Day Walk and a response to criticisms leveled against him and major fundraising events.
Dan argues that our society places many constraints on non-profits that we would never consider placing on business. In brief, these limits include:
1) Limiting employee compensation to well below the private sector;
2) Limiting money spent on advertising and marketing;
3) Discouraging risk taking and therefore preventing innovation;
4) Preventing long-term investment by demanding immediate results;
5) Prohibiting profit-making.
According to Dan, these limits arise from the Puritanical idea that charity is about helping others while business is about helping yourself. In other words, economic self-interest is allowed in business, but not in nonprofits, and these constraints limit the effectiveness of charitable organizations.
Dan’s discussion of limiting advertising and fixating on overhead costs seemed most relevant to my decision.
Businesses are allowed to use advertising to maximize consumption, and blanket advertising is common. Meanwhile, nonprofits are strongly discouraged for “wasting” money on advertising. This pressure not to advertise exists even where a $50,000 newspaper ad brings in $500,000 in contributions. Instead of one moral dictate – that advertising is wrong – nonprofits should use cost-benefit analysis to make advertising decisions, Dan argues.
With respect to the 3-Day Walk, Dan provides the advertising costs and benefits for the 2001 Seattle event. That year, approximately $650,000 was spent on advertising. The event brought in more than $8.7 million dollars and netted more than $4.95 million. These numbers suggest a very strong return on advertising investment, but this ROI is not apparent to the person who notices the abundant ads.
In addition, Dan argues that advertising allows nonprofits to build demand for their products. Advertising, which generates interest in nonprofits, can result in more money to put toward the solution in the long run.
Fixation with overhead and fundraising cost ratios
Many donors are concerned with the percentage of the donation that goes toward programming. These fundraising cost ratios are appealing because they are easy to acquire and have been promoted by many charity watchdogs and emphasized by the media.
Dan argues against focusing on this ratio because this measurement is not an indicator of likelihood of long-term success. Instead, Dan argues, we should focus on a different question: How well is the nonprofit serving its mission? In other words, as Dan says, an efficient fundraising operation does not necessarily mean good program operation.
Dan’s further arguments address my concerns directly. First, he notes, it is more expensive to produce events on a large scale than on a small scale. Big groups of participants require large-scale logistics. Second, the fundraising percentage statistic ignores the intangible benefits like raising awareness or inspiring people. Finally, there is a value to raising money quickly. The sooner donations come in, the sooner research can be funded and lives can be saved.
In all, Dan believes we need to allow nonprofits to apply the ideas of capitalism in order to make them even more effective. In the end, he persuaded me. Yes, the advertising for the 3-Day Walk is extensive, but it is building awareness and demand for the cause. And yes, the money I raise might go toward Gatorade or band-aids, but collectively, the walkers are providing a great infusion of money to breast cancer research. Probably much more than if we each just wrote a check or held a small fundraiser.
So, I registered for the 3-Day Walk. This big endeavor felt commensurate with my passion and concern, and Dan’s arguments addressed my hesitations. Now the only question is: Would you like to meet up for a walk?
— Sherri Wolson
The Uncharitable web site: http://www.uncharitable.net/
Sherri’s 3 Day Walk page: http://www.the3day.org/site/TR/2012/General?px=1141408&pg=personal&fr_id=1769