If you build it, will they come?

(Sean Stannard-Stockton is on vacation. This is a guest post from Jacob Harold, a program officer at the William and Flora Hewlett Foundation.)

Imagine there was a perfect database of nonprofit performance information. Would donors actually use it to make decisions? With apologies to Kevin Costner, would they calmly walk out of the cornfields of ignorance into the baseball diamond of smart philanthropy?

The short answer is: some would, some wouldn’t—but either way we need to make it as easy as possible. There is no such thing as an “average donor”. Some people give only as a reaction to a personal request, some out of guilt, some out of hope, and others out of cool rationality. Most of us give in a combination of these and other impulses, beliefs, and methods. Emotional giving will always be with us, and we should be thankful for that. But there is latent demand for better information. Even if only 10% of charitable donations by individuals were influenced by better performance information, that could change the destinations of more than $20 billion in gifts each year.

For donors to use good information we must make it easy for them. The more steps a donor has to take to get access to good information, the less likely she will be to actually use it. As much as possible, we need to have the information “near” the donor at those times when they make charitable decisions. If donors make decisions about their money when they are in the office of their financial planner or on their bank’s website, these are the times we need to have performance information available for them. When I look at my bank account on www.wellsfargo.com, I see tabs for “checking,” “savings,” and “investments”. There is no “philanthropy” tab. It’s time that changed. When an wealthy individual sits down with their financial advisor, that advisor needs to have access to good information about nonprofits so they can help the donor make a good decision.

As described in the last post, there are many different potential sources of meaningful information about nonprofit performance. But whatever the source, such information will be generally unfamiliar to donors. As it is, full-time foundation staff struggle with determining which nonprofits are most effective. So it’s crucial that information be presented in an organized, manageable, user-centered manner. It would be a revolution of responsibility to empower donors to make decisions based on performance (and to empower high-performing nonprofits to have a shot in an anecdote-driven market). Such a transformation demands patience with all players involved.

5 Comments

  1. “User-centered” is thought provoking. It occurs to me that the main obstacle to developing such a perfect database is the elusive quest for the perfect “nonprofit metric” of evaluation, quantitative or qualitative or both.

    What if we crowdsourced the solution? Perhaps the perfect database is a dumb database, that casts no value judgements, but allows users to adjust the relative importance of a very wide variety of factors to their giving decisions. Intelligence would reside at the edges of the network, like the internet itself.

    This would characterize users by their yardsticks; and enable global yardsticks, composed of all users or users of a specific type / sector / etc. And also allow, perhaps, for a highlighting of unique or innovative evaluation models? It would certainly allow trending on an unprecedented level of granularity.

    What if we could *show* that a funder who values (and funds) reasonable administrative “overhead” versus program costs for a specific sector is getting results?

    Perfect information might enable perfect arguments, in many cases :)

    But enough with the navel-gazing: The tech platform for something like this isn’t impossible to build. Anyone want to run with the idea, if I find the folks to do the building?

  2. Hi Dave & Sean,
    I think those “databases” are already in existance aren’t they? Isn’t that what Charity Navigator and ChristmasFuture proof of impact sites are about?

    I am not sure. I know for my clients we start at a values focal point because everyone puts a different value on personal values. What one person says is important (i.e. true cost accounting) another person says take out the overhead because I don’t fund that to the other who says I only want to fund internal capacity. A study was released about 6 months ago that Canadian donors feel that 13% overhead was the right amount and anything more was too much. When asked to clarify what goes into that overhead costs, people had different answers ranging from rent and utilities to salaries and consultants.

    I think before we can start putting together “good information” we have to define what that “good information” looks like. As a sector I don’t believe we have come to a conscense (sp?) on that… yet.

    Andrea Swaney is doing some research on measurements and impacts and creating a matrix for values. If you are serious about creating the technology behind it I am sure that you will have several people (myself included) that would be interested in working on this. Andrea is with: Straight Path Managment.

    All the best,
    Gena

  3. Jacob Harold says:

    If only these databases were already in existence! There are databases of nonprofits–but they don’t tell us anything about whether or not the nonprofit was effective. CharityNavigator is based on financial ratios. They don’t try to evaluate programmatic effectiveness (which they admit). Here’s an example: imagine two health organizations serving the same low income community. Each has a $1 million budget. Org A saves 1000 lives and spends $200,000 a year on administrative and fundraising expenses. Org B saves 100 lives a year and spends $50,000 a year on administrative and fundraising expenses. Org A is more effective — but using financial ratios will lead you to give to Org B (and Org B would get a higher score from Charity Navigator.) What we need is a database that actually tells us something about what the nonprofits accomplish. It’s a difficult, worthwhile challenge.

  4. All of the above comments on user centered and different values make me think of socialmarkets.org. They’re getting ready to launch beta site – where one intent is to see if crowds can set SROI. Check it out.

    Lucy

  5. Jason Dick says:

    I think that many people are going to give a gift because of who else is giving that gift. For some it woun’t matter how well they are “represented” on charity navigator and other sites but what the testimonial messages are like and if their friend asks them to give.