Does it seem like there is more open debate lately in the social sector? Or maybe I’m just attracted to discussions where the gloves come off and (let’s hope) transformative conversation happens. That was the case in May where philanthropic transparency, nonprofit leadership, and donor acceptance policies were all up for debate.
Add to that some really interesting developments in the new “sharing economy”, net neutrality, and use of big data, and it was another great month in the world of social innovation.
Below are my 10 favorite reads from the last month, but please add what I missed to the comments. And if you want to see a longer list of great reads, follow me on Twitter, Facebook, LinkedIn or Google+.
And you can see past months’ 10 Great Reads lists here.
- Writing in the New York Times, Frank Bruni criticizes some nonprofits for accepting donations from donors who actually undermine the cause. These nonprofits, in effect, end up whitewashing the philanthropists, “Some [philanthropy] is prophylactic or penitential: The polluter supports environmentalists, while the peddler of sugary soft drinks contributes to campaigns against obesity.”
- And philanthropists themselves were far from criticism this month. Writing in The Atlantic, Benjamin Soskis believes it is critical for a healthy democracy that philanthropists go under the microscope, in fact: “Given the power that private philanthropy can wield over public policy, a spirited, fully-informed public debate over the scope, scale, and nature of that influence is a democratic necessity.” Phil Buchanan from the Center for Effective Philanthropy agrees. And to that end, May saw the launch of Philamplify, the National Committee for Responsive Philanthropy’s attempt at a Yelp-like review site of foundations.
- In a long (but well worth the time) piece, Albert Ruesga from the Greater New Orleans Foundation lays bare his antipathy toward his fellow philanthropists: “We grantmakers, myself included, act as arrogant elites, drawing arrows and triangles on the whiteboards of our well-appointed conference rooms with no one around to challenge our flawed thinking. We strut about like giant roosters puffing out our breast feathers and clucking incoherently about ‘disruption’ and ‘theories of change.’ We look foolish to everyone except ourselves and those even more foolish than we are.”
- But there are bright spots. Daniel Stid from the Hewlett Foundation takes to the Hewlett blog to refreshingly demonstrate funder transparency and explain “What Went Wrong in Our Democracy Grantmaking.” And Peter Buffett, son of Warren Buffett and author of a scathing critique of philanthropy last year, has a fascinating debate/very civilized exchange with ethicist William MacAskill about how effective (or harmful) philanthropy can be.
- We are living in the era of big data, and this month there were some really interesting examples of how data can be used to make things better. First, UPS uses data to improve driver performance and profitability. The University of Texas at Austin is doing some fascinating things with data to help at-risk students graduate. And some nonprofits are using data to improve fundraising effectiveness.
- Last month saw the first-ever sharing economy conference. This new idea – that our economy is evolving to a point at which goods, services, ideas are all shared – has serious implications for the social sector. Lucy Bernholz and Beth Kanter break it down for us.
- And a key part of that sharing economy is an open Internet. But the FCC is considering changes to rules that would allow a “two-tiered” Internet where those with means can pay more for faster service. The Benton Foundation did a nice summary of developments around net neutrality. And the Electronic Frontier Foundation organized to let voices be heard by the FCC.
- Innovation is hard work. So when the work of creating social change drags you down, you only need look as far as Steven Pressfield for inspiration, “When we’re stuck, when we’re freaking out, when it all seems too much too soon too crazy, remember: that’s only how it seems to us, confined within our limited point of view. From the universe’s perspective, all is as it should be. Sooner or later, you and I will stop fighting and let the symphony/supernova/baby be born.”
- Using data from the Nonprofit Finance Fund’s most recent State of the Sector survey, work by state associations of nonprofits, and new Uniform Guidance for federal grants from the federal Office of Management and Budget, Beth Bowsky from the National Council of Nonprofits charts some positive developments in government funding the true costs of nonprofits’ work.
- Never one to sugar coat it, in an interview on the Idealist blog, Robert Egger describes his vision for the next generation of nonprofit leaders: “Our society needs an elevated nonprofit sector, but to get there, we need people who are prepared to challenge antiquated ideas about the role we play in the economic and political process.”
