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David Henderson

How to Use Real Performance Data to Raise More Money

calculator and moneyA big topic of conversation lately has been whether donors really care about impact, or whether they simply just give based on less scientific things like their emotions, or their friends recommendations. Which is why I’m excited to announce that I’ll be participating in a Google Hangout April 30th about using data to attract donors.

Writing in the Stanford Social Innovation Review, Tim Ogden claims that donors have never really been interested in impact. And Ken Berger from Charity Navigator and William Schambra of the Hudson Institute debate (here and here) whether moving the nonprofit sector toward performance management helps or hurts social change efforts.

To add to this conversation, David Henderson and I are hosting a Google Hangout, “How to Use Real Performance Data to Raise More Money,” on Tuesday, April 30th at 2pm Eastern. David is a super smart guy who runs Idealistics, a consultancy that helps nonprofits learn from their outcomes data, increase impact, and demonstrate results to funders and stakeholders. David’s professional focus is on improving the way social sector organizations use information to implement higher impact poverty interventions. He has been quoted in the Chronicle of Philanthropy and has written for Change.org and the Huffington Post. You can read my interview with him from a year and a half ago here.

David and I thought it would be interesting to host a conversation with nonprofit leaders about how nonprofits can use real performance data to raise more money. We’ll kick off the hour-long conversation with a couple of points and a case study or two of nonprofits that are using data to raise more money, but then we’ll open it up to you for questions. You can send us your questions ahead of time (via email to nell@socialvelocity.net or dhenderson@idealistics.org) or simply post them to the Google Hangout here as you watch.

I hope you’ll join us!

How to Use Real Performance Data to Raise More Money
A Google Hangout with David Henderson and Nell Edgington
Tuesday, April 30th, 2013
2pm Eastern

Can nonprofits that use real performance data to raise more money? Are donor increasingly interested in impact data? How can nonprofits communicate their program data to donors? And how should nonprofits respond to questionable performance claims by other organizations? Join David Henderson from Idealistics and Nell Edgington from Social Velocity in a Google Hangout on Tuesday, April 30th at 2pm Eastern to discuss these and many more questions about how nonprofits can use real data to raise more money. We’d love to have you participate in the discussion, so send your questions ahead of time to Nell or David, or leave a comment at the Google Hangout here.

Photo Credit: 401(K) 2013

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Doing Good Work is No Longer Enough

There is an increasing drumbeat in the world of social change that nonprofits must start measuring their work. Thought leaders like Mario Morino with Leap of Reason, Bill Shore’s recent blog post “What Does Success Look Like?” and David Henderson’s (recently interviewed on the Social Velocity blog here) ongoing Full Contact Philanthropy blog, to name a few, are adding to the chorus.

The argument among thought leaders, funders, raters and others in the social change sector is increasingly that nonprofits MUST:

  1. Figure out what they exist to do (a theory of change)
  2. Create a disciplined operational model for creating that change
  3. Measure whether the change is actually happening
  4. Articulate that change in order to garner more support

But all of this is fairly new to the nonprofit sector and not yet widely practiced (by a long shot). In fact, some of these ideas are still quite controversial. Let’s take #2 for example, “Creating a disciplined operational model.” David Henderson analyzes this well in his post last week. Although David gets a little bogged down in jargon, his idea is a really great, but probably touchy, one.

He argues that nonprofits must become more discerning and disciplined about who they provide service to. Because nonprofits have limited resources, they cannot serve everyone. Therefore instead of serving people on a first come first served basis (which is the norm), they should instead serve those who they can best help. In other words, they should determine and then serve those populations of people who will benefit the most from their intervention:

In the case of the youth workforce development program, while all low-income youth would qualify for services, we might have a preference for placing people into the program who are likely to complete the internship. In this case, one could use historical data to fit a predictive model that provides some insight into what characteristics made an individual more or less likely to have completed the program in the past. Under this framework, social welfare maximization would involve not only placing people into the program, but maximizing the number of people in the program who complete the internship.

The idea is that instead of filling up the program with any youth who have a need, the nonprofit would create more social change by thoughtfully selecting types of children on whom they could have the most impact.

