(Note: The below article was approved for publication and sharing by Uncharitable movie director Stephen Gyllenhall of Upstream Pictures.)
Sharon, VT, August 30, 2023 — In Uncharitable, the soon-to-be-released movie based on a book of the same name, Dan Pallotta tackles one of the largest issues of our lifetime, of our country, of our world. The issue is how capital markets have evolved in relation to charitable “non-markets”. How businesses grow and thrive while charitable organizations struggle to find funding to pursue causes that will improve and save lives.
Dan reminds us that the nation’s founding fathers (yes, men) arrived from England with Calvinistic beliefs and the desire to conquer the New World to amass wealth. They plundered the peoples of the Americas and the land itself. Wealth creation evolved into the capital markets of today where companies and people in pursuit of profits have ready access to vast amounts of cheap or no-cost capital. But the religious beliefs and guilt of these early settlers pushed them to offer small amounts of money to charities, mostly run by women in the early days, to care for the poor and the infirm. Giving to charity seemed to assuage their guilt enough to allow them to continue to plunder and profit on the backs and lands of others.
Since then, not much has changed. As Pallotta highlights, today’s major corporations spend massive amounts of money on research and product development, sales and marketing. At twelve and a half percent of its operating budget, that means a company like Coca-Cola spends about $4 billion annually on marketing alone. Yet, the world’s ills have not been solved. Hunger is still with us. As are homelessness, cancer, mental illness, and environmental catastrophe. What do our capital market leaders do? They continue to throw relatively small sums of money at charitable causes. Presumably, this makes them feel better while their hand-picked charities benefit through support that, frankly, pales in comparison to the cash flowing to the businesses these capital market players operate. They spend the lion’s share of their overall asset base on investing and reinvesting in market entities that create wealth. Not those that save the world. They look to capital markets to raise massive amounts of money to start businesses that may or may not succeed. If they fail, they move on to the next venture. Eventually, they’ll turn a profit and pay shareholders and equity partners enough to do it again, and again. In the end, the capital markets take care of their own while private wealth creation continues. The nation’s charitable organizations scrape by with never enough financial support.
Pay a CEO of a Fortune 500 company tens of millions per year, plus stock options and bonuses? Wow, that’s our world’s definition of success. But pay the same wage to an executive director of a charitable land conservation organization that’s saving wildlife habitat, and making the region’s food systems and water quality more sustainable? Or another executive director whose charitable organization is saving tens of thousands of people from starvation? Or generating money for cancer research? Such a wage would be deemed preposterous, almost criminal.
Enter the true revolutionaries. These are the charitable and mission-driven crusaders everyone hopes will solve the ills of our world. Be it famine, illness, environmental disaster, climate change, social justice, or homelessness, these charitable missionaries are our real-life heroes. But they are heavily discriminated against by the very systems, entities, and people that created the world in which we now live. It’s nothing less than uncharitable.
Let’s discuss the charitable “non-markets”, as I’ll call them. Pallotta was burned by his desire to raise large amounts of capital to help charitable causes like AIDS and cancer research. He raised hundreds of millions, but in doing so, he had to spend tens of million to galvanize large numbers of people to come together to donate time and money to these worthy causes. Once the press learned of this spending on marketing, his primary funders balked and pulled their support. Why? Because society has evolved to believe only capital market entities have a right to raise and spend money freely to develop products or services and sell them. This social and economic blind-spot favoring massive spending by for-profit business over charitable causes led to an overall collapse of the considerable funding channels Dan had developed for research and development of cures for AIDS and cancer. Dan couldn’t hold an Initial Public Offering (IPO) in a stock market to raise capital, with investors willing to let him take years to build a product to cure cancer or AIDS, while investing vast sums in his organization. It’s not feasible. Unlike Amazon which took years to turn a profit, Dan was excoriated for spending too much to, in turn, raise vast sums of money for charitable causes. The middleman doing good things got burned by a national media that focused on historical conventions, not on forward-thinking needs.
This leads to the “pie theory” of fundraising for charities. What would be better, having $10 billion available to spend on research and marketing to reverse the effects of climate change, or $10 million for the same purpose? What if it cost $2 billion (20%) to raise that $10 billion versus $100 thousand (1%) to raise the $10 million? Is it better to have the bigger pie, with more spending to yield far more money to solve the problem, or a smaller pie, with far less spending yielding far less money to solve this overwhelming global problem? Or to focus more closely on the percentage, or cost per dollar raised, to the exclusion of total dollars raised?