Photo Credit: Mo Riza
In addition to the Social Impact Exchange conference I mentioned earlier, I will be traveling a lot this summer connecting with nonprofit and philanthropic leaders. I’ll be blogging about what I learn in my travels and conversations. And, I’m really excited to announce, that I have an amazing group of guest bloggers who will be posting throughout the summer as well.
These guest bloggers are people who really make me think and will offer some really interesting perspectives. I’ve invited them each to take over one Social Velocity blog post sometime during the summer.
Below is the guest blogger lineup with some background on each of them. Their posts will begin in late June. And I will continue to post throughout the summer as well.
Social Velocity Summer Guest Bloggers
Robert is the founder of DC Central Kitchen and LA Kitchen, as well as the nonprofit sector advocacy group, CForward. Robert was included in the Non Profit Times list of the “50 Most Powerful and Influential” nonprofit leaders from 2006-2009, and speaks throughout the country and internationally on the subjects of hunger, sustainability, nonprofit political engagement and social enterprise. He is a tireless advocate for the nonprofit sector, encouraging nonprofits to take their rightful seat at the table. He is always pushing us to think bigger and smarter about social change. You can read my past interview with him here and my post about CForward here.
David is the founder of Idealistics, a former social sector consulting firm that helped organizations increase outcomes, demonstrate results, and organize information. He has worked in the social sector for the last decade providing direct services to low-income and unhoused adults and families, operating a non-profit organization, and consulting with various social sector organizations and foundations. David’s professional focus is on improving the way social sector organizations use information to address poverty. He writes his own blog, Full Contact Philanthropy, which I highly recommend. He will make your head hurt, but in a really good way. You can read my interview with him here and watch the Google Hangout he and I did about Using Real Performance Data to Raise Money.
Jessamyn is Executive Director of the Peery Foundation, a family foundation based in Palo Alto, California. The Peery Foundation invests in and serves social entrepreneurs and leading organizations in the San Francisco Bay Area and around the world. Jessamyn helps shape the foundation’s strategy, develops programs, strengthens the foundation’s portfolio, and supports existing grantees. Her experience as part of the founding Ashoka U team has given her the perspective and skill-set to help the foundation develop new methods to support and build the field of social entrepreneurship. You can read my interview with her here.
Adin is Senior Director of Community Impact and Innovations at the Jewish Community Federation and Endowment Fund. In this role, he develops new strategies and programs to bring about change and impact within JCF’s mission. Adin focuses on defining metrics to document impact, maximizing measurable impact and increasing the visibility of the organization. Prior to JCF, Adin was a nonprofit consultant and had his own blog, Working in White Space, which was phenomenal. You can read my past interview with him here.
Laura is a network developer at the Council on Foundations, where she tracks philanthropic trends and builds relationships with leaders advancing the common good across sectors. She also leads an impact investing initiative and regularly interacts with those interested in the changing landscape of social good. Previously as manager of public-philanthropic partnerships, she built the capacities of federal agencies interested in partnering with foundations. Before joining the Council, she worked at Grantmakers for Effective Organizations and at the Central New York Community Foundation. Laura has been named a Global Shaper by the World Economic Forum. She is also a StartingBloc Fellow and writes for UnSectored, serving on advisory boards for both organizations. You can read my interview with her here.
So there you have it. A summer guest blogging lineup that I am thrilled about. I can’t wait to read what they all have to say. Stay tuned!
Photo Credit: Holger.Ellgaard
Bradach asked leaders and thinkers in the scale movement – like Risa Lavizzo-Mourey from the Robert Wood Johnson Foundation, Billy Shore from Share Our Strength, Wendy Kopp from Teach for All, and Nancy Lublin from Do Something – to contribute their insights to the series. Bradach is doing this because he believes we have not yet figured out how to grow solutions to a point at which they are actually solving problems. As he wrote in his kick-off post to the series:
Over the past couple of decades, leaders have developed a growing catalog of programs and practices that have real evidence of effectiveness. And they’ve demonstrated the ability to successfully replicate these to multiple cities, states, even nations in some cases, reaching thousands or even millions of those in need. Despite all this progress, today even the most impressive programs and field-based practices rarely reach more than a tiny fraction of the population in need. So we find ourselves at a crossroads. We have seen a burst of program innovation over the past two decades; we now need an equivalent burst of innovation in strategies for scaling.
