The Problem With Non-Profits: A Reader's View

We’ve said it before many times: the best feature of this blog is its readers. Case in point is a recent e-mail from one Chris Markl. It concerns philanthropy, a topic we’ve covered in various ways before on this blog: the economics of street charity; conservative vs. liberal giving; the efficiency of Smile Train; and most recently, Penn State’s THON fund-raiser.
Chris’s note is essentially a plea for everyone to read a book on the topic that illustrates what he sees as a huge barrier to efficient philanthropy.
We don’t usually publish unsolicited mini-book reviews, but this one seems worthwhile.

Hello,
I am writing to suggest a blog topic about a book I recently finished reading called Uncharitable [by Dan Pallotta]. Uncharitable concludes that the constraints society places on non-profits leave them unable to solve the great social problems of the world. The book argues for the capitalization of philanthropy, including: competitive wages to attract the best applicants, increasing spending on advertising to build demand for philanthropy, and allowing investors to purchase stocks in non-profit organizations so philanthropy is not capital barren.
One of the key points of the book is that the method we currently use to evaluate charities, through efficiency ratios, provides no information about the effectiveness of an individual charity and leads an organization to focus exclusively on the short term (at the cost of long-term planning) and develop extreme risk-averse preferences (which leaves them unwilling to take risks which could lead to innovations).
The book has been reviewed by Nicholas Kristof and in The Economist. There is also a companion site for the book.
I’m not a publicist and I’m just a 28-year-old who has seen the adverse effects of constraining charities through creating my own large-scale fundraisers (yesride.org), and through being priced out of the non-profit market because of the extraordinarily low wages.
If desired, I will use my limited community college teaching income to purchase and send you a copy of Uncharitable from Amazon; this is how much I believe in this book.

I appreciated Chris’s generous offer, but he easily persuaded me to buy it for myself.