As I mentioned earlier, it is so important to take time away to rejuvenate and reconnect with your passions, family and friends. So I am taking my own advice and taking some time off later this summer to connect with the world outside of social change.
And so for the second summer in a row I’ve asked a group of social change thought leaders to write guest blog posts in my absence (you can read last summer’s guest blog posts here).
I am so excited about this year’s group of amazing social change thinkers. They are experts in social change finance, philanthropy, political reform, outcomes data, organizational effectiveness and much, much more. They are smart, thoughtful, engaged and visionary leaders. And they are all helping to move social change forward in big ways.
Below is the lineup of guest bloggers with background information on each of them. Their posts will begin in late July. Enjoy!
Antony is the CEO of Nonprofit Finance Fund (NFF), a national nonprofit and financial intermediary where he oversees more than $340 million of investment capital and works with philanthropic, private sector and government partners to develop and implement innovative approaches to financing social change. NFF also creates the annual State of the Sector Survey. Antony writes and speaks on the evolution of the social sector and the emergence of the global impact investing industry. Prior to leading NFF he was Managing Director at the Rockefeller Foundation. He is the founding board chair of the Global Impact Investing Network and convened the 2007 meeting that coined the phrase “impact investing.” You can read my past interview with Antony here.
Kelly is a program officer at the Hewlett Foundation working on their Madison Initiative, which focuses on reducing today’s politically polarized environment. Before joining Hewlett, Kelly worked as a strategy consultant with the Monitor Institute, a nonprofit consulting firm, where she supported a range of foundations’ strategic planning efforts. In addition to her experience as a strategy consultant, Kelly has worked with various nonprofit and multilateral organizations including Ashoka in Peru, the World Bank’s microfinance group CGAP in Paris, Technoserve in East Africa, and both The Asia Foundation and Rubicon National Social Innovation in the Bay Area. Kelly guest lectures on impact investing at Stanford’s Graduate School of Business and often writes for the always thoughtful Hewlett Foundation blog.
Phil is President of the Center for Effective Philanthropy (CEP), a nonprofit that is the leading provider of data and insight on foundation effectiveness. CEP helps bring the voice of grantees and other stakeholders into the foundation boardroom and encourages foundations to set clear goals, and coherent strategies, be disciplined in implementation, and use relevant performance indicators. Phil writes and speaks extensively about nonprofits and philanthropy and rarely pulls punches when he does. He is a columnist for The Chronicle of Philanthropy and a frequent blogger for the excellent CEP Blog. He was named to the 2007, 2008 and 2014 “Power and Influence Top 50” list in The Nonprofit Times. You can read my past interview with Phil here.
Kathy is Organizational Effectiveness and Philanthropy Director at the David and Lucile Packard Foundation where she helps grantees around the world improve their strategy, leadership, and impact. Her team makes grants on a broad range of organizational development issues, from business planning to social media strategy to network effectiveness. She also manages the Packard Foundation’s grantmaking to support the philanthropic sector. Prior to joining the Foundation, she worked in a non-profit, on Capitol Hill, and in state and local government in California. Kathy serves on the board of Grantmakers for Effective Organizations and on the advisory committee for the Center for Effective Philanthropy. You can read my past interview with her here.
I asked David to be a guest blogger again this summer because he is so insightful and often points out things that few others in the sector are willing to acknowledge. He is Director of Analytics for Family Independence Initiative, a national nonprofit which leverages the power of information to illuminate and accelerate the initiative low-income families take to improve their lives. David is also the former founder of Idealistics, a social sector consulting firm that helped organizations increase outcomes, demonstrate results, and organize information. He writes his own blog, Full Contact Philanthropy, which is amazing. You can read his past guest blog post here and my interview with him here.
In today’s Social Velocity interview, I’m talking with Lowell Weiss, President of Cascade Philanthropy Advisors, which provides personalized guidance to foundations and individual donors seeking to deepen their impact. Previously, he served in leadership roles at the Bill & Melinda Gates Foundation, the Morino Institute, and in the Clinton White House.
You can read past Social Velocity interviews here.
Nell: Why do the Leap Ambassadors believe now is the right time to introduce the Performance Imperative (PI) to the nonprofit sector? There have been past attempts to move the sector toward outcomes and performance. What makes this effort and this timing different?