One of the places where scale has been an on-going topic of conversation is the annual Social Impact Exchange’s Conference on Scaling Impact. Now in its fifth year, this conference next month in New York City brings together “funders, advisors and leaders to share knowledge, learn about co-funding opportunities and develop a community to help scale top initiatives and build the field.” The conference is organized, in part, by the Growth Philanthropy Network, which “is creating a philanthropic capital marketplace that provides funding and management assistance to help exceptional nonprofits scale-up regionally and nationally.”
I’m excited to be attending this year’s conference and participating in a panel called “Business Models for Sustainability at Scale.” From my perspective, one of the biggest hurdles to scale is a financial one. Very few nonprofits have yet figured out how to create a sustainable financial model, let alone how to create one at scale. And this hurdle exists for many reasons, including: lack of sufficient capital in the sector, lack of sufficient management and financial acumen among nonprofit leaders, an unwillingness among funders to recognize the full costs of operation. So I’m excited to be part of this important conversation about how we can actually create financially sustainable scale.
It will be interesting to see how the conversations at the Scaling Impact conference – led by rockstars in the field like Antony Bugg-Levine from the Nonprofit Finance Fund; Tonya Allen from the Skillman Foundation; Heather McLeod Grant, author of Forces for Good; Paul Carttar from The Bridgespan Group; and Amy Celep from Community Wealth Partners – will relate to the perspectives of those writing in the “Transformative Scale” blog series. I wonder where there will be overlap and where there will be disagreement or even controversy. Scale is an incredibly difficult nut to crack. And as Bradach rightly states, no one has figured it out yet.
I will be posting to the blog during the conference about what I’m hearing and where there are common threads or separate camps.
I hope to see you there!
Image Credit: Social Impact Exchange
Controversy about whether Millennials will spend money differently than their parents to create change, arguments for greater philanthropic risk, examples of innovation in the arts, use of “Moneyball” in conservation and policymaking efforts, and the lure of online media to create social change. What more could you want from a month of social innovation reading?
You can also see all of the 10 Great Reads lists from past months here.
- Man, I love a good controversy. In April the Obama administration invited Millennial philanthropists to the White House to discuss next generation philanthropy. And The New York Times sent Millennial reporter (and heir to the Johnson & Johnson fortune) to cover it. Well, Jim Newell from The Baffler doesn’t buy the argument that Millennials are going to use money differently than their predecessors. But Jed Emerson and Lindsay Norcott think Millennials will actually take impact investing mainstream.
- And staying on the controversy train just a bit longer, William Easterly takes issue with celebrity famine relief efforts that ignore (and potentially make worse) the lack of democracy causing famine in the first place.
- Because achieving scale is incredibly difficult work, Jeff Bradach from The Bridgespan Group launched an 8-week series on the Stanford Social Innovation Review blog exploring how we achieve it. 16 thought leaders will “weigh in with their insights, struggles, and questions regarding the challenge of achieving impact at a scale that actually solves problems.”
- It seems that the arts, perhaps more than other issue areas, are on the front lines of innovation in order to stay relevant. And this month really brought those struggles home. First, the Houston Grand Opera has seen dramatic growth in audiences, bucking a declining trend elsewhere, by appealing to broader audiences. Perhaps the San Diego Opera could have learned something from Houston since their declining audiences (and poor governance decisions) have put them in danger of closing their doors. And ever at the ready with examples of how arts organizations are innovating and adapting, ArtsFwd released two case studies on how the Woolly Mammoth and Denver Center Theater Companies have embraced adaptive change.
