I just finished reading the Essay by Dan Palotta in the Wall Street Journal entitled Why Can’t We Sell Charity Like We Sell Perfume?. The gist of the article is clear by the title. While I could argue each one of his specific points, the bottom line is that I think the article fails to recognize the unique dynamics of the three major sectors; private; nonprofit; and public (government) and just as importantly people’s expectations of them.
I think what the author is really asking is “Why doesn’t the nonprofit sector operate/behave more like the private sector?” The answer is that the currency each of these two sectors values is entirely different.
The Nonprofit currency – is the trusted source relationship
The For profit currency – is the bottom line
So when after 9/11, when the Red Cross made a completely logical BUSINESS decision to take some of its 9/11 donations and put them aside for the next crisis — it caused a scandal resulting in the removal of the ED and a reshuffling of its board.
WHY? Because the people donating didn’t value the bottom line business decision but rather THE TRUST they put into the Red Cross to use everything they gave for the 9/11 crisis — even if it wasn’t needed for that crisis.
The nonprofit sector is designed to satisfy the more ethical, spiritual, moral, selfless side of our lives and the trust we have in our fellow people.
The private sector satisfies our more tangible and selfish needs – for creature comforts to make our lives easier, more comfortable and subjectively satisfying.
Given the different objectives of the two sectors, it is reasonable to understand why they’d work differently. That doesn’t mean you can’t adapt certain strategies between sectors, but you have to first appreciate the different dynamics of the two to do this effectively. Otherwise you stumble into the Red Cross conundrum.
The author could have written another article asking why the government doesn’t operate as a business. The answer would be that the government’s responsibility is to protect/fulfill the needs of ALL ITS CITIZENS while a business is committed to meeting the far narrower desires of its consumers and bottom line requirements of its investors. In a perfect world the private sector and government should work complimentarily and not exactly like each other (just as the private and nonprofit sector do) – one is the engine of the economy and the other regulates and protects all our interests so the engine doesn’t overheat and explode in our collective faces.
Jonathan Peizer is the Principal of Internaut Consulting supporting foundations, nonprofits, governments and socially responsible private sector initiatives. He is the former CIO/CTO and Director of the Open Society Institute’s Global Internet Program.