Lowell: We don’t know if we’ll break through with this effort. But the 70+ members of the Ambassadors Community are committed to giving it our all, because we believe that performance matters more than ever. The social and public sectors are increasingly steering resources toward efforts that are based on a sound analysis of the problem, grounded assumptions about how an organization’s activities can lead to the desired change, and leadership that embraces continuous improvement.
High performance is all too rare in our sector today. In fact, we don’t even have a commonly accepted definition of the term “high performance.” The PI is our attempt to create that common definition and then start the process of creating guideposts to help nonprofits who are motivated to improve their performance for the clients and causes they serve.
We’re not aware of any other effort devoted to this mission-critical topic that has engaged so many top nonprofit executives, funders, and thought leaders as co-creators. Perhaps even more important, the PI goes beyond the typical focus on helping nonprofit leaders do things right. When leaders do things right, they can achieve strong operational performance but not necessarily meaningful results for beneficiaries. To achieve the results embodied in their mission statements, leaders must go the extra mile, through diligent internal monitoring and external evaluation, to ensure they’re also doing the right things.
Nell: Does the PI apply to any and all nonprofit organizations? Is it a measuring stick that any size and domain area nonprofit should use, or are there certain types of nonprofits for which this really works?
Lowell: We believe the insights in this document are most immediately applicable to nonprofit organizations with budgets of $3 million or more. But many of the basic management principles apply to organizations of any size, just in less-intensive ways. Some of the details have a special focus on organizations that provide direct services. We believe the overarching framework is relevant for organizations of almost any type.
Nell: What will keep the Performance Imperative from becoming a dusty document rather than a movement? What does success look like for this movement and how will you measure whether that happens?
Lowell: Let’s face it: The topic of high performance is not a lightning-fast meme that will spread like a left shark or right-wing conspiracy theory. It’s a slow, complex idea that will require patient, methodical work to advance. Hence the importance of the Leap Ambassadors Community, a group of leaders who care deeply about high performance and are willing to share the gospel with trusted colleagues and peers.
We believe that when leaders with strong beliefs and passion coalesce around a common purpose, they can build a collective power and influence to drive positive change. They can create an infectious enthusiasm to pull other like-minded players into a growing community of action. That can only happen when you take the time to build relationships, trust, quality work, and collective pride in that work. Overall, we’ll judge our success based on a) to what extent the PI becomes an established framework for increasing the understanding and expectation of high performance as a critical pathway to greater societal impact; and b) to what extent the Leap Ambassadors Community demonstrates itself as a thoughtful, knowledgeable, aligned community of leaders and earns respect, collaboration, and support from prominent players in the field.
To be more concrete about how we will know if we’re on the right track, we’ve established metrics for the growth and engagement of the Ambassadors Community as well as for the value of the PI itself. Here a few of the milestones we hope to achieve over the next year:
- 100‐150 ambassadors have jelled as a community and are truly aligned with the community’s purpose.
- At least 25 nonprofits commit to using the PI to assess their strengths and needs; increase the board’s focus on mission effectiveness; improve their professional-development and organization-building efforts; or otherwise use the PI as a North Star to guide their journey toward high performance.
- Three to five foundations adopt the PI for themselves and their grantees, and they begin to apply the PI in their grant decisions and grantee support.
- Three charity ratings or information providers build the PI into their offerings.
- At least two vendors prominently use the PI in their suites of products and services.
- At least two prominent nonprofit management and leadership programs incorporate the PI as a core staple in their products and services.
- At least one institution creates a prominent award aligned with the PI or adapts an existing award.
Nell: Where do funders and regulators fit into this push for higher performance in the sector? One of the things that holds nonprofits back from high performance is an inability to spend the money it takes to achieve high performance (money for infrastructure, evaluation, staff, etc.). How do we fix that and where does fixing that fit into the movement’s plans?
Lowell: Funders and regulators can and must play a role. Right now, I’m helping a multiservice agency transition from providing compassionate care to ensuring that its clients achieve meaningful, measurable, sustainable life outcomes. The agency is trying to live the PI. But here’s the sad reality: The journey toward high performance is making the organization’s development challenges harder, on net. That’s because there are so few funders who understand the value of high performance—and even fewer who reward it.