- What’s with Moneyball (the movie and book about using data to drive major league baseball strategy) everywhere lately? Using data and smart strategy the Nature Conservancy is getting more effective at conserving bird habitats. And David Bornstein thinks the federal government is getting into the game as well with an increase in data-driven policy making.
- The Pew Research Center just released a book, and corresponding interactive site, about the changing demographic face of America and how it could affect everything, “Our population is becoming majority non-white at the same time a record share is going gray. Each of these shifts would by itself be the defining demographic story of its era. The fact that both are unfolding simultaneously has generated big generation gaps that will put stress on our politics, families, pocketbooks, entitlement programs and social cohesion.”
- Should philanthropy embrace more risk? Philanthropist Laurie Michaels founder of Open Road Alliance, which provides funding to help nonprofits overcome unforeseen roadblocks or leverage unanticipated opportunities, thinks so. Michael Zakaras interviews her in Forbes. As she puts it, “Very few people in the finance industry predicted the economic collapse in 2008, and yet we ask NGOs to submit a plan that will be stable for several years, which is an impossibility in the best of circumstance.” Amen!
- On the NPEngage blog, Raheel Gauba answers the fascinating question: “If Google were a nonprofit, what would its website look like?”
- And speaking of nonprofits online, the PhilanTopic blog released an infographic summarizing the 2014 M+R Benchmarks Study about nonprofit online activity.
- Moving on to other forms of media, I love what’s happening with video games and the innovators who are adapting them to help solve social problems. Who knew that playing Minecraft could actually change the world?
Photo Credit: Mikel Agirregabiria
Today the Nonprofit Finance Fund (NFF) released the results of their sixth annual State of the Nonprofit Sector survey and the data underlines a growing crisis in the financial sustainability of our nonprofit sector.
56% of nonprofit leader respondents reported that they were unable to meet demand for their services in 2013, this is the highest rate since the survey’s inception six years ago. And the scary part is that this inability to meet demand is not because of a temporary down period in the economy, but rather because of deeper dysfunctions in how we funnel money to the sector. As Antony Bugg-Levine, CEO of NFF put it, “The struggles nonprofits face are not the short-term result of an economic cycle, they are the results of fundamental flaws in the way we finance social good.”
The survey gathered responses from more than 5,000 leaders from U.S. nonprofits of all sizes, domain areas, and geographies.
The top challenge by far for nonprofit leaders, with 41% of them reporting it, is “achieving long-term financial stability.” And this is evidenced in several ways:
- More than half of nonprofits (55%) have 3 months or less cash-on-hand.
- 28% ended their 2013 fiscal year with a deficit.
- Only 9% can have an open dialogue with funders about developing reserves for operating
These struggles with financial sustainability stem in large part from a lack of understanding among funders of the true costs of social change work. Roughly 53% of nonprofit respondents’ funders rarely or never fund the full costs of the programs they support. And for approximately 24% of respondents their government indirect cost rate (the amount government allows for indirect, or “overhead” expenses) declined over the last 5 years, while about 47% of respondents are subject to a government indirect rate of 9% or less. That is nearly impossible.
For the first time, the survey included questions about impact measurement, a growing interest among funders, ratings agencies and others in the sector. But these questions just further underline the financial Catch-22 in which nonprofit leaders find themselves. 70% of nonprofit leaders report that half to all of their funders want to see proof of the impact of their programs, but 71% of nonprofit leaders also report that funders rarely or never fund the costs of impact measurement.
At the end of the day, government and private funders are putting greater demands on nonprofits whose services are increasingly needed, all while funding is becoming more difficult to secure. It’s a vicious downward spiral.
More than ever this survey demonstrates a need for the nonprofit sector and those who fund it to take a hard look at how the social sector is financed. We are not sustainably financing the social change work we so desperately need. And if we don’t address that, the downward spiral will simply continue.
Here are some fundamental changes to the financing of the nonprofit sector that I’d like to see:
- Government must move to a more reasonable indirect rate. No one can deliver an effective program with only 9% allocated to administration and other “overhead” costs.
- Funders who want to see impact measures need to step up and fund the work and systems necessary to make it happen.
- Nonprofit leaders and funders need to have more open and honest conversations about the hurdles standing in the way of the work.
- Nonprofit leaders need help figuring out sustainable financial models.
In the six years of NFF’s comprehensive and unparalleled view into the world of nonprofit leaders the story is not getting better. Let’s hope this data serves as a wake up call for the social sector. We must collectively realize that if we really want social change we have to figure out how to finance it effectively and sustainably.
In today’s Social Velocity interview I’m talking with Pat Lawler. Pat is the CEO of Youth Villages, a national nonprofit dedicated to helping emotionally and behaviorally troubled children and their families live successfully. Youth Villages is often heralded as a model for high performing nonprofit organizations. In 2006, Lawler was recognized as one of “America’s Best Leaders” by U.S. News & World Report.
You can read past interviews in the Social Innovation Interview Series here.
Nell: In 34 years of your tenure at Youth Villages you’ve grown the organization from serving 25 youth to now serving 22,000 families. Very few nonprofits are able to grow to that level, let alone sustain it. What are the factors that make nonprofit growth attainable and what holds more nonprofits back from achieving it?
Pat: First, an organization must have a clear mission and defined values. When we started Youth Villages, we knew who we were. We didn’t just want to respond to RFPs; we wanted to do what was best for kids. No more of the status quo, instead we used our expertise and created best practices. We built our leadership team and our culture around a clear mission and set of values. Our culture is a big part of who we are and what we’ve done over the years. We’ve also been willing to change directions. We’re willing to do different things based on the needs of kids and families. At one time, we only provided residential treatment services, but now residential services comprise only about 35 percent of our work. Don’t anticipate the future, create it.
As an organization, we were also careful not to grow too fast. We were constantly assessing what was best and reevaluating. We also implemented a feedback system to learn what was working and what was not so we could improve our outcomes.
It’s easy for nonprofits, especially those focused on social services, to make decisions with our hearts instead of our heads, but we must still maintain a strong focus on the business aspect of our work. After we got through our first 12-13 years, when we were just trying to survive as an organization, we began thinking about strengthening our financial reserves because we were responsible for more children and families, as well as our staff and their families. So we really started trying to build a stronger financial foundation that would help us successfully transition through turbulent times.
Nell: Often when a nonprofit becomes very large finding on-going sustainable funding sources can be difficult. The majority of your funding comes from state contracts. Is government the ultimate answer to long-term funding for large nonprofits? Or are there other ways?
Pat: It depends, but in general, I think it’s important for organizations to have a diverse set of funders to achieve maximum stability. Having at least three or four funding sources and a relative balance among those sources is a good way to go. If government is a major funding source, you want to make sure that’s diversified among different programs, geographies, etc. and not all one contract.
Nell: Youth Villages is also unusual in that you have a robust performance management system and are considered one of the leading nonprofits in the country in that arena. Why did you make the decision many years back to invest in performance management and what do you think the return on that investment has been?
Pat: Youth Villages’ goal has always been to provide the best services for children and families. That’s one of the reasons why we started collecting data, using measurement, benchmarking and total quality improvement. It was all about getting better outcomes for kids. We didn’t realize how valuable our data could be until the mid-‘90s when some of our state funding was at risk. Using our data, we were able to convince the state to spend money for in-home services and develop a continuum of care — because we had really good data to show them what worked and how much more cost-effective it was. Throughout the years, we started trying to convince other states and funders. A few were pretty enthusiastic about our data and outcomes. When the Edna McConnell Clark Foundation met with us nine years ago, they were very interested in our data and outcomes, and that was the first indication that the private sector was becoming interested in doing what works.
Even today, we’re asking ourselves where is the best place to put our resources, and more often, we’re finding it’s better to serve a larger number of children through community-based services rather than in a residential setting. You can make such a greater impact in the community serving a large number of youth, rather than serving a small number with the greatest needs. We’re trying to do both. But we’re asking ourselves what’s the biggest return on our investment so we can have the greatest impact on our community?
