Ep 67: Busting the Overhead Myth (with Dan Pallotta)

by Joan Garry

Donors won’t give to charities with “high overhead.” Right? But what structural problems does this cause? My guest, Dan Pallotta, busts the nonprofit overhead myth.


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High maintenance donors. Do-nothing boards. A lack of development resources.

Running a nonprofit as a board or staff leader can be frustrating.

It’s no wonder it‘s so hard to scale. But what’s the main issue standing between your nonprofit and success? Is it OVERHEAD?


When you want to make a difference in the world but you believe the holy grail of charity is low overhead, or that high administrative costs indicate a charity is not well run, you undermine your own ability to solve the problems you want to solve.

Listen to this podcast to learn how my guest, Dan Pallotta  busts the overhead myth.

About Dan Pallotta

(born January 21, 1961) is an American entrepreneur, author, and humanitarian activist. He is best known for his involvement in multi-day charitable events with the long-distance Breast Cancer 3-Day walks, AIDS Rides bicycle journeys, and Out of the Darkness suicide prevention night walks. Over nine years, 182,000 people participated in these events and raised $582 million. They were the subject of a Harvard Business School case study.[2] He is the author of Uncharitable – How Restraints on Nonprofits Undermine Their Potential, the best-selling title in the history of Tufts University Press. He is also the author of Charity Case: How the Nonprofit Community Can Stand Up for Itself and Really Change the World, and When Your Moment Comes – a Guide to Fulfilling Your Dreams. He is the president of Advertising for Humanity and president and founder of the Charity Defense Council. He is a featured contributor to Harvard Business Review online. In 2012 Pallotta wrote, Charity Case: How the Nonprofit Community Can Stand Up for Itself and Really Change the World, which Robert F. Kennedy, Jr. called, “an Apollo program for American philanthropy and the nonprofit sector”. The book calls for the creation of a “Charity Defense Council” to act as a national leadership organization for the humanitarian sector in the United States. In 2008 Pallotta wrote, Uncharitable: How Restraints on Nonprofits Undermine Their Potential. It became the best-selling title in the history of Tufts University Press. The New York Times described it as seething “with indignation at public expectations that charities be prudent, nonprofit and saintly”. The Stanford Social Innovation Review wrote that the book, “deserves to become the nonprofit sector’s new manifesto”. Former U.S. Senator and Presidential candidate Gary Hart wrote that the book was, “nothing less than a revolutionary work”. Pallotta has given in excess of 150 speeches in 29 countries on the book as of December, 2012.

In this Episode

  • Does it make sense to look at overhead without looking at impact?
  • An overview of the economics of the nonprofit sector
  • Why do so many people think keeping overhead low some kind of badge of honor? And do they have a point?
  • Why don’t leaders challenge this misperception and what would that look like?
  • Why do political campaigns have permission to spend money to get people engaged but nonprofits do not?
  • How do the “seals of approval” from watchdog organizations contribute to the scarcity model?
  • What has online marketing got to do with impact? Why do some nonprofits consider marketing an unnatural act?
  • How does fundraising build civic engagement?
  • What would investing in a community of caring (instead of one of consumption) look like?