10.26.09

Gender Trouble at Nonprofits

Seven out of 10 nonprofit workers are female. Charity expert Dan Pallotta argues that sexism is holding back the entire sector, preventing nonprofits from adopting aggressive business practices.

Unequal pay for equal work. Patriarchal control and oversight. Those disparities, associated with gender discrimination in the home and workplace, also undermine the world of charity, whose workers are overwhelmingly female. Society has two rulebooks; one for charity and one for the rest of the economy. This apartheid discriminates against the nonprofit sector at every level.

Consider: The for-profit sector is free to pay competitive wages based on the value people produce, yet it’s considered unseemly for anyone to make money in charity. This forces our brightest young men and women to choose between doing well and doing good, and drives most of them, burdened by student debt, into for-profit careers.

The for-profit sector pummels the public with ads for Budweiser and Botox, but donors don’t like their funds used for advertising. So the urgent causes of our time are at a hopeless disadvantage when it comes to building market demand.

Charity is subservient. The for-profit sector heads to the office every day to do the real business of the world, while charity stays at home and dabbles in idealism and sentiment.

For-profit companies take huge risks and tolerate spectacular failure in pursuit of new customers and gigantic profits, but if a charity event doesn’t produce a 70 percent return in year one, donors want the attorney general to investigate. This aversion to risk stifles learning, innovation, and change.

The for-profit sector can take years to develop products and markets, but a charity’s overhead is measured in 12-month cycles, which means that nonprofits can’t enjoy the fruits of revenue-generating ideas that might take a decade to develop.

And last, the for-profit sector can use profit to attract capital. By definition, the nonprofit sector cannot. It is limited to the donation as its only financial instrument. So the for-profit sector monopolizes the multitrillion-dollar capital markets while charity is starved for growth and risk capital.

Dana Goldstein: The Health-Care Gender GapFor more than a decade, the trendy admonition to charity has been to “act more like business.” That’s disingenuous. Society bars charity from the most elemental business practices. “Act more like business” really means, “Draw more blood from the stone”—do more with less—the opposite of the for-profit sector it-takes-money-to-make-money credo. Little wonder, then, that the nonprofit sector represents just 5 percent of the economy. The number of nonprofits that have crossed the $50 million revenue barrier since 1970 is 144. By contrast, 46,136 for-profits have crossed it.

Charity is not allowed to use the same tools as business because society subconsciously regards it as female, and discriminates against it the same way it has historically discriminated against women. Charity is subservient. The for-profit sector heads to the office every day to do the real business of the world, while charity stays at home and dabbles in idealism and sentiment. Even the governing structure of charity is patriarchal; business people direct direct nonprofit staff—seven in 10 of whom are women—from the perches of their board seats.

The parallels between the world of charity and the role of women are no coincidence, and have their roots in American history. Women also outnumbered men two-to-one in the pews of 17th-century Puritan New England churches, and what women learned in those churches was that self-interest was a sin, and only extreme acts of self-sacrifice could secure them a place in heaven.

The Puritans were the authors of our “nonprofit ethic.” In his famous sermon, “A Model of Christian Charity,” John Winthrop told the faithful they would perish if they pursued their profits, even while he was writing in his journal about how much money he could make in fur trading in the New World. (Ironically, the word “profit” comes from the Latin profectus, for “progress,” so “nonprofit” means, literally, no-progress—exactly what you’d expect men to prescribe for women in 1630.)

In the 19th century, the doctrine of separate spheres emerged, which held that men were destined for the worlds or war, work, and politics, while women, weaker and purer, focused on marriage, motherhood, and charity. In the definitive text, Charity, Philanthropy, and Civility in American History, the index listing with the second-largest number of entries, right after “philanthropy,” is “women.”

The women’s rights movement changed the world. It’s time now to undertake a similar movement to win equal economic rights for charity: Equal pay, equal ability to spend on markets, and to use financial incentive to attract capital and reward risk, no matter how uncomfortable that kind of equality might make us feel. When AmeriCorps has the same access to capital as Ameritrade, and microfinance has the same market cap as Microsoft, then the nonprofit sector will stand some chance of addressing the massive social problems that confront us. Until then, the sector’s true potential will remain obscured, and the needy will pay the price.

Dan Pallotta is the creator of the AIDSRides and the three-day breast cancer walk. He is the author of Uncharitable from Tufts University Press and is a weekly blogger on nonprofit sector issues for the Harvard Business Review Online.