To make the leap to high performance, nonprofits need creative funders willing to think big with them—not just ask for more information on results. They need funders who understand that making the leap requires more than program funding and more than the typical “capacity-building” grant. They need funders who make multi-year investments in helping nonprofit leaders strengthen their management muscle and rigor.
That’s why we’re so supportive of the work of Results for America and the Coalition for Evidence-Based Policy, organizations that are helping governments to base funding decisions on evidence and results. And that’s why the Ambassadors Community is developing the case for high performance that we can start bringing directly to funders. Bridgespan Group Co-Founder and former Social Innovation Fund Director Paul Carttar and Center for Effective Philanthropy President Phil Buchanan are co-leading a working group of ambassadors to build the case for funders. They are planning to convene a dozen+ foundation leaders to help flesh out the most effective arguments and evidence we can assemble to persuade funders that they have a better chance of accomplishing their missions if they support their grantees’ pursuit of performance.
Photo Credit: Cascade Philanthropy Advisors
Since I was out of the office for part of July and checked out of social media (which I highly recommend!), the below list is in no way comprehensive. But it is what caught my eye in the world of social innovation in July (when I was paying attention). More than ever, please add what I missed in the comments below.
You can see the 10 Great Reads lists from past months here.
- In a highly provocative op-ed, Peter Buffett, son of Warren Buffett, wrote a pretty scathing rant against today’s philanthropy, calling it “conscience laundering — feeling better about accumulating more than any one person could possibly need to live on by sprinkling a little around as an act of charity.” Needless to say, much argument followed, including Howard Husock’s post arguing that Buffett is “far too pessimistic about what philanthropy, well-conceived, can accomplish.”
- Dan Cardinali, CEO of Communities in Schools and an emerging voice on the importance of measuring nonprofit outcomes, wrote a third piece in his series on redefining the nonprofit sector. This one explores the need for nonprofits to “hold ourselves accountable to objective measures and quantifiable outcomes.”
- And another nonprofit leader trying to shake things up, Bill Shore of Share Our Strength, offers the provocative “We Just Don’t Have the Money, and Other Fibs We Tell Ourselves“.
- Antony Bugg-Levine from the Nonprofit Finance Fund provides additional fodder to the conversation with his post “Navigating Tough Trade-offs in the Era of Scarcity.”
- Lucy Bernholz, philanthropy truth teller and future seer, offers three ways we can reinvent philanthropy in this great, short video brain dump.
- Kathleen Enright, CEO of Grantmakers for Effective Organizations, talks with Paul Carttar, former Director of the Social Innovation Fund, about what he learned there. It remains to be seen what impact the Social Innovation Fund will have, but as Paul says, government can and must play a role in social innovation, “The challenge for everybody — for government and for philanthropy — is to understand what each has to offer.”
- The New York Times uses Think Impact (which encourages entrepreneurship in third world communities) to provide an interesting case study of the dilemma of deciding whether to be a for-profit or nonprofit social change organization.
- Ever provocative, Phil Buchanan from the Center for Effective Philanthropy argues that the approach MBA programs take in teaching philanthropy “denies the reality that nonprofits and philanthropy work to address the problems that have defied markets…and, in many cases, are a result of market failure.”
- Writing on the Pioneers Post blog, Jeremy Nicholls takes issue with the word “impact” and encourages us to think about “value” instead.
- The National Committee on Responsive Philanthropy found that in 2011 American foundations increased unrestricted giving by 50% (from 16% of all grant dollars going to support general operating in 2010 to 24% in 2011). Now that’s an exciting trend!
Photo Credit: josue64
June was all about attacking some pretty fundamental roadblocks in the way of social change. From the pivotal “Pledge Against The Overhead Myth,” to a new database for all nonprofit organizations, to moving philanthropists from innovators to capacity builders, to ideas for growing the level of giving, it seems June was about putting everything on the table and exposing what stands in the way of progress.
Below are my 10 favorite social innovation reads in June. But, as always, add your favorites to the list in the comments below. And if you want to see my expanded list, follow me on Twitter, Facebook, LinkedIn, or Google+.
You can see the 10 Great Reads lists from past months here.
- The big news in June was GuideStar, Charity Navigator and BBB Wise Giving Alliance’s Open Letter to the Donors of America and their kick-off of the Pledge to End the Overhead Myth. The three nonprofit review organizations are on a quest to expose the destructive nature of the overhead myth.