Nell: Funders and nonprofits themselves are often reluctant to invest in nonprofit leadership development. How do we solve this need and how did you grow your leadership skills over the course of your career? What role do you think funders should or could play in leadership development for the sector?
Pat: I read a lot, and I’ve been very fortunate throughout my career to have worked with great boards of directors and mentors to shape my leadership skills. At Youth Villages, we have an outstanding leadership team filled with better leaders than I am. Together, we make a strong team. Any of us independently might not be as good. I know I wouldn’t be at all. At all levels of this organization, we have very bright people and that is what makes the difference here.
If I had to start over at the beginning, rather than asking foundations for money for programs and services, I would have asked for funds to put toward business planning, professional coaches, leadership development and communications to help with the things I didn’t know about. I’d have asked for money to help build a stronger organization, while at the same time maybe a little money for programs and services. I believe it’s a waste of money for governments, foundations or anyone to spend money on an organization that doesn’t have the necessary skills, organizational structure, leadership and business planning to achieve the goals of their program. It just makes no sense.
From the time an organization is created, I think they have to ask the questions: Do we have the right people in place? Do we have the right business plan and strategy to execute? Do we have the support of the community and board of directors? I firmly believe every foundation should put a significant portion of their funding toward strengthening the organization versus funding some programs and services. If you don’t have the right people in place to execute the strategy then it’s not going to happen. It’s also important for foundations to give organizations time. It takes time for leaders to develop, they get better as they encounter and overcome problems, and it’s important to stick with those organizations for extended periods of time.
Photo Credit: Youth Villages
In today’s Social Velocity interview I’m talking with Daniel Stid, Senior Fellow at the William and Flora Hewlett Foundation. Daniel serves as an advisor to Foundation president, Larry Kramer, leading the exploration of a potential Foundation initiative to support and improve the health of democracy in the US. Before joining the Foundation, Daniel was a longtime consultant and strategist to governments, nonprofits, and for-profit organizations, including as a partner in The Bridgespan Group’s San Francisco office, where he co-led the organization’s performance measurement practice.
You can read past interviews in the Social Innovation Interview Series here.
Nell: You moderated a panel at the recent After the Leap conference about government and performance management. Government has a long history in the outcomes space, but there was some controversy at the conference about whether government can really lead this new movement. What role should government play in this new push toward nonprofit performance management?
Daniel: Yes, my Twitter feed was blowing up during that session with people adamantly saying that government couldn’t lead this push, it had to be nonprofits! To my mind this controversy misses the point. It presumes a hierarchy – that leadership is lodged in one place, and that it is exercised in one direction. The fact is that if we are going to make this “leap” happen, we need distributed leadership in multiple places: in government agencies, in operating nonprofits, in foundations, among researchers and program developers.
A great example is the Teen Pregnancy Prevention program administered by the Office of Adolescent Health in the federal department of Health and Human Services, the implementation of which I recently wrote about with some former colleagues at The Bridgespan Group. The Office of Adolescent Health administrators demonstrated leadership in conceiving and developing a bold and thoughtful program; the researchers and purveyors involved demonstrated leadership in creating evidence-based solutions and effectively supporting their implementation; and front line agencies demonstrated leadership in implementing these interventions with fidelity. What makes this program so compelling is that it has been animated by multiple forms of leadership that are networked and reinforcing each other across sector lines. I believe this same pattern occurs in most other situations where social change is happening at a large scale.
Nell: Your charge as a senior fellow at the Hewlett Foundation is to help explore how the foundation can “support and improve the health of democracy in the United States.” There have been some criticisms lately that philanthropy has moved away from supporting democracy and instead sometimes enhances wealth inequality. What are your thoughts?
Daniel: Insofar as this occurs, I believe this an inadvertent effect from the standpoint of individual donors. Most people want to give to something they can point to and/or that they can have affiliation with – hence the contributions of many donors to hospitals and arts organizations and universities, or to the schools that their children attend. This is straightforward and understandable. You can readily see and appreciate and be associated with what you are getting for your contributions. And it is philanthropy. We shouldn’t presume that all philanthropy can or should be geared toward reducing inequality. That is not the point of philanthropy in a free society. (Now whether all philanthropy needs to be and should be subsidized by the tax code is another question; I am on the record as saying it is high time to revisit the charitable deduction.)
