It becomes increasingly obvious to me the longer I am in this space that philanthropy must change just as much, if not more, than nonprofits. And perhaps change is on the horizon, particularly with some key debates happening in the philanthropic world lately.
The biggest of which this month was the showdown between Bill Schambra and Paul Brest (among others) about whether philanthropy should be “strategic.” Add to that the on-going discussion Peter Buffett started last month about philanthropy as “conscience laundering,” and the growing drum beat against the nonprofit overhead ratio, and August was a mind-opening (I hope) month in the world of social innovation.
Below is my list of the 10 best reads in the world of social innovation in August. But please add to the list in the comments.
As always, the 10 Great Reads lists from past months are here.
- First up, Crystal Hayling offers some great advice for new philanthropists, but I would say her advice translates to experienced philanthropists as well. If we want to get better at solving social problems, we have to raise the bar on philanthropy.
- The big debate this month was about how “strategic” philanthropy should be, whether the best philanthropy comes from a community or scientific approach. Bill Schambra, from the Hudson Institute, and Hewlett folk Paul Brest and Larry Kramer went back and forth and back, and of course others chimed in. For me, the most thoughtful response was from Scott Walter. It was an interesting debate, but I think at the end of the day they are saying roughly the same thing, with which I heartily agree, philanthropy has to get better at actually solving problems.
- As I mentioned last month, Peter Buffett wrote a highly provocative rant against philanthropy in July. And this month the debate raged on with some very interesting counterpoints from nonprofit leader Dan Cardinali here and from Nandita Batheja on the Idealist blog here. Buffett’s piece is certainly doing what any good writing should, provoking people to question their assumptions and think in new ways, even if they don’t fully agree.
- Adding to his growing opus, Bill Shore again argues that nonprofits must get bolder in their social change goals. This time Darell Hammond from KaBOOM! and Amy Celep from Community Wealth Partners join in. But Phil Buchanan at the Center for Effective Philathropy doesn’t heartily agree.
- More and more data points to the fact that women are becoming a major philanthropic force. It will be interesting to see how they change the face of philanthropy as we know it.
- It’s always important to get a different perspective, and Brian Mittendorf at the Counting Charity blog provides a really interesting counterpoint analysis to recent concerns about the Clinton Foundation’s financial management.
- I have to admit it, I LOVE a good contrarian, and Arik Hesseldahl is one this month with his great post suggesting that there may be too much hype around Big Data (the idea that the enormous amount of data now available could yield tremendous improvements to the world as we know it). Although he is talking about Big Data’s promise for business and government, there is an equal amount of hype around what Big Data can do to solve social problems. As with everything, there is no magic bullet, so we would do well to understand Big Data’s limitations.
- There is much work to be done bringing the “old” world of philanthropy together with the “new” world of impact investing, so I love to see the two at work together, like Nonprofit Finance Fund’s new project helping the Maine Community Foundation launch an impact investing program.
- And then there was something completely different. If we are to ensure that the next generation cares as much, if not more, about fixing social issues, we must raise compassionate children, which gets harder to do in an increasingly segmented society. Perla Ni offers 5 ways to Raise a Compassionate Child In the Age of Entitlement.
- And lest we forget why we do this social change work, April Greene from Idealist reminds us.
Photo credit: ouzo-portokali
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.
In this month’s Social Velocity blog interview, I’m talking with Phil Buchanan. Phil is president of The Center for Effective Philanthropy (CEP) and was the first chief executive of the organization. Under his leadership, the organization has grown into the leading provider of comparative performance data to large foundations and other grantmaking institutions. Phil also serves on the board of Great Nonprofits and is a columnist for The Chronicle of Philanthropy.
You can read past interviews in our Social Innovation Interview Series here.
Nell: At the Center for Effective Philanthropy you work to make philanthropists more effective at creating social change, but a large part of philanthropy is driven by emotion and passion as opposed to results and data. How do you reconcile a push towards more reasoned philanthropy with the emotional aspect that will always be present?
Phil: I understand that some people feel this tension, but to me, it’s hard to understand because I think emotion and passion and results and data can – and should – cohabitate very happily. The passionate, emotional desire to make change is what inspires the commitment to get results. If you believe deeply in helping people in need, but do it in a way that doesn’t help, what kind of emotional satisfaction do you get from that?
Fay Twersky of the Hewlett Foundation articulated this very well in an essay in Alliance Magazine. She says impact should be pursued with “a warm heart and a hard head.” I like this way of thinking about it.
Nell: One of the the things you promote at CEP is a move from evaluating nonprofits based on overhead spending to evaluating them based on achievement of results. But sadly most funders haven’t yet embraced this distinction. What will it take for funders and the general public to recognize that overhead percentages are meaningless and destructive to the nonprofit sector?
Phil: I think the adoption of better nonprofit performance assessment practices is part of the answer. The more data nonprofits can point to that can show what they achieved with their total budgets, the less relevant how that budget was divided will feel to donors.
Look, I think people tend to gravitate toward that which is available, quantifiable, and comparative. Overhead percentages are all of those things, so they become the default performance measure even those they don’t tell you anything about performance. Caroline Fiennes of the U.K. has a great new book called It Ain’t What You Give, It’s the Way You Give It, and one of the best parts is that she really slays the argument for looking at administrative costs, while also providing guidance on how to approach performance measurement.
The rub is that the only way we’ll get better overall nonprofit performance assessment practices is if funders support that work. In our research, we have seen that, contrary to the stereotypes, nonprofits care about assessment and are working on it. But they want and need much more support – financial and non-financial – from their funders. I hope that funders embrace this and support better assessment practices in service of better outcomes.