- This exciting announcement was followed quickly by some great articles. Kjerstin Erickson’s (former Executive Director of FORGE) eye-opening post about how the overhead myth can ruin a great nonprofit. And Ann Goggins Gregory (most famous for the seminal Nonprofit Starvation Cycle article in a 2009 Stanford Social Innovation Review that arguably started the entire overhead debate) great post about what nonprofits can do to speed adoption of the idea of overhead as myth. And Phil Buchanan from the Center for Effective Philanthropy chimes in with what foundations can do. And writing on the Grantmakers in the Arts blog, Janet Brown seems to agree, arguing that “with more efforts for honest assessment and honest communication between funders and nonprofits, we can stop dancing solo and begin dancing as real partners.”
- Antony Bugg-Levine, from the Nonprofit Finance Fund, gets down to brass tacks, gleaning 3 things that funders can do to help nonprofits from the NFF’s most recent State of the Sector survey.
- Echoing these same themes, Dan Cardinali, President of Communities in Schools, argues in the Huffington Post Impact blog that “Philanthropists…must come to grips with their new role as capacity builders rather than innovators.” Amen to that!
- But the reality is that foundations aren’t using innovative tools already available to them. A recent study by the Indiana University Lilly Family School of Philanthropy found that only 1% of US foundations are using PRIs (program-related investments), which I think is an enormous missed opportunity.
- Keeping with their ultimate goal of building the data infrastructure necessary for social change to thrive, Markets for Good announces the new BRIDGE project, which assigns all nonprofits a “numerical fingerprint” so that we can eventually understand the global social sector at scale.
- The annual unveiling of philanthropic giving numbers shows the same result, giving as a share of Gross Domestic Product has not strayed far from 2 percent over the past four decades. Suzanne Perry offers some reasons why, past failed attempts to grow the figure, and new ideas for moving the needle.
- The Dowser blog interviews Patrick Dowd, founder of the Millennial Trains Project, a ten day transcontinental train journey where each of the 40 Millennial riders profiles a crowdfunded project to build a better nation.
- If you wonder whether social media can actually move social change forward, check out this fascinating case study. A Facebook app encouraging organ donation resulted in an initial 2000% increase in organ donor sign ups. Who knows if those rates will continue, but the experiment definitely demonstrates the power of social media.
- There is a lot of hype in the world of social innovation, and two contrarians offer some thought-provoking perspectives about digging beneath the hype. First Daniel Ben-Horin is fed up with social entrepreneurs who don’t realize what a long haul social change is, when he notes “This making a difference stuff, it turns out, can be a real grind.” And Cynthia Gibson argues that we need to create a culture within the social change space that “encourages healthy skepticism.”
Photo Credit: mindfire3927
In this month’s Social Velocity blog interview, I’m talking with Jim Canales. Jim is President and CEO of The James Irvine Foundation, the largest multi-issue foundation focused exclusively on the state of California. Under his leadership, the foundation has adopted a more targeted approach in its grantmaking programs, focusing on three areas — Arts, California Democracy and Youth — of critical significance to the state’s future. Jim also serves on the boards of Stanford University, the Monterey Bay Aquarium and the College Access Foundation of California.
You can read past interviews in the Social Innovation Interview Series here.
Nell: One of the four grantmaking principles of the Irvine Foundation is “Invest in Organizations,” meaning that you are committed to providing grants to build nonprofit organizations (evaluation, operating support, infrastructure). This is a pretty radical idea for most foundations. What do you think holds other foundations back from this kind of investment and what will it take to get more of them to embrace the idea of organization building as opposed to just supporting direct programs?
Jim: This question of general operating support versus project support has been an ongoing debate in the nonprofit sector, and I’d like to suggest that we may be creating for ourselves a false dichotomy that may not be helpful. I’d suggest we focus on the end goal, not the means. Let’s start by asking the question: How can we maximize impact toward the shared goals of a foundation and its grantees? By asking the question in that way, we naturally have to explore whether we are investing sufficient resources, in the right ways, so that our grantee can have the impact we both seek.
That’s how we try to approach our work at Irvine. At times, we may make grants for general operating support; in other cases, our grants would not be characterized that way – and yet we try to ensure we are investing the necessary resources for the organization to achieve its goals. That will, by necessity, require investment in the infrastructure or organizational development needs that are critical to success. Without that support, whatever project or program we’re funding can’t and won’t have the impact we both seek.
Another part of this question presupposes that foundation staff are able to recognize and address organizational needs. Because we believe that’s an important ability, you will notice that each of Irvine’s program directors has held senior positions in nonprofit organizations. Each of them brings an understanding of organizational development, financial management, board development and all that it takes for an organization to succeed and thrive.
Nell: The Irvine Foundation tends to be fairly transparent in its work and even does an annual survey to gauge how the foundation is viewed by grantees, the social sector, other philanthropists, etc. What do you gain from this survey and how do you integrate what you find into your work going forward?
Jim: This goes back to the time we adopted our current strategic directions in Arts, California Democracy and Youth. At that time, a task force of board members and senior staff explored the question: How will we know we are making a difference? Out of that exploration came a framework that we use to assess our performance on an annual basis, and one of the key elements of that framework is constituent feedback.
Feedback is critically important in philanthropy. If you look at foundation initiatives that have failed — and I would include some of our own — one common theme is that feedback loops were not sufficiently robust. Grantees often are reluctant to come forward with bad news or criticism. And our sector doesn’t have a strong track record of consistently gathering candid feedback from our various constituents, whether that’s grantees or other stakeholders.
Phil Buchanan and his colleagues at the Center for Effective Philanthropy have played a catalytic role in improving philanthropy’s feedback loops through CEP’s Grantee Perception Report and other assessment tools. Irvine has commissioned two grantee surveys from CEP over the last seven years. And last year, we commissioned a separate stakeholder survey gathering opinions from leaders in our fields and the nonprofit and philanthropy community in general.
In each of these cases, we have found the data immensely valuable and used it to improve our performance. And we’ve tried to be transparent about it: We posted the results of the grantee perception reports on our website, and, more recently, I described what we had learned from the stakeholder report of 2012. In all instances we have sought to describe how we intended to use these findings to improve our work going forward.
There does remain, however, one area we have not fully explored: So far, we haven’t done very much to gather feedback from the people who benefit from the work that we support, which is obviously a critical constituent for any foundation. But we are following what others are doing in this regard to see what they have learned and how it might apply to us. An example of that is YouthTruth, the national survey of high school students that CEP developed in partnership with the Gates Foundation. I commend the article that Phil and others authored in the recent Stanford Social Innovation Review on this very topic.
Nell: One of the things that came out of your survey was a desire to see the Foundation take more risks. What does taking more risks mean to the Irvine Foundation and how do you think you will go about doing that in the coming years?
Jim: We have to start by defining risk. At Irvine, we’re not interested in risk for risk’s sake. Rather we are trying to understand the relationship between risk and reward and our tolerance for ambiguity and even failure. In the context of philanthropy, I think risk is about trying to balance the need to invest our resources wisely, while also taking advantage of the fact that we have very few restrictions on how we invest those resources.
For those of us in endowed foundations, we have much to learn about risk-taking from our investment colleagues who think about it in the context of managing a foundation’s endowment. And we have benefited from discussions amongst our program and investment teams on this subject. Our investment colleagues are willing to take risks on investments that offer the potential for greater return. But they know that to maximize returns over the long run, you need to have a balanced portfolio. So it’s not just about taking lots of risks; it’s about balance and a portfolio approach.
And ultimately, part of taking risk is about being comfortable with failure and learning from it. As part of our annual report on the foundation’s progress, we have a section that covers what we’re learning from our programmatic work and how those lessons can be used to further improve our strategies.
Nell: The Irvine Foundation is very much focused on evaluation, yet outcomes measurement is still difficult for the majority of nonprofits to achieve, given that most nonprofit funding sources aren’t interested in funding it. How do we get past the catch-22 of not being able to find funding for evaluation, but increasingly needing evaluation to get funding?
Jim: We approach evaluation as a tool that enables us to understand the effectiveness of key programs and initiatives, to learn from the progress and challenges along the way, and to demonstrate the value of approaches that will have an impact. In our experience, it is important to think carefully at the outset about what stage of development the work is in and to align the evaluation accordingly. We cannot evaluate everything, so we need to be selective about when and why we choose to use this tool.
I see evidence of a change underway in how the social sector and philanthropy approach evaluation. There is emerging greater interest in tools for measuring progress and impact. The proliferation of assessment tools available from organizations like CEP and PerformWell suggest that we’re moving beyond talking about the problem to developing real solutions.
