Giving When It Hurts: Rethinking charity in the midst of an economic crisis

Is this really the best way to do things? Several critics have recently been asking this and other hard questions about what some have dubbed “the nonprofit industrial complex”—the $300 billion-a-year sector of the economy that encompasses everything from art museums to private colleges to local food shelves. Reform-minded critics come from both right and left, with proposed remedies that range from mildly corrective steps to a fundamental makeover of the system. Here are some of the big ideas that are being floated.

Free the nonprofits. Some charity reformers think nonprofits are hobbled by government regulations that limit expenditures in areas such as advertising, marketing, and executive salaries and should be unleashed to do their good works under a free-market model.

“It is about freeing charities—and all of the good people who work for them—from a set of rules that were designed for another age and another purpose, and that actually undermine their potential and our compassion,” writes Dan Pallotta in Uncharitable (Tufts University, 2008).

Pallotta is a real-world innovator in mixing good works and business, having run a for-profit company that funneled money to nonprofit charities through two big events, AIDSRides and Breast Cancer 3-Days. He is also no stranger to controversy, having endured withering criticism for high overhead, relatively low returns, and his own $400,000 salary—the type of expense he argues nonprofits should be free to make to lure top talent.

The feisty grassroots activists in the group INCITE! Women of Color Against Violence are as suspicious of corporate influence as Pallotta is enamored of it. In the anthology The Revolution Will Not Be Funded: Beyond the Non-Profit Industrial Complex (South End, 2007; see excerpts on p. 44), INCITE! members push back against business culture’s intrusion into community organizing, arguing that foundation money with too many strings attached can co-opt or corrupt a once-fiery group. Donor pressure and government rules, they contend, make them a part of the flawed capitalist system and keep them from pushing for real reform: Fixing health care, for instance, is a matter not just of creating community-health programs but also of battling for universal health care.

Nonprofit reformer Robert Egger, while he’s less radical than the INCITE! crew, also maintains that nonprofits should be more politically engaged, as well as more organized (see “Ladling Soup, Raising Hell” on p. 41). His V3 Campaign, a nationwide network of nonprofit advocates, aims to strengthen their collective voice on public policy issues that affect them and their constituents.