The best books to help you realistically understand the complex worlds of philanthropy and nonprofits

In Uncharitable Dan Pallotta challenges the way most people think about charity. 

Many people have been told that the less charities spend on overhead, fundraising, and salaries, the better the charities are. But this is not a healthy way to understand a charity’s impact, and Uncharitable refutes this myth. 

Pallotta describes what he calls an “economic apartheid,” a mindset that denies charities the critical tools that the for-profit sector is allowed to use without restraint: incentives to take risks, counterproductive limits on compensation, and moral objections to the use of donated dollars for anything other than program expenditures. 

I like this book not because Pallotta has a fully fleshed-out roadmap to energize the nonprofit sector, but because he is one of the few to articulate important problems facing the sector.

After reading Winners Take All, we might be forgiven for being worried about the role philanthropy plays in society.  Anand Giridharadas’s central argument is that donors – defined not as the average annual supporter of a charity, but as those with millions, and more, to give – do not so much change society for the better, but use their wealth to maintain the status quo. 

He says that instead of helping the poor, donations support policies, in the nonprofit arena, that uphold and even increase donors’ own wealth and status. In that regard, he reflects upon Oscar Wilde’s observation that those who do the most harm are those who try to do the most good. 

In The Givers David Callahan asks questions – and answers them – about the power philanthropists possess to influence public policy in America. 

He wonders how much influence donors have and what their goals are. He says that some of us are happy about the causes the wealthy promote, but are terrified about others. 

As well, he contends, the process is undemocratic. Philanthropy, he says, is a strong power center in its own right, and “is set to surpass government to shape society’s agenda.” He points out that private donors, who are accountable to no one, have more influence than the public officials who are accountable to the voters. 

Callahan is unafraid to question how much good philanthropists actually do.

Rob Reich, a professor at Stanford University – in observing that we are living in a second gilded age – directly addresses whether the philosophy of philanthropy is in opposition to democracy. 

He answers, with several qualifications, that it very well could be.  He sets it up in the following way: Is philanthropy – the support of privately funded causes that affect society, often in profound ways – an individual act or a social policy? 

He views the question through that prism, of social policy, and concludes that philanthropy “is not just a matter of private morality,” but is “a matter of public morality.”  Just Giving appeals to me because of its comprehensive approach to an issue – the private support of our nation’s charitable organizations – that, while ubiquitous in society, has received too little attention. 

Our love for humanity – which is how “philanthropy” is defined – is rooted in our sense of morality. 

Adam Smith explains that morality is not driven only by reason, but is built into us because we are social beings. To understand philanthropy, therefore, I think we need a grounding in how and why we want to help others.  This book explores that desire, or need, to empathize. 

Smith says that when we see people happy or sad, we feel happy or sad too, that we derive pleasure when people do things we approve of. Even though The Theory of Moral Sentiments is almost three centuries old, it teaches us much about why nonprofits can be successful in the modern world.