Dan Pallotta Gets It Wrong Again With Plan to Create One Big Charity Association

Dan Pallotta, the self-styled — and self-serving — savior of the nonprofit world, is at it again.

In a new article in Harvard Business Review, he argues that the charity sphere would be far better served if there existed “one coordinated force doing its advocacy, its media, its communications, its legal defense, and its grass-roots organizing.”

Such an organization, he asserts, would combine the best work of watchdog groups and associations representing charities into “one powerful new information engine for the public.”

The problem, Mr. Pallotta writes, is that the nonprofit world “doesn’t have a brain. It doesn’t have one center of organization and imagination looking out at the far horizon to inspire and guide all of the component parts to get to a place together that none operating independently could ever get to on its own.”

Groups like Independent Sector, the Council on Foundations, and the National Council of Nonprofits are geared toward doing some of this work, he says, but they have limited missions, such as a focus on advancing only the needs of grant makers or state-level associations.

For all his poetic imagining (“This is the kind of exciting, courageous, surprising, breathtaking action the people who work in this sector are waiting for its leaders to take.”), Mr. Pallotta is, in effect, arguing for the creation of a new bureaucracy. His case might sound good, until you think the premise through. Like the watchdog and umbrella groups dotting today’s nonprofit landscape, his centralized entity would inevitably adopt its own subjective, and perhaps capricious, standards of doing business.

It’s true that the nonprofit world doesn’t need small-minded organizations like Charity Navigator, which takes the word “watchdog” to a very low level. But we also don’t need Mr. Pallotta’s bland palliatives. They are woefully ineffective for the problem at hand.

So far, the nonprofit world has not lived up to the task of justifying itself as the caretaker of our society’s aspirations. We are obligated to answer, or at least address, the question of why nonprofits exist. For the most part, we don’t, perhaps because charity leaders have for too long felt that doing good immunizes them from scrutiny.

Whatever the reason for this reticence, the conversation should rest neither on comparing meaningless data nor on doe-eyed sentiment. What we need is hard-nosed thinking that honors the idea of standards by sifting through the mountains of data to extract meaningful measures of evaluation and impact.

Mr. Pallotta anticipates the naysayers who will attack his proposal and offers preemptive defenses, but they ring hollow. For example, to the notion that the egos of nonprofit leaders will keep them from getting on board, he suggests they’ll fall in line with the promise, “We will double your annual operating budget for the next three years if you do join us.”

How does he plan to do that? His organization will be so powerful it will persuade foundations to part with some of the billions of dollars they are sitting on in assets to boost the budgets of groups that belong to his association.

This is a failure to understand the basics of what foundations are supposed to do. They are created by philanthropists who typically provide guiding principles about what causes their money will support and how fast it will be spent (slowly to keep grants flowing forever, or more quickly in anticipation of making a big impact and shutting down). Few if any foundations could just decide to distribute a major chunk of their assets willy nilly to any nonprofit that joins a major membership group.

It’s not just that Mr. Pallotta’s ideas are fanciful. It’s that he is trying to solve a problem that doesn’t exist. He’s done this before. after all. The organization he founded in 2012 and leads, the Charity Defense Council, has as one of its basic premises that charities are under attack. But where is the evidence of that?

It’s true that the charity watchdogs have done a lousy job of rooting out real scandals and addressing the challenges engendered by poor-performing charities, while at the same time exaggerating the importance of overhead as a yardstick. But these groups have relatively little power in swaying donors and policy makers.

Mr. Pallotta’s prose can be alluring but his message lacks substance. In a 2013 Huffington Post article, Ken Berger and Robert Penna, then respectively the chief executive and international coordinator at Charity Navigator, argued that “if you look under the hood for details” in Mr. Pallotta’s writings and speeches, “there is little in his argument on exactly how to go about measuring … results.”

The authors correctly point out the problem at the heart of Pallotta-ism: “He speaks of vague notions such as ‘Charity is in the business of inspiration, so it is particularly problematic for charity that the value of inspiration is not measured’; and ‘it is not a matter so much of what we must do as what we must stop doing,’ yet at the same time he implicitly — and sometimes explicitly — justifies doing away with most clear standards of accountability.”

The organization Mr. Berger and Mr. Penna formerly led has done its share to skew standards of nonprofit accountability, but they have a point. They, and other critics, expose the Pallotta way: simplistic arguments that sound plausible only to the unseasoned ear and don’t offer much in the way of accountability. Harvard Business Review should know better than to publish articles that do so little to advance real solutions to the nonprofit world’s challenges.

Doug White directs operations in the fundraising-management program at Columbia University.