I’m hard pressed to accept the conventional wisdom that suggests charitable organizations should limit their spending to raise money through marketing and fundraising mechanisms, also known as “overhead” as Dan so beautifully articulates, to some relatively insignificant portion of their overall operating budget. Instead, they should, like their capital market competitors, spend more to raise far more in donations to address today’s large, looming problems the capital market entities can’t or won’t tackle because the profit motive doesn’t allow for it. Greed seems intent on favoring wealth creation and not tackling social problems that have plagued our country since the Puritans landed with their Calvinistic beliefs and drive to accumulate more and more.
The competition for charitable organizations, as Uncharitable, the movie, reveals, is not other charitable causes trying to raise money from a finite universe of donors, but the capital market companies that grab mindshare through massive spending on marketing and advertising campaigns. If we had a worldwide marketing campaign by, let’s say, Apple, spending hundreds of millions to encourage people to buy the latest iPhone, nobody would blink. And people would buy the product, sending Apple stock soaring. But, if, let’s say, my own charitable educational cause, Vermont Law and Graduate School (VLGS), was to spend tens of millions of dollars to attract faculty and students to teach and learn how to change consumer behavior to move to a carbon zero lifestyle, or to recycle and re-use, or massively cut energy consumption through strong governmental policy creation, it would immediately come under scrutiny for excessive, some might say negligent, spending habits.
Of course, this won’t happen because VLGS doesn’t yet have tens of millions to spend. Yet if, as a result of this hypothetical massive spending, VLGS created thousands of acolytes who went out and changed the world, reversing climate change within a generation, we would celebrate its foresight and innovative success. But it might never get that far because financial advisors, foundations, and individual donors would be led to question its “questionable” spending habits. Again, the “pie theory” would come into play. In this case, and as Pallotta experienced, the media can be a cruel master when it follows the conventional wisdom of capital market superiority borne out of a national consciousness that discriminates financially against too much spending by charitable organizations to proote and market themselves and their missions.
And, yet, sometimes a charity does make an impact. Vermont Law and Graduate School for example, has spent the past fifty-years populating a small state with environmentally forward-thinking graduates, and, guess what’s happened? Today, Vermont is ranked the number one greenest state in the nation [according to Consumer Affairs, Wallet Hub and US. News]. VLGS alumnae/i as lawyers, lobbyists, legislators, policy-makers, community and non-profit leaders, parents, and good neighbors have taken what they learned at this best-of-class environmental law school and translated it to build a state that leads the nation in environmental and sustainable practices. Still, VLGS has had to do it on a shoestring of a budget, struggling to get the word out about its world-changing educational programs. It’s the epicenter of the environmental movement, with an Environmental Law Center, and its Maverick Lloyd School for the Environment that continue to send out crusaders intent upon implementing policies and programs to save our world from itself. This little, independent mission-driven law and graduate school on the banks of the White River is the under-sung hero of Vermont — and of the world. If only Amazon would swing VLGS 1% of its marketing budget, or Microsoft would see fit to distribute a half of a percent of its profits to the school, it could move even more mountains and save our planet with graduates and faculty who truly care.
The uncharitable culture of U.S businesses and the related capital markets around the world simply will not allow charitable organizations to raise and spend massive capital in pursuit of solving massive problems. Want to make massive profits by turning petrochemicals into fertilizers that create runoff destroying massive tracts of coral reefs and marine habitat, and killing fish in ever-increasing numbers? The capital markets proclaim, Hallelujah!, so long as there’s a profit to be made. But, if you want to spend massively to raise more massive funding from donors to conserve land, protect animal habitat, save lives through social and restorative justice practices, and alter large-scale consumption habits to reverse climate change? Put on the brakes, say the charitable oversight boards comprised of people who made their money in capital market businesses. They want to limit spending to the charitable mission, the actual downstream beneficiaries of the charity’s work. But limiting spending on marketing and fundraising, in turn, limits the amount of money available to spend on mission-driven work because without visibility and brand awareness of the charitable cause, more money can’t be raised to spend on the mission. If the charitable entity isn’t known broadly, it won’t get funded broadly. It will fail in its mission due to lack of funding from potential donors who never knew it existed. Want to succeed as a charitable entity, suggests Pallotta? Spend more on organizational overhead, just like the capital market businesses do.