As a complement to this, we are broadening our understanding about the purpose of evaluation. More and more foundations view evaluation less as the thumbs-up or thumbs-down audit and more as a tool for learning, strategic refinement and improvement. It’s been interesting to see foundations create senior-level roles like Chief Learning Officer or Director of Strategic Learning, as an indication of the value and importance of this work. I am of the belief that the more we shift toward evaluation as a tool for learning and improvement, the more likely we can have the impact we seek. At the same time, that is not to suggest that we should not be clear-eyed about whether we are achieving what we set out to achieve, which is an important role for evaluation activity.
Nell: In 2010 President Obama appointed you to the White House Council for Community Solutions to come up with recommendations about how to address the large population of Americans aged 16 to 24 who are not in school or work. What do you think the role of the federal government should be in creating innovative solutions to “disconnected youth” in America? And what do you think is the role of government more broadly in social innovation?
Jim: It was a privilege to serve on the White House Council for Community Solutions with a group of committed and dedicated leaders from across the country. The experience underscored yet again the critical importance of building relationships between philanthropy and government. In fact, an interesting study on this topic of cross-sector partnerships was recently published by the University of Southern California’s Center on Philanthropy and Public Policy. One of its conclusions is that in many cities and states, we’re starting to see a concerted effort to develop and institutionalize more of these partnerships.
We know that many of the innovations that foundations are working on need the engagement and partnership of government to increase their impact and to bring those solutions to scale. A good example for Irvine is the ways in which our Youth program is partnering with state and local government to reform high school education in California.
For the past six years, our Youth program has been working to build the field of Linked Learning — an educational approach that integrates rigorous academics with career-based learning. It has demonstrated success at increasing high school graduation and college attendance rates. And after a lot of work, Linked Learning is now available to students in nine school districts in California.
This year, thanks to a pilot program sponsored by the state Education Department, an additional 63 school districts have committed to Linked Learning. When the program is fully implemented, Linked Learning will be available to more than a third of high school students in California. That’s not something that Irvine or the nonprofit sector could ever have done by itself. So for the state to be launching this kind of pilot program underscores the importance of these partnerships.
As for the work of the White House Council and its focus on what we called “opportunity youth,” the fact that the White House raised this up as a critical issue for our country was really important for this often-ignored population. And the Council’s work continues to live on: most recently, FSG issued a report that serves as a framework for how different stakeholders can improve outcomes for this population of youth who are neither in school nor participating in the job market.
For our part, the focus on out-of-school youth complements the work of our Youth program. A little over a year ago, we launched an initiative to extend the Linked Learning approach to this population as a way to help them re-engage with education. Improving outcomes for this population is so critical — it represents an immense opportunity for our economy and society and for the youth and their families who want to create a better future for themselves.
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.
There is something really interesting going on in the world of nonprofit advocacy. And I don’t mean advocacy for a specific cause. Rather, I’m talking about advocating for the nonprofit sector as a whole. Three new efforts underway in recent months are vying to be the voice of the nonprofit sector. And the firestorm brewing is interesting to watch.
Robert Egger kicked it off a year ago when he formed CForward an advocacy organization that champions the economic role of the nonprofit sector and supports political candidates who include the nonprofit sector in their plans to rebuild the economy. You can read my interview with Robert about why he launched CForward here. Robert’s video about the need to advocate for the nonprofit sector is below (or here if you are reading this in an email):
And then in the last couple of months there have been two similar movements to better advocate for the nonprofit sector. Dan Pallotta released a new book last month called Charity Case: How the Nonprofit Community Can Stand Up for Itself and Change the World where he announces the creation of his new entity, the Charity Defense Council, which is also aimed at advocating for the nonprofit sector, via five efforts:
- An “anti-defamation league” to respond to and rectify inaccurate reports about the sector in the media
- Big public advertising campaigns for the sector
- A “legal defense fund” to challenge unproductive laws against the sector
- Work to create a “National Civil Rights Act for Charity and Social Enterprise” to support the sector
- Grassroots organizing of the sector as a whole, including a national database of every nonprofit in the country
And then the third grand effort to advocate for the nonprofit sector comes from Independent Sector, the organization formed in 1980 to “advance the common good by leading, strengthening, and mobilizing the nonprofit and philanthropic community.” Their new report “Beyond the Cause,” which interviewed 100 nonprofit organizations, recommends the creation of a national organization (probably run by Independent Sector) to push a nonprofit agenda, costing $20 million over 4 years. For Independent Sector the key issues that such an entity would address are:
- Changes that could limit the organizations eligible for charity status
- Threats to charitable tax deductions for donors
- A need to clarify advocacy and lobbying rules for charities and private foundations
- Changes to Internal Revenue Service disclosure forms that could hamper nonprofit operations
- Burdensome paperwork and red tape involving government contracts with nonprofits
- Lack of government-financed research on the nonprofit world
While CForward seems to be largely supported in their work, both Pallotta’s and Independent Sector’s efforts are drawing fire. Phil Buchanan, president of the Center for Effective Philanthropy, writes a scathing review of Pallotta’s new book and advocacy effort and concludes that “Mr. Pallotta is selling is himself—as both the nonprofit world’s messiah and its advertising agency,” and suggests that people support CForward and Independent Sector instead of Pallotta’s Charity Defense Council.
