The Everyday Philanthropist

CHAPTER 28It's Time to Rethink Charity

For well over a decade, it's been popular to preach to charities that they should act more like businesses, but the truth is, society won't permit it. What we mean by “act more like business” is really “focus more on lowering overhead”—the opposite of what it takes to grow a successful business.

The nonprofit sector remains tightly constrained by a set of irrational economic rules handed down to us through the ages—rules that discourage profit, self‐interest, serious marketing, risk‐taking, and long‐term investment for growth. These rules work against the sector on every level, and they have been elevated to the status of “ethics.”

The nonprofit sector is in an economic prison, and the for‐profit sector roams the economy free as a bird. The very system we have established for rectifying inequity in society is treated inequitably—across every meaningful domain.

We let the for‐profit sector pay competitive wages based on value, but have a visceral reaction to anyone making a great deal of money in charity. We let people make a fortune doing things that will harm the poor, but want to crucify anyone who wants to make money helping them. This sends the top talent coming out of the nation's best universities directly into the for‐profit sector, and gives our youth mutually exclusive choices between doing well and doing good. It's not sustainable, ...