As they say in business, “It takes money to make money”. The same applies to any charitable cause. Uncharitable makes this clear. It’s unfortunate our uncharitable culture has discriminated for so long against the idealistic and mission-driven people and organizations who have taken it upon themselves to save our world.
Dave Celone writes from Sharon, VT, where he appreciates the beauty of nature each day. His work as vice president of alumni relations and development at his alma mater, Vermont Law and Graduate School, has helped him understand how the State of Vermont, consistently ranked #1 nationally as the most environmentally forward-thinking state, has become the nation’s environmental powerhouse and epicenter of the environmental movement. This has happened thanks to forward-thinking law and policy creation, and active community involvement by the school and its alumni. In a small state where more than 900 VLGS alumni live and work, and who understand the pressing need for policy and legislation to effect broad-based change, they know how to transform the world. Populate a state with people in law and policy-making positions with high ethical standards who care deeply about helping others and saving our world, and the world will be saved. VLGS may have started small, but its efforts are now global.
What was once a state known mainly for maple syrup, dairy products, downhill skiing, and fall foliage has now become the #1 greenest state in the nation. The world looks to Vermont for innovative policy, governance, and business practices that guide and advance how people can live their lives sustainably. This transformation happened over 45 years, quietly yet inexorably, with the leaders of the environmental and social justice movements coalescing at Vermont Law and Graduate School in South Royalton, VT to make it the springboard for solving many of the world’s most pressing environmental, climate, social justice, animal welfare, food systems, agriculture, and energy problems. But they had to do it out of love and passion, not for pay. Where would we be if we could have harnessed the best and the brightest, by paying Wall Street wages to solve our environmental woes? Likely not where we are today. Thankfully, the best and the brightest chose to love VLGS and coalesce with sharp minds that created an environmental movement. Someday, people may look back and realize VLGS did, indeed, save the world.
Only when capital markets fully support places like VLGS, and when the national media and charitable board leadership encourage far greater investment in and spending by socially forward-thinking, mission-driven causes, only then will the transformation we’ve seen at the Vermont state level with its environmental practices begin to spread globally. Only then will we cure cancer and other ills, end homelessness and hunger, save our forests and oceans, treat our animals with compassion, reverse the climate disasters we face every day, and move toward a more harmonious existence with one another and our natural world.
Following deeply-rooted fictions of how charities should accept and spend their budgets to the exclusion of the people and programs that make these organizations run and increase their visibility is a zero sum game. The large corporate voices will always outstrip the impact of the charitable causes so desperately needed today and tomorrow. Creating a bigger pie through successful marketing and hiring practices, including paying for talent like the corporate entities do, will transform our world. “Overhead” within charitable organizations is crucial to each mission, and is a much-needed expense that drives far greater revenue streams. Pallotta has been down this road and has had to sacrifice much. I empathize with his plight, but he’s come back with a voice that must be heard around the nation. Watch the movie — twice!
Uncharitable, in its movie and book formats, will open your eyes, your minds, and your hearts to all of the above and more. The information, compassion, and truths Dan Pallotta tells with his story offer a path to a more sustainable, just, equitable, happy, and safe future for all of us as we inhabit a planet that seems intent on encouraging us to change our ways.
One final note is the Uncharitable pledge. It reads as follows:
I’m Changing My Giving I am changing the way I give. I will identify organizations that have transcendent ideas, audacious dreams and serious intentions to create a society that works for everyone. I will not criticize or stand in the way of the spending they deem necessary to achieve their highest aspirations. I will direct one hundred percent of my giving to help these organizations grow. I will focus my curiosity on their impact and ideas instead of their expenses. And I will encourage all those around me to do the same.
I support the principles championed in “Uncharitable,” and will not only allow, but encourage these organizations to invest in competitive compensation, world-class advertising and marketing, risk in pursuit of growth, time to build capacity and the raising of serious capital to achieve the scale they require to achieve their dreams.
I now believe that if unleashed, the charitable sector holds unspeakably powerful potential, and I make this pledge to change my giving in order that it might change the world.
That’s all from Vermont where it feels like I’m living in a rainforest.