A Square Peg in a Round Hole

As the Occupy movements become more formalized, some of them have created structure around their protest and have applied for tax-exempt status.  In Seattle, members of different committees wear different color armbands, and the fundraising committee solicits donations to pay for sleeping bags and food.  Different committees serve different functions, much like a well-established non-profit board of directors breaking down into strategic plan-guided subcommittees.

How non-profits create structure around a community wanting change is captivating to those of us who love both structure and community, but what stood out to me was the protester who stood in protest of this formalization, angry that their local Occupy group had gone mainstream.  The whole point was to fight the status quo, he suggested.  Filling out a lengthy government-issued tax document in the midst of a protest against government policies and unfair taxes seemed contradictory to him.

This tension between the fight for significant social change that allows for equality of opportunity and the reality that someone has to fund that fight is common within social change organizations.  (One of my favorite books discussing this tension is The Revolution Will Not Be Funded.)  Non-profit leaders balance the organic reality of working for transformational change while having to define their work with the rigid requirements imposed through IRS reporting forms and charity navigators.

Dan Pallotta in his new book Uncharitable: How Restraints on Nonprofits Undermine Their Potential makes a very compelling case for how both government requirements and philanthropic culture impede the efforts of non-profits to make real and lasting change.  He takes on the big questions that cut to the core of how non-profits function.  He believes that efficiency measures are ineffective and unfair, giving examples from his own work creating large AIDS awareness events and campaigns.  He argues that the concept of overhead is fictional, and that our focus on keeping it to 20-percent or less distracts us from the real issues that drive our work.  He concludes that only a shift in culture would allow non-profits to operate differently.  In reading his arguments, I could think of many more examples to make his points.

I read Pallotta’s important book with the protesters in mind.  There are many powerful reasons to create a structure around a community wanting to effect change.  Structure allows for better communication, professionalized staffing, holistic tracking of impact, and intentional learning across constituencies.  Those people with the colored armbands can specialize and build skills that allow them to better serve more people.

That structure in the United States, however, is one of an IRS-approved non-profit with all of the requirements that go with that.  By agreeing to take tax-exempt money, non-profits agree to report their overhead on their 990.  (How they do so remains a bit of a shell game.  Palotta cites a 2004 study that determined that nearly half of charities report zero fundraising expenses.)  Movements do give up something when they go mainstream.

As that protester noticed, fighting for a new way of doing business within the limitations of institutions created to reinforce the old way of doing business can pose challenges and contradictions.  It can feel a bit like trying to fit a square peg into a round hole, or trying to force rigid requirements designed long ago or for another purpose onto a holistic community that is making a difference in unpredictable ways.

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