I think Mario Morino has been a powerful voice on this topic and I recommend his book, Leap of Reason, to everyone I can. I hope people are listening to Mario because measuring effectiveness isn’t some academic issue. People who work at nonprofits deeply want to be effective. Foundations want to be effective. The people we help desperately need us to be effective. So we should – and we must – figure it out and get beyond empty measures. And many have. There are some fantastic exemplars when it comes to nonprofit performance assessment. But there are not enough.
Nell: In addition to leading CEP, you also serve on the board of GreatNonprofits, which allows individuals (clients, donors, volunteers) to review nonprofits. How does the idea of individual consumer reviews of nonprofits fit into the larger movement to evaluate nonprofits based on outcomes when the average person doesn’t yet understand or embrace the idea of nonprofit performance measurement?
Phil: In some ways I think it’s very easy for anyone to grasp. You’re trying to help someone; shouldn’t you ask whether they feel they have been helped? GreatNonprofits can provide that read on whether individuals served by a nonprofit feel they’ve been helped. I think GreatNonprofits, which Perla Ni founded and leads, is really important and I also think we need other kinds of efforts to collect and analyze beneficiary perception data. We need both the kind of open, web-based opportunity GreatNonprofits offers as well as rigorous, survey-based efforts such as the Center for Effective Philanthropy’s YouthTruth initiative, which helps schools, districts, and funders hear from middle school and high school students. We’re debating school reform in this country yet many of those with power and resources don’t understand the students’ experiences. We know that those experiences correlate to outcomes, so this kind of perceptual data could be a vitally important “leading indicator” of progress.
Nell: Philanthropy tends to be fairly risk averse and focused on program funding, as opposed to the organization-building capital investments (money to build organizations rather than buy services) the nonprofit sector so desperately needs. What do you think it will take to get more philanthropists to make riskier, longer-term, organization-building investments?
Phil: I think there needs to be a greater recognition that we count on organizations to get the work done. Sounds obvious, I know, but I think funders sometimes forget.
It is stunning, and sobering, that despite the valiant advocacy of Paul Brest, Paul Shoemaker, GEO, NCRP, and others, there has been no increase in the provision of general operating support over recent years. But we also need to be careful not to pretend operating support alone is the answer. Our research demonstrates that what really matters to grantees is operating support that is multi-year and a decent chunk of change – six figures or up in annual support, ideally. So the problem isn’t just one of grant type, it’s also one of grant size.
This comes back to assessment, too, in my view. If, as a funder, you know what you’re going after, and there is an organization that is focused on the same goal and can show that it’s delivering results, why would you not provide significant, long-term, unrestricted support? And, if you can’t find organizations delivering results toward your shared goal, why wouldn’t you fund in a way that would allow them to build that capacity?
Nell: You recently wrote a fairly scathing critique of Dan Pallotta’s new book, Charity Case because you thought his approach to advocating for the nonprofit sector was misguided. Yet the nonprofit sector is largely underfunded, undervalued, and dismissed in the broader regulatory and political environment. What do you think it will take to change that reality?
Phil: Pallotta’s book doesn’t advocate for the nonprofit sector that I know – or for one that I would ever hope to see. He wants the sector to become something entirely different, something a lot more like business, something that ultimately might not be discernible at all as a distinct sector. His take on the sector is both ahistorical (he demonstrates almost no understanding of the sector’s past contributions) and ideological (he has written that “the free market is a self-correcting system” that supports our “natural desire to help each other” and “only stops working when it is interfered with”). He is infatuated with free market analogies, believes financial incentives are the key to motivating people despite research demonstrating that they are not, insists that public trust in charities is lower than in other sectors when all credible research shows the opposite, and does not seem to understand that many nonprofits work to address the problems that exist as a result of market failures. His book is a disservice to the nonprofit sector.
So, then, what do we need to do to increase the appreciation of public and government officials for the nonprofit sector?
We need to start by standing up and asserting our value as a sector separate and distinct from business and government. We need to stop buying into the fiction that being effective means being “like a business,” whatever that even means. We need to stop praising the “blurring of the boundaries” and start articulating why we need organizations that pursue mission alone rather than profit for their shareholders. We need to explain why the sector is good for our society, good for business, good for government, good for citizens: we all need the nonprofit sector to be its best for us to be our best. And we need to re-learn our history – Olivier Zunz’s recent book on U.S. philanthropy would be a good place to start.
Yes, of course there is much work to do to improve the sector, but that doesn’t mean we need to tear it down. I wrote a series of blog posts for Duke University’s Center for Strategic Philanthropy and Civil Society a few years ago and argued that just as it is possible to walk and chew gum at the same time, it is possible to believe both that the nonprofit sector is and has been a defining strength of this country and that it must dramatically improve its effectiveness. It is possible to both celebrate the diversity of the sector and its various organizations and push for greater clarity of organizational goals, strategies, and performance indicators. It is possible both to applaud initiatives fostering “social innovation” and the government’s embrace of this push and also recognize what has worked in the past.
We need not tear down the sector to improve it. We need not disparage all that has come before in order to chart a better future.
- Download a free Financing
Not Fundraising e-book
when you sign up for email
updates from Social Velocity.
Sign Up Here
- Reinventing the Nonprofit Leader
It's time for a new kind of nonprofit leader, learn how to become one in this Social Velocity webinar.
- The Problem with Strategic Planning
- Social Media and the Future of Fundraising
- 9 Ways Board Members Can Raise Money Without Fundraising
- Calculating the Cost of Fundraising
- Financing Not Fundraising: Moving From Push to Pull
- Financing not Fundraising
- Financing Not Fundraising: 5 Lies to Stop Telling Donors
- 5 Nonprofit Trends to Watch in 2011
- Financing Not Fundraising: The Plan
- What is Social Innovation?