The kinds of interventions that stand a chance of alleviating inequality – e.g., support for high quality early education, or effective teen pregnancy prevention – entail large-scale systems change and diffuse and uncertain impact for people typically living in very different communities from the philanthropists who are in a financial position to support them. They are for that reason a riskier philanthropic proposition. But many individual donors and foundations are making these investments anyway, and I bet we will see more of them do so as the evidence-base supporting solutions to inequality continues to be solidified.
Nell: Moving nonprofits to a performance management system will be costly. Do you think government can and should foot that bill, or can philanthropy? How do we create and fund the infrastructure necessary for this movement to truly succeed?
Daniel: Really good question! I don’t think that we can count on government to do it – for all of government’s resources relative to those of philanthropy, it is extremely rare that a government program will have the political and policy degrees of freedom, let alone the budget, to invest in nonprofit capacity in any sustained way. And the age of austerity we are in will only worsen this shortfall. To me this is a critical role for philanthropy to play. Just a portion of the billions that philanthropy puts to work in the service of education, health and human services, youth development, etc. could help assess and put to much better use the hundreds of billions that federal, state and local governments do across these areas.
Typically foundations see their role as scaling up initiatives that government can then “take out” and fund directly, freeing up the foundations to move on and fund their next ventures. Foundations should stay engaged rather than moving on and, by investing in the infrastructure and measurement capacity that government cannot pay for, help society get the most out of the far greater levels of government spending. Rather than seeking to “leverage” other foundations, to use some jargon, foundations should in effect be seeking to “leverage” government funding by increasing its impact.
Nell: Should every nonprofit work towards articulating and measuring outcomes, or does it primarily apply only to social service and education nonprofits? Is there a way for arts and cultural organizations, for example, to move toward outcomes management?
Daniel: I think every enterprise – whether it be a profit-seeking business, a government agency, or a nonprofit, whether it is producing cars and trucks, health and human services, or arts and culture — should seek to get better at what it does. I found Jim Collins very persuasive on this point in his “Good to Great in the Social Sector.”
The desire to improve, to get better at things, is woven into the human psyche, and when this desire is given full expression, by individuals and the organizations they work in, so is our humanity. Whether this quest involves “outcomes” and “measurement” as we conventionally define them depends on context. It may well involve tracking audience surveys and visitor numbers and assessments by informed critics. But it may also involve a troupe rehearsing until it feels it finally has its performance nailed, or a museum director continuing to refine interpretive material that she thinks visitors are struggling to understand. Those behaviors reflect a relentless quest for outcomes in their own right. At the end of the day, performance measures are merely proxies to help us assess our progress toward what we are working towards: an underlying excellence. The excellence itself is really the point.
Photo Credit: Hewlett Foundation
This week I attended the After the Leap conference in Washington D.C. and was blown away. As I mentioned in a post earlier this year, the conference was organized by Social Solutions and PerformWell partners Child Trends and Urban Institute and builds on the momentum Mario Morino has created around his book, Leap of Reason, published in 2011, and the companion book Working Hard & Working Well by David Hunter published this year.
This first-ever conference was an attempt to bring the nonprofit, philanthropic and government leaders who are on the cutting edge of the movement to create a higher-performing social sector together to, as Mario put it “grow a critical mass who can mobilize for greater change.”
What’s Government’s Role in Nonprofit Performance?
Day 1 focused on government’s role in driving social sector performance management. A fascinating panel of government agency leaders, moderated by Daniel Stid from the Hewlett Foundation, discussed various efforts at the federal, state and local government levels to drive evidence-based policy and practice. But some in the audience and Twitter-verse wondered whether government could really be the impetus for a greater push towards measuring and managing outcomes in the nonprofit sector.
How Do You Get Buy-In For Change?
