Dan Pallotta Attempts to Change the Nonprofit Sector Narrative With ‘Uncharitable’ Movie

“When people say you can’t change the way people think about charity, I think, ‘Oh yeah? Watch,’” Dan Pallotta said in the teaser of his new film, “Uncharitable,” which is coming to select theaters in the fall. 

Pallotta, the founder and president of Charity Defense Council, screened the movie — based on his book of the same name and his 2013 Ted Talk — last night in Philadelphia to kick off the Classy Collaborative. 

The movie — which was 100% funded by private donations — features Tom Tierney, chairman and founder of Bridgespan Group; Darren Walker, president of the Ford Foundation; as well as various current and former nonprofit leaders.

The movie highlights five areas where nonprofits are discriminated against in ways for-profit companies are not. Between regulation and public perception, the nonprofit sector has been held back because nonprofits are harshly criticized if they pay competitive salaries deemed too high for a nonprofit, or allocate revenue to advertising to both increase donations and impact over time, among others.

To illustrate the media firestorms that have attacked nonprofit overhead, he shared the downfall of his own company, Pallotta TeamWorks, an event organizer for nonprofits until 2002, which has become a case study for the Harvard Business School. Other examples of unfair criticism include the salary for the Boys and Girls Club of America’s CEO being paid too much, the Wounded Warrior Project spending too little on veterans, and Invisible Children spending too much on advertising.

After the screening, Pallotta joined the audience via Zoom for a Q&A session. Here are a few highlights from what he had to say. 

How Can Nonprofits Change the Narrative for the Nonprofit Sector?

First, don’t try to change the entire nonprofit sector, Pallotta said. Start with your organization. 

“Charity begins at home, and changing charity begins at home, too,” he said “And so, don’t go anywhere until you have completely saturated your own ecosystem, and you have an ecosystem that is adhering to the principles in the movie — that is functioning fundamentally differently than it was before.” 

It’s not as easy as a simple phrase that will make people more trusting of the sector and its work, Pollatta said. Instead, it’s an in-depth process to create a donor, staff and board literacy program for your organization.

“And say, ‘Within the course of the next year, I’m going to completely change the way my staff [thinks], … I’m going to change the way my board thinks and I’m going to change the way all of my donors think,” he said.

Is It Better to Change Minds or Find Staff and Donors With the Right Mindset?

As he said in the trailer, Pallotta believes it’s possible to change people’s minds. He’s experienced it through past speaking opportunities on the subject. 

“People’s arms are a little folded. They don’t know what I’m about to say,” he said of his audience before his talks begin. “And an hour later, there are long lines, like [a] confession — ‘I’m so sorry. I didn’t mean to do this.’ If you’re persuasive, rather than assertive … absolutely I think we can change it. I think we can change it quickly.”

Is There a Limit to Overhead?

There is a limit in the sense that the spending must fulfill the mission. Pallotta pointed out frivolous purchases, like fancy office furniture, could fall into an area of excessive overhead spending. He asked which is better: a soup kitchen with low overhead and higher impact, or one with high overhead and a lower impact?

The overhead ratio, which was used against the Wounded Warrior Project, can give cover to organizations not achieving impact, he said. In other words, a nonprofit can have a very high overhead ratio (98% toward the cause, for example) but have very little or no impact compared to an organization like Wounded Warrior Project that was spending 60% of its budget on veterans at the time of the criticism. That equaled $148.6 million — a much higher figure than its peers.

“Every argument that I make must be in service of some audacious dream to create fundamental change,” Pallotta said. “In the absence of that, there’s no moral authority to spend more money on overhead or anything else.”

You can request a screening of the movie and watch the trailer here: