September 9, 2014
The Ice Bucket Challenge Won’t Solve Charity’s Biggest Problem
I love the Ice Bucket Challenge. Period. It’s a collective expression of love in a world with far too little of it. It has generated public tears in an age with far too few of them. It restores faith. It connects. And, as of last week, it raised more than $100 million for the Amyotrophic Lateral Sclerosis Association, up from donations of $2.8 million for the same period last year.
So, are we looking at the future of charity? We are glimpsing the potential of momentary collective engagement, but at the same time, we are seeing the confining rules by which nonprofits must play, collectively imprisoned in an ancient way of thinking. The ALS Association is already being scrutinized to make sure it doesn’t spend a penny of the Ice Bucket money on anything but research. So when the enthusiasm fades, there will be nothing there to replace it, because investment in the replacement was forbidden.
I love the Ice Bucket Challenge as a thing unto itself. But for the sake of the ALS Association and everyone afflicted with ALS, we must dedicate ourselves to something far greater – yes, far greater than $100 million. We must aspire to a statistically significant increase in charitable giving as a percentage of GDP. And for that to happen we need to give charities far more freedom to invest in that result.
Charitable giving in the U.S. was $335 billion in 2013, but only about 15% of that, or $50 billion, went to health and human services causes – 85% went to religion, higher education and hospitals. $50 billion isn’t near enough to cure cancer, ALS, AIDS, Alzheimer’s, and other threatening diseases. It’s not enough to end poverty, homelessness, bullying, and all of the other problems charities address.
Charitable giving has remained stuck at 2% of GDP in the U.S. ever since we started measuring it in the 1970s. In forty years, the nonprofit sector has not taken any market share away from the for-profit sector.
What keeps us from increasing charitable giving? We are inherently averse to seeing humanitarian organizations spend money on anything other than “the cause,” as we define it, and we define it very narrowly. We condemn them for using donated resources on building market awareness or on fundraising, even though without those things, they can never reach the scale we need to fully address these massive social problems.
Without a systemic way to raise money and also build market awareness of its causes, charities have to pray that a fluke like the Ice Bucket Challenge – a zero-cost, once-in-a-lifetime, spontaneously combusting viral idea – will come their way. This is no way to change the world. Imagine if Tim Cook had to get people to dump ice on their heads in order to bring revenue into Apple – and had to figure out a new idea like that every six months – with an R&D budget for hatching it of precisely zero, to boot. Apple’s revenues are close to $50 billion every quarter – equal to the entire annual budget of the entire U.S. health and human services charitable sector.
The humanitarian sector has been taught to settle for scraps. The $100 million-in-two-months Ice Bucket Challenge is our highest-profile success in years. Compare this to what some companies can make in a day: Apple sells $465 million worth of iStuff every single day. And Anheuser Bush sells$40 million worth of beer daily.
Predictably, the sector is all abuzz now with Ice Bucket fever, and organization after organization is scrambling to figure out how to create its own version of it. That’s not the future. It’s how we’ve always done things. We look for the get-rich-quick-and-easy-scheme because we think that’s what donors want. Meanwhile, we are largely blind to the deep strategic and systemic issues that keep us scrambling for the next Ice Bucket Challenge.
For an audience hell-bent on promoting sustainability, we have a strange addiction to things that are not. The Ice Bucket Challenge is not sustainable, not for ALS and not for the sector as a whole. Zero-cost fundraising ideas that spring up from out of nowhere and require virtually no investment are not sustainable because they rarely happen, and relying on them won’t result in the world we truly seek.
Ice melts. The big play here is a wholesale re-education of how the American public thinks about charity. We did it with pork (“the other white meat”), we did it with gay marriage, and we can do it with charity. We need an Apollo-like goal that challenges America to increase charitable giving from 2% of GDP to 3% of GDP within the next ten years – and this, in large part, means allowing charities to make the investments in growth that they need (and not withholding donations because we disagree about what those mean). That would amount to an extra $160 billion a year. That’s the future of charity.
The Ice Bucket Challenge shows us that the human heart wants to be engaged. Now it’s time to invest in sustaining and increasing that engagement. If you really want to challenge yourself for ALS and for charity at large, challenge the long-held belief that charities should not be able to invest a healthy part of your donation in growth, the same way that beer and cosmetics companies do every day.
by Dan Pallotta