In this month’s Social Velocity blog interview, I’m talking with Perla Ni, CEO of GreatNonprofits. Perla was the founder and former publisher of the Stanford Social Innovation Review, the leading journal on nonprofit management and philanthropy. Prior to her work at SSIR, Ni co-founded Grassroots Enterprise, later acquired by global public relations firm, Edelman. A frequent speaker on nonprofits and philanthropy, she has been named a “Top Game Changer” by the Huffington Post.
You can read past interviews in the Social Innovation Interview Series here.
Nell: GreatNonprofits is an interesting spin on the growing nonprofit ratings market in that you gather consumer reviews of nonprofits. Why do you think what donors, volunteers, and clients have to say about a nonprofit is important to potential donors?
Perla: We think people with direct experience with a nonprofit, especially the nonprofit’s beneficiaries, are in the best position to tell us about the difference that that nonprofit has made in their life or their community.
In the seven years that we’ve been doing this, we have learned a couple of things about collecting beneficiary feedback. It’s not only the right thing to do – to empower the voice of beneficiaries so that they are treated with dignity – it is also the smart thing to do. It’s the smart thing to do because it is highly correlated with actual program outcome. We’ve seen the linkage between effective outcomes and organizations that collect and listen to their beneficiaries.
Although there are ongoing conversations about the best metrics for judging quality, there is agreement that, for almost every sector, consumer satisfaction and feedback drive quality through transparency and competition.
A trend toward human-centered design, where products are designed and rapidly iterated upon with feedback generated from users, is another example of how client responsiveness leads to improved outcomes.
GreatNonprofits has been collecting feedback about a wide variety of health, human service, arts and education organizations.
Nicole Molinaro, former executive director of Communities in Schools of Pittsburgh-Allegheny County, a Pennsylvania-based dropout prevention program serving at-risk youth, found great value in constituent feedback, “What interested us in being open to reviews from our constituents is really the desire to improve our services. Without hearing feedback about what we’re doing well and what we can do better, we really can’t make improvements in how we serve our kids.”
Due in part to feedback submitted by students, the organization added a student lounge as a safe, accessible place for the students to spend time in before and after programs.
In a recent GreatNonprofits survey of nonprofits, we found that a large number of nonprofits are listening to beneficiary feedback and some are taking action.
- 78% share reviews with board members
- 72% share reviews with staff
- 54% share reviews with volunteers
- 49% share reviews with donors
- 23% share reviews with clients
- 26% say reviews have impacted their operations
In fact, in Learning for Social Impact, a report for donors and foundations by McKinsey & Company, the number one recommendation given to funders is for them to “hear the constituent’s voice.”
These rich, detailed and concrete experiences from people who have actually experienced the work of the nonprofit—been fed by the food bank, helped by the after-school program—are a better way to discover the most effective charities than through tax forms. According to our survey of our users:
- 90% of donors say that reading reviews of clients help them understand the work of the nonprofit
- 80% of donors say that it influences their decision to give
Nell: How does a great customer experience (a review from a volunteer that had a great experience with a nonprofit) translate into a nonprofit’s ability to create social change? Or should or does a donor care about that?
Perla: In the excellent article “Listening to Those Who Matter Most, The Beneficiaries” in the Stanford Social Innovation Review, the authors show that, in the studies about school performance and patient outcomes, there is a high degree of correlation between listening to the student/patient and success.
Donors care about real world outcomes–how is my money helping?
Nell: What do you make of the growing debate about what information donors want and actually use in making their funding decisions? Do you think how donors make their giving decisions and what information they use to make those decisions has or is changing?
Perla: It starts with the donor. Donors want to improve the world, to make a difference. And the donors typically want to spend their time and money effectively. How do you find a nonprofit that is aligned with your passion and making a real difference on the ground?
Well, it requires listening to the voices of people on the ground – the ex-felon in a job training program, the student receiving mentorship, the volunteer who organized the environmental conference, the donor who visited the school in Cambodia – who have seen the first-hand impact of nonprofits.
These are not the usual people that donors listen to – they may be different from us in so many ways – income, class, geography, or race.
And if the donor wants to empower real, tangible changes in the lives of people and communities they want to improve, he/she needs to have the discipline to do that. It’s part of the first rule of philanthropy “don’t do something about me, without me.”
It’s a radical discipline, transparency and accountability that we must hold each of ourselves to, including the donor.
We don’t see this discipline as just funding decision-making. We see this as community engagement. The donor and the beneficiaries needs to be part of this philanthropic marketplace together to share insights on what works, what doesn’t yet and what could help to make a greater difference.
Nell: You were also the founder of the Stanford Social Innovation Review which is currently celebrating its 10th year. 10 years in to this world of social innovation what do you think we have to show for it? Have we gotten better at solving social problems?
Perla: If you Google “social innovation,” you get 648 million search results. This wasn’t at all the case 10 years ago! We pretty much invented that term.
One of the accomplishments, I think, is that social issues are no longer ghettoized as nonprofit issues. It’s not just a nonprofit problem or a business problem or a technology problem. Social innovation, which was always focused on finding new ways to solve problems, agnostic of the approach of the sector, is broadening our framework and ways that we network to achieve our goals. Now published by the incredibly prolific Stanford Center on Philanthropy and Civil Society, SSIR reaches business people, foundations, technology leaders, and nonprofits. Social innovation is about bringing an open, entrepreneurial outlook to enterprises – start-up and mature organizations alike. We’d also like to think that it helped popularize other concepts such as social entrepreneurship, which has blossomed into an area of study in school, as well as create a new kind of career identity. At the core is a belief in not being complacent, not doing the same old same old, or talking to the same people. It’s really about creating a broad mindset for ideas and different people.