To the nonprofit world, which is very much focused on trying to help as many people as possible, this is a potentially radical idea. But if smartly employed, nonprofits could actually provide more social change through this disciplined method. And in an increasingly resource-constrained environment, it makes sense for nonprofits to want to get the highest return on their program resources.

In order to take this approach, however, nonprofits must have a theory of change. You cannot create social change if you don’t:

  • Know what you want that change to be, and
  • Measure whether that change is happening

In an increasingly competitive marketplace, it is getting harder and harder for nonprofits to attract support. The harsh reality is that those nonprofits that develop a smart theory of change, measure whether that change is happening, and then articulate the change to supporters will increasingly be the ones that survive. Not to mention that they will be the ones that actually create social change.

Photo Credit: Colin Smith

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Using Data to Solve Social Problems: An Interview with David Henderson

David HendersonIn this month’s Social Velocity blog interview, we’re talking with David Henderson. David is the founder of Idealistics Inc., a social sector consulting firm that helps 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. David’s professional focus is on improving the way social sector organizations use information to address poverty.

You can read past interviews in our Social Innovation Interview Series here.

Nell: On your blog, Full Contact Philanthropy, you write a lot about making program evaluation accessible to all nonprofits, even small and under-resourced ones, which is something that a lot of those pushing for evaluation neglect to address. Evaluation can be expensive, time-consuming and poorly executed. What is the essence of good evaluation, and, at a minimum, what should all nonprofits be doing to evaluate their work?

David: Whatever the price tag, a good evaluation helps you make better decisions, a bad evaluation does not. If an organization is not open to changing its course of action regardless of what the data suggest, then evaluation has no meaning. Therefore, the most important step in any evaluation is knowing what you want to evaluate and why.

While some evaluations are expensive, they don’t all have to be. Evaluation does not mean just one thing. There is no one right way to do evaluation. Instead, there are a number of ways organizations can use outcomes metrics to inform their work, ranging from randomized control trials (most accurate and most expensive) to simply monitoring whether a few key indicators are getting better or worse.

More important than the certitude of any one evaluation is the regularity with which an organization uses metrics in decision making. It’s not terribly costly to start every staff meeting with an update on how the people you are helping are doing. But this discipline helps create cultural commitment to using outcomes data in decision making, which is really at the core of any good evaluation strategy.

Nell: Is everything in the social change arena measurable? Are their some public good efforts that are so complex or have so many variables that we cannot measure them, yet they still need to happen?

David: When we think about measurement, we tend to imagine a numeric, linear scale with start and end points. Not everything is quantifiable, but that doesn’t mean it’s not measurable.

Organizations collect information all the time. Some of that data is quantifiable and gets stored in spreadsheets and databases. But we also get a lot of important information through visual observations and conversations.

All of this information, quantitative and qualitative, objective and subjective, helps inform decision making. Taking the information we have and establishing evaluative frameworks that help us make systematic program decisions is the real challenge.

Nell: How does government fit into the effort for social change? Can and is government changing quickly enough to keep up and to have a relevant place?

David: Ideally, the non-profit sector would innovate and test social interventions, and governments would take the best innovations to scale. But successful social innovation requires cultural commitment to both evaluation and failure. And in the current funding environment, failure is not an option. That’s a big problem.

With so much pressure on organizations to show evidence of impact, instead of investing in innovating new social solutions, non-profits are hiring marketing consultants shrouded as evaluation experts to help them tell their stories.

If the government is to invest in and scale what works, as the federal Social Innovation Fund purports to do, organizations have to be free to report what does and what does not work. So long as our focus is on story telling instead of truth telling, it’ll be difficult for non-profits to have the latitude to experiment and evaluate freely, leaving the government precious little worth scaling.

Nell: Your particular interest is social change efforts to alleviate poverty. But since poverty is the result of some very serious failures in America’s infrastructure (inadequate education system, broken health care system, etc) is it possible to fix the results of those inadequacies without addressing those much larger structural deficiencies? Or can social entrepreneurs do both?

David: Poverty eradication has to be the goal, but alleviation is pretty darn important to the 43.6 million Americans and billions more worldwide living in poverty today. Social entrepreneurs as well as a myriad of government efforts address both structural causes and the many harms resulting from poverty.