Similarly, Pablo Eisenberg, senior fellow at the Georgetown Public Policy Institute, dislikes Independent Sector’s effort to coalesce the nonprofit sector arguing that “nonprofits will never share a broad consensus about which issues are most important. The best that nonprofits can accomplish is to strengthen their individual advocacy and lobbying activities and join with other organizations in coalitions that fight for specific policy changes.”
It is really a fascinating and multi-layered debate. I strongly agree that the nonprofit sector is often dismissed in the policies of the day. But if organizations like Independent Sector have been working to create a common voice for the sector for more than 30 years with little improvement, I’m not sure what will change. Especially if 3 separate entities are all singing different verses of the same tune. They will be competing for dollars, mind-share, and the ears of policy makers. But I am a huge advocate for fixing a broken sector, so let’s see how this all plays out.
What do you think? How do we get policy makers to recognize the importance and value of the nonprofit sector?
I can’t believe that January is already over, it was a complete blur. Nonetheless there was lots to read and ponder in the past month in the world of social innovation. Below are my ten picks of the best reads, but as always, please add what I missed in the comments. And if you want to see other things that caught my eye, follow me on Twitter, Facebook, LinkedIn or Pinterest (I’m starting to really love this new one!).
- Socialbrite has created a mega calendar of 2012 nonprofit & social good conferences. Perfect for planning your year ahead.
- In their Fast Company article, It’s Time To Start Judging Nonprofits Like For-Profits, Alexa Clay and Jon Camfield tell donors “Do not be turned off by high overheads. They’re healthy. They mean the organization has a longer-term view on its role in making change.” Amen to that!
- Crowd-sourcing meets behavioral economics meets iPhone apps. A new approach to getting people to eat better. Love it.
- FastCompany profiles the business pioneers who really understand and embrace the new chaos in which we all now operate. This should be required reading for any leader (for-profit or nonprofit).
- I love it when we can use history to understand current trends. Phil Buchanan, CEO of the Center for Effective Philanthropy, reviews historian Oliver Zunz’s new book, Philanthropy in America. In so doing, Buchanan describes 7 “new” philanthropic concepts that really aren’t so new.
- Jason Cohen from A Smart Bear always has a way of finding hope in the entrepreneurial process. Although this post is focused on “traditional” entrepreneurs, I think it holds for social entrepreneurs as well: Entrepreneurship is a torturous chaos, until it isn’t.
- I have always said that in order to be a truly effective social change leader, you must be able to fully wield the financial sword. Kate Barr from the Nonprofit Assistance Fund in Minnesota breaks it down in the Executive Director’s Guide to Financial Leadership
- January saw a pretty impressive mobilization of people via social media to protest against SOPA (the Stop Online Piracy Act) and PIPA (Protect Intellectual Property Act). Dowser helps us understand what it means for online protest more broadly.
- In an increasingly competitive and resource-strapped environment it is even more critical that nonprofits be able to demonstrate the impact of their work. Here is a great example of how a Michigan arts collaboration demonstrates the economic impact of the arts in their community.
- Hull House, one of the oldest and most impressive American nonprofit organizations closed its doors in January. The Bridgespan Group explains the implications.
Photo Credit: ilovememphis