DAN PALLOTTA is an American entrepreneur, author, and humanitarian activist born on this date. 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. 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.
During the summer before Pallotta’s senior year at Harvard he heard about two cyclists crossing America to raise money for cancer research. It inspired him to create a cross-country bike ride for world hunger. He and his co-chair, Mark Takano (now a Congressman representing the 41st district in California) recruited 39 students to make the journey. During the summer of 1983 they traveled 4,256 miles along a primarily northern route over the course of 9 1/2 weeks from Seattle to Boston. They crossed the continental divide at 9,658 feet at Togwotee Pass in the Absaroka Mountains of the United States, between the towns of Dubois and Moran Junction, Wyoming. The event raised approximately $80,000 for Oxfam-America. Pallotta appeared on television and radio during the course of the ride, including an in-studio appearance with Bryant Gumbel on the Today show.
In 1985 Pallotta moved to Los Angeles to pursue a career as a singer and songwriter. He was auditioned by Clive Davis and had a single recorded by Edgar Winter and sang the national anthem at Anaheim Stadium for the Los Angeles Rams. During his time in Los Angeles he also met David Mixner, a leading civil rights activists, and went to work on Mixner’s Great Peace March for Global Nuclear Disarmament, envisioned as a 5,000-person march across America to promote nuclear disarmament. He also met and worked with Irving Warner, author of Bantam Books’ The Art of Fundraising, who mentored him in the field of major gift fundraising.
Pallotta was aware that there was “nothing big” for the average person to do about AIDS. It was the same feeling of frustration he had at Harvard looking at the gap between world hunger and the small fundraising events designed to address it. In 1991, building on the ‘power of the journey’ as a metaphor, he conceived of a 600-mile bike ride from San Francisco to Los Angeles, which combined his marketing, fundraising, mobilizing and motivating skills. Three years later, the movie Alive motivated him to realize his idea. He brought his plan for the event to the Los Angeles Gay & Lesbian Community Services Center, which was looking for a new signature event. The Center put up an initial investment of $50,000 in risk capital, which was enough for the effort to survive until a sponsorship was secured from Tanqueray for an additional $110,000. 478 people participated in the first California AIDS Ride from San Francisco to Los Angeles, netting $1,013,000 – much more than expected.
From 1995 to 1996 Pallotta expanded the AIDS Rides to include San Francisco, Boston, New York, Chicago, the Twin Cities, Miami, Philadelphia, Washington, D.C. and Raleigh, North Carolina. This writer had the privilege, and great experience of doing two of these rides.
The model was new in that it was the first time a “thon” event came with a four-figure mandatory fundraising minimum, and was marketed on a large scale in major metropolitan media. Up until that time, “thon” events had welcomed people no matter how much or how little they raised. This was democratic, but not a powerful revenue model.
Pallotta built his for-profit charitable company Pallotta TeamWorks in 1994. His company employed 400 full-time people in 16 U.S. offices and was raising $169 million annually by 2002. In total, the company raised $582 million from 1994 to 2002. The company charged a fixed production fee for its services. It did not do commission-based fundraising or get a “take” off of the top. One hundred percent of all donations went to lock boxes under the charities’ exclusive control. The charities then reimbursed the company for its expenses on a dollar-for-dollar basis. Pallotta TeamWorks fees, in a hindsight calculation, amounted to 4.01% of funds raised.
Pallotta was criticized for the large amounts of money Pallotta TeamWorks was making each year and the $394,500 salary he was receiving, described as “stratospheric” for the aid world. His annual salary ranged from $150,000 in 1994 to approximately $425,000 in 2002. Palotta commented that “We allow people to make huge profits doing any number of things that will hurt the poor, but we want to crucify anyone who wants to make money helping them”.