Regardless of a particular intervention’s focus, every effort is more likely to succeed when informed by regular outcomes assessments. Since my firm’s focus is helping organizations use client metrics to make higher impact program decisions, we work with all types of organizations across the anti-poverty spectrum.

Nell: How does your company Idealistics fit into the solution to poverty?

David: Our practice is about helping organizations make smart, high impact decisions that increase social outcomes. Everything we do is underscored by a vision of a social sector that uses evidence in the crafting, implementation, and iterative evaluation of its interventions.

Probably the most important thing we do toward that end is helping organizations establish decision frameworks. A decision framework converts an agency’s theory of change into a tool, or a mathematical model as we think about it, that organizations can test, update, and use in the design and execution of their interventions.

With a solid decision framework in place, we provide analytically oriented consulting and technology systems that help organizations establish data collection pipelines to make sense of their information.

While a lot of our customers hire us so they can better prove to their funders that they’re making a difference, that isn’t our objective. But the fact is our customers do very well with their funders.

Our clients are able to uniquely demonstrate an analytical approach to their work, and have the evidence they need to back their claims of progress, which makes them very competitive in the evidence-deficient social sector landscape. However, for me and my team, the real gratification is not that our customers impress their funders, but that they are better positioned to change the lives of the people they serve.

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Creating The Donors You Really Need

A new year is always a time to re-evaluate things, to forge a new approach, to finally change something that just isn’t working anymore. In the nonprofit world, how nonprofits and their major donors interact could stand a new approach. It is difficult, if not impossible, to be open and honest with those who fund your work, as Ann Goggins Gregory has pointed out. And sometimes nonprofits feel beholden to donors who are taking the organization in the wrong direction, in this case blogger David Henderson encourages nonprofits to “fire bad donors.”

This disconnect between nonprofits working to solve problems and the donors who fund them can sometimes seem a vicious, unending cycle.

But with a new year comes a new opportunity to alter this pattern. Here’s what nonprofit leaders can do to create the donors they really need:

  • Inspire your donors. Make your ask for money from a place of impact, not need. Talk about your bold, ambitious strategies for change. Describe an opportunity so compelling, so invigorating, so inspiring that donors can’t help but reach for their pocketbook and follow where you lead. Part of your job as a nonprofit leader is to paint such a clear, desirable picture of a future goal that it becomes a magnet for the resources needed to get there.

  • Ask for more. It’s not a donor’s job to automatically give you as much as they possibly can. Rather, it’s your job to convince them to give until it hurts. When a donor gives you less than you asked for, or less than it’s really going to cost, push back. Don’t just thank them and walk away. If they truly can’t or won’t give more, ask them to help you find a funding partner. If you want donors who share the burden of your work, treat them as such. Encourage them to give more, bigger, better. Not just with their pocketbook, but with their rolodex too. Be honest with them about how they could really make a difference and at what level.

  • Command respect as an expert. Donors sometimes carry a hubris that they know best how to spend the dollars they invest in an organization. Work to forge a partnership with your donors that recognizes  you and your organization as the solution provider. A donor’s ideas and insights as an investor should be welcome, but at the end of the day you know what is best for your organization, its mission and the impact you are working to achieve. Make sure your donors know that.

  • Stop apologizing for administrative costs. Educate your donors about how significant social change can’t be bought on a shoe string. If your donors are committed to the work your organization is doing, then they must invest in the personnel, space, technology, fundraising and other needs that are integral to that work. Don’t let funders only fund “direct program expenses,” as if such a thing even existed. Don’t let your donors make meaningless distinctions that end up crippling your organization financially.

  • Educate donors about capacity capital. To take the last point even further, capacity capital (or money for personnel, technology, systems, space) is a new concept for philanthropists who tend to like to fund programs alone. But capacity capital could actually have a much higher social return on investment for donors because it strengthens an organization so that it can create more impact in perpetuity. But donors won’t understand that on their own. You need to make that case. Figure out what it will actually cost to hire the staff, secure the space, buy the technology you need. Then educate your donors about how funding those things could transform your organization and your impact.

It’s exhausting when you lack the donors you really need. But you can’t just wait around hoping they’ll see the light. It’s up to you to transform a mediocre or troublesome donor into a competent and willing partner in change.

Photo Credit: WTL Photos

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