From the big, systemic view, the day quickly shifted for me to the organization-level with the fantastic panel on “Getting Buy-In” from staff, board and funders for a shift towards performance management. Isaac Castillo from DC Promise Neighborhood Initiative, Bridget Laird from Wings for Kids, and Sotun Krouch from Roca explained how they had moved their nonprofits toward articulating and measuring outcomes. The most effective approach seemed to be to ask “Don’t you want to know whether the work we are doing is helping rather than hurting?” Isaac made the urgency to move toward performance management clear, “If you haven’t started doing performance management yet, in 12-18 months you will start losing funding to those who are.”
Can We Convince Funders to Invest?
Day 2 of the conference kicked off with an inspiring keynote address by Nancy Roob from the Edna McConnell Clark Foundation that really served as a call to action for the foundation world. Nancy painted a pretty stark picture of the disconnect she saw between how much money we’ve spent on solving social problems in the last decades and how much actual progress we’ve made. She blamed this disconnect on “our piecemeal approach to solutions.” As she bluntly put it, “We are woefully under-invested in what we already know works.” She laid out 5 steps funders can take to move away from piecemeal and toward transformational social change:
- Make bigger, multi-year investments
- Provide more upfront, unrestricted, flexible capital
- Invest in nonprofit evidence building
- Scale what works with innovation, and
- Adopt an investor mindset
But for Nancy, it’s not just up to funders, nonprofits also need to change. She urged nonprofits to:
- Shed the charity mindset
- Focus on the larger context
- Create a performance management culture, and
- Ask for help to achieve performance
From there, Phil Buchanan from the Center for Effective Philanthropy led a panel with Carol Thompson Cole from Venture Philanthropy Partners and Denise Zeman from Saint Luke’s Foundation asking “Do Funders Get it?” While a few funders are willing to invest in helping nonprofits articulate, measure and manage to outcomes, most are not. The panel suggested that some of this reluctance stems from funder’s lack of humility and fear of what they might find. Audience members suggested that it might also be funders’ lack of performance expertise. (You can read Phil Buchanan’s blog post giving more detail on this panel here.)
From there I attended a breakout session “Funder Investment Strategies to Strengthen Nonprofit Performance Management Capacity” where Victoria Vrana from the Gates Foundation and Lissette Rodriguez from the Edna McConnell Clark Foundation and two of their grantees discussed how they worked together to fund and create performance management systems.
The final panel of the day brought an impressive group of nonprofit CEOs together (Mindy Tarlow from Center for Employment Opportunities, Sam Cobbs from First Place for Youth, Cynthia Figueroa from Congreso de Latinos Unidos, Bill McCarthy from Catholic Charities of Baltimore, and Thomas Jenkins from Nurse-Family Partnership) to talk about how they each had built a performance management system at their organizations, the hurdles they encountered, how they funded it, and where they are now.
Where Do We Go From Here?
Mario Morino rounded out the conference with an inspiring call for us to build momentum. He outlined some new ideas coming out of the conference that he’d like to see developed by 2020, including:
- A “Manhattan Project” of social sector evidence
- A National Commission on Nonprofit High Performance
- An Aggregated Growth Capital Fund to deploy billions to solve entrenched national problems
- A Performance Academy for Social Impact
- Presidential Performance-to-Impact Awards
- Social Sector Center for Quality Improvement
- A Solutions Journalism Network to “lift up the hope spots” in the country
- Leap Learning Communities in local settings connected in a national web
This was one of the best conferences I’ve been to in years. The caliber of the presenters and audience was amazing. It felt like I was witnessing the birth of the next generation of the social sector. Buoyed by the ability to see the writing on the wall, this group is determined to lead the fundamental, and critical, shift towards a more effective sector.
The urgency of this movement became increasingly clear through the course of the two days. Our country is witnessing mounting disparity and crippling social challenges. It is increasingly up to the social sector to turn the tide. And the time is now. As Mario charged at the end of the conference “If we don’t figure out how to build high performing nonprofits, nothing else matters. This is the last mile. Our nation depends on it.”
Photo Credit: tableatny
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