Nell: Much speculation has occurred about what effect millennial donors will have on philanthropy, because of the huge wealth transfer they will enjoy, their large numbers and the new ways they are sharing information about their giving. What are your thoughts on how or if Millennial donors will change philanthropy?
Perla: Millenials are more civic-minded, more public about their giving and more likely to be bifurcated in their giving – give locally and internationally.
They may find the idea of donating to their parents’ alma mater or their parents’ charity as rather stuffy. They are a more connected, shop local, eat local, biking/walk generation – and so they are more drawn to the idea of helping their local community. They are also well-traveled and more connected internationally, so they have a high interest in giving internationally as well.
A new report from the Dorothy A. Johnson Center for Philanthropy and 21/64 gives us the first real glimpse into the minds of the next generation of philanthropists, and it’s fascinating. These are not your father’s philanthropists. Millennial and GenX donors (wealthy individuals, or individuals who will inherit wealth, born between 1964-2000) will control more philanthropic dollars than any previous generation. And more importantly, they think about giving in very different ways than their parents or grandparents did. Which means nonprofits need to pay attention.
This next generation of philanthropists is so critical because it’s estimated that $41 trillion will transfer from the Baby Boom to these next generations in the next 40 years. And since much of this wealth could become philanthropic, some have predicted “a new golden age of philanthropy.”
But it’s not just the unprecedented wealth that makes this new generation of philanthropists so important, it’s the fact that they want to fundamentally change philanthropy. According to the report: “They want to make philanthropy more impactful, more hands on, more networked.”
The key findings from the report are that these NextGen donors are:
- Focused on Impact. “They see previous generations as more motivated by a desire for recognition or social requirements, while they see themselves as focused on impact, first and foremost.”
- Giving Based on Values. “They fund many of the same causes that their families support and even give locally, so long as that philanthropy fits with their personal values.”
- Looking to Be Engaged. “Giving without significant, hands-on engagement feels to them like a hollow investment with little assurance of impact.”
- Paving Their Own Way. “While they respect their families’ legacies and continue to give to similar causes and in similar ways as their families, they are also eager to revolutionize philanthropy.”
This report is further proof of the major trends changing the nonprofit and philanthropic sectors. Given where the sector is heading, there are three things nonprofit leaders should understand and embrace:
- Outcomes are here to stay. In order to compete for funding you must be able to prove the results of what you are doing, what change you are creating. NextGen donors are doing their homework and want to understand what impact their dollars will have. To stay relevant, you need to start by creating a theory of change and then figure out how you can being managing to outcomes.
- Giving has gone social. NextGen donors rely heavily on their social networks to make decisions, including their giving. And they offer their knowledge of worthy causes to their friends as well. So if you aren’t part of the social network you will be left behind. Start to open your organization to become a networked nonprofit and watch your support and influence grow.
- Donors are more than a checkbook. This next generation of donors doesn’t want to just write a check, have their name on a wall and be done with it. They want to really get to know the causes in which they invest. And the word “invest” is an apt one. These donors want to give money, time, mind-share, networks to things they believe in. And if you can employ that passion and investment effectively you will get so much more than just dollars. So figure out how to engage donors in much deeper, more meaningful ways.
This is a really exciting time for philanthropy and ultimately for the nonprofit sector it funds. But it’s up to nonprofit leaders to understand these fundamental shifts and adapt accordingly.
Photo Credit: www.nextgendonors.org
In our ongoing blog series, 10 Great Social Innovation Reads, below are my top 10 picks (ok, if you really count it’s 11, but consider it added value) for what really stood out in the world of social innovation in April. But I’d love to hear what you think the best reads last month were. Please add your favorites from the past month in the comments.
- Are Better Days Ahead for Fundraising? It could be, according to a new fundraising survey and this infographic.
- But maybe not, since according to new IRS data (that disputes the annual GivingUSA survey) Americans gave about 20% less during the recession than before it.
- What Can Junk Food Teach Philanthropy?: Sean Stannard-Stockton from Tactical Philanthropy takes a look at how junk food is marketed and wonders if we could apply the same principles to get more people to become philanthropists.
- An interesting controversy has been brewing around the social enterprise darling, TOMS Shoes, which gives a pair of shoes away for every pair purchased. But some have begun to argue that this type of cause-related marketing is actually quite harmful. The Triple Pundit blog summarizes the debate: B1G1 Virus and the Cause Marketing Paradox.
- There are two new generations of donors on the horizon, Millennials and Generation Z. Do you know what you need to about Millennials?: What do – and don’t – we know about Millennial donors?
- And Is Your Nonprofit Connecting with Generation Z?
- The Nonprofit Finance Fund has been building a treasure trove of information, discussion, tools etc on social impact bonds, a revolutionary way to fund nonprofit impact through government, all in an effort to make them a reality in America.
- The Path to Sustainability: Bob Ottenhoff from GuideStar gives a great argument about the lifecycles of nonprofits and how revenue must move from foundation support to some sort of market support over time.
- From the Philanthropy411 blog comes a great list of resources for nonprofits entering, or looking to enhance their presence in, the world of social media: 20 Social Media Resources for Nonprofits
- Impact Market Failure: Kevin Starr from the Mulago Foundation challenges funders to start funding organizations that can achieve impact and address the failure of the impact funding market.
Photo Credit: susivinh
- Download a free Financing
Not Fundraising e-book
when you sign up for email
updates from Social Velocity.
Sign Up Here
- Do You Want to Attract Major
Donors to Your Nonprofit?
Find Out How in the
Attract Major Donors