Underperformance is Philanthropy’s Natural State

This is my latest column for the Chronicle of Philanthropy.

Is Underperformance Philanthropy’s ‘Natural State’?
By Sean Stannard-Stockton | Chronicle of Philanthropy

BrainThe nonprofit world is full of technocratic conversations about how to measure and improve results. But two new books, Leap of Reason, by Mario Morino, and Give Smart, by Thomas J. Tierney and Joel Fleishman, make the argument that the key to progress is not a new technical solution but a new mind-set by both donors and nonprofits.

In Give Smart, Mr. Fleishman and Mr. Tierney—both longtime advisers to donors and nonprofits—make a startling (but accurate) claim that the “natural state” of philanthropy is one of underperformance.

In discussing the “terrible truths” that donors who seek to achieve results must face, the authors note that excellence must be self-imposed in philanthropy.

Unlike in corporate America, where weak performance will drive a company out of business, philanthropy “has no built-in systemic forces to motivate continuous improvement,” they write.

This presents an enormous barrier to success. Improving results requires making changes, and humans resist change at all costs unless there are forces that compel them to act. As the authors write, “Self-imposed accountability is not a natural act. It requires extraordinary determination and discipline to pursue outstanding results year after year when nothing in the surrounding environment requires you to do so.”

If underperformance is the natural state of philanthropy, then no clever measurement system is going to solve the problem. Instead, we must find ways to motivate donors, grant makers, and nonprofits to choose to be accountable to themselves for the results they achieve.

While everyone will happily support a call to focus on results, the message of Give Smart is that actually following through requires the determination and discipline to create self-imposed accountability. The solutions to this problem are more likely to be found in the study of psychology than the science of evaluation.

While Give Smart focuses on the need for donors to overcome their natural proclivity to underperform, Leap of Reason makes a similar case for nonprofits.

Mr. Morino, a prominent businessman who was one of the early founders of the venture-philanthropy movement, calls for nonprofits to run their organizations with the determination and discipline to produce results. Since nonprofits by and large do not get paid for producing results, the only solution is self-imposed accountability, an act as unnatural for nonprofits as it is for donors.

Leap of Reason makes clear that most nonprofits do not manage their organization to maximize results, but not due to lack of interest or passion. Instead, nonprofits face many challenges, and perhaps the most important one can be found in Give Smart: because most donors don’t make a deliberate effort to support groups based on their results.

Mr. Morino recognizes that measuring results is only a means to an end and urges readers never to confuse measurement with mission. He warns of the danger to nonprofits when outsiders foist measurement requirements on nonprofits. Far from helping nonprofits achieve results, these approaches distract them from achieving their mission.

The only path to results, for both donors and nonprofits, is to dig deep into the wellspring of passion that drives their giving and their work to find the determination and discipline they need to be accountable to themselves.

Leap of Reason is unusual among books about measuring results for nonprofits in that it is brief and practical. The main part of the book runs a mere 60 pages. Each of the short chapters ends with a section titled “Take-Homes in Tweets,” where the key points are distilled in 140 characters or fewer.

In addition to Mr. Morino’s advice, the book includes a stirring essay by Isaac Castillo, director of evaluation at the Latin America Youth Center, in Washington. Mr. Castillo discusses his organization’s determined tracking of results and how those efforts led it to make a big change in one of its programs. After the group added material on preventing domestic violence to its child-rearing classes, Mr. Castillo discovered to his horror that the lessons were increasing acceptance of domestic abuse among participants. But because the organization was regularly monitoring its results, it was able to quickly adjust the program and begin producing far more positive results.

It is a common refrain in philanthropy that giving money away is harder than making it. But Give Smart and Leap of Reason make clear that philanthropy is not just a more difficult problem than making money, it is a different kind of problem. Success in business brings with it the money needed to do more great things, but that doesn’t necessarily happen in the nonprofit world in which producing results does not automatically bring more resources.

But through our own determination and discipline, each of us—donors and nonprofits alike—can self-impose accountability. Only then will we begin to achieve great results.


  1. So here’s a thought experiment.

    Replace the word philanthropy with the word business, or government, nonprofit sector, academia, or wonky philanthropic advisor in this conversation.

    Aren’t we talking about the natural state of human organizations in all of their diversity in success and failure?

    Those who say that the natural state of business is generally successful need a subscription to the Wall Street Journal.

    WSJ is a rap sheet of the ebb and flow of our underperforming all-stars and our front row seat to the modern dance of corporate accountability.

    The WSJ our go-to resource to study the social construction of performance measurement in all of its insight and sheer folly.

    Yes, weak performance narrowly defined will put a company out of business.

    But a high performing organization defined by that narrow set of indicators, metrics, market forces, etc. can still pollute the planet, violate the laws of the land, disrupt economies, and pillage the commons.

    So I guess I do agree with all of the authors with the idea that systems of measurement and accountability are important but not the holy grail driving performance in organizations.

    But lets not bow at the altar of any organizational form or exalt its fundamental nature more or less than others.

    Nobody gets a free pass from the so called “terrible truths”.

    As the authors point out — we need a new mind set.

  2. Marianne says:

    This does remind me of something a friend once told me, a former WSJ reporter in fact, who now writes a lot about Africa, on why he tended to trust business engagement in long term economic development through emerging market initiatives in sub-Saharan Africa, more than the aid organizations who had encamped there for decades. He said, “if a business tries something, and it doesn’t work, they stop doing it. If an aid organization does, they ask for more money.”

  3. My first, second, and third response upon reading this post was an uncharacteristic, “Meh.”

    And sadness.

    Prentice addressed one source of underwhelm-ment: holding out the nonprofit model as one that uniquely underperforms.

    I’m not really fully sure where the sadness came from, but I think it has to do with the way this sentence ends:

    “The only path to results, for both donors and nonprofits, is to dig deep into the wellspring of passion that drives their giving and their work to find the determination and discipline they need to be accountable to themselves.”

    It would read so very differently if the last word, themselves, was replaced with “those they serve.”

    And if “determination and discipline” were replaced with “courage and humility.”

  4. Katrina Hosie says:

    Thank you for taking time to write this article.

    I’m in total support of Christine’s suggested adjective changes – I love the alternatives you’ve proposed Christine.

    Sharing some of my thoughts…

    One of my approaches to life – particularly in relation to communication – is to be mindful of avoiding the use of generalisations (or wording that implies generalisations). I believe – and have seen and experienced (having worked for philanthropic bodies and nfps in Australia) some wonderful approaches to accountability and measurement. To tar all nfps and/or all funding bodies with the same brush of “the natural state of philanthropy is underperformance” is not only unfair and inaccurate, but it also shows a lack of insight and understanding by the people making this uninformed (and untrue) statement.

    I found it disappointing and, quite frankly, tedious to read such a scathing article. As a believer in, and practician of, bring a range of potential solutions when I see a problem, I think you have an incredible opportunity to talk about the need for greater accountability in the philanthropic sector by highlighting examples of philanthropic bodies who do practice ongoing evaluation of their processes and decisions.

    Wow, what a different – and far more uplifting tone – your article would have projected by showcasing some wonderful examples of philanthropic bodies demonstrating a commitment to accountability (and believe me, there are many examples of this!) and using this to inspire other philanthropic bodies to learn from, and collaborate with, the philanthropic organisations who do it well.

    I’ve also been musing on the incredible opportunity there exists for philanthropic bodies to explore the possibility of establishing some common measures of performance. This could be particularly relevant for philanthropic bodies focusing their funding on similar areas / issues.

    I see the exploration of this possibility as having a number of benefits. Firstly, it would open a dialogue, and opportunities for learning / collaboration, between philanthropic bodies. I don’t know about the US, but in Australia I see – and have experienced – a very strong “silo” mentality in the philanthropic arena. There is certainly more collaboration occurring now than 10 years’ ago, however there is still an opportunity for philanthropic bodies to work much more closely. The other obvious benefit I see in philanthropic bodies choosing to break down silos and collaborate is the modelling of behaviour they would like to see in the nfp sector. What I mean by this is philanthropic bodies (be they Trusts / Foundations / Corporate organisations / Government) are putting more emphasis on funding partnerships / consortiums of nfp organisations but, ironically, the funding bodies are still often operating in silos!!

    Secondly, should philanthropic bodies – again, particularly those funding in similar areas / issues – choose to dialogue about, and establish, some common measures of accountability and performance, this opens the opportunity for a greater “common language” between funding bodies and, potentially, a greater depth of knowledge sharing about how they operate (structurally) and what works / doesn’t work as well.

    I’m interested in progressing some brainstorming / work around the opportunities I’ve mentioned above and would love to hear from anyone who might be interested in collaborating with me on this.

    Sean, once again, thank you for your article and for the opportunity to comment.


  5. Mario Morino says:

    Although this is Sean’s blog, I wanted to interject myself to offer a quick note of thanks to those who took the time to post in response to Sean’s column. I’m in agreement with most of the comments I read.

    For example, I agree with Prentice Zinn that all different types of orgs—nonprofit, for-profit, and public alike–struggle with performance. However, in my experience, the concept of “performance management” is more widely understood and accepted—if not always practiced—in the for-profit sector than in the nonprofit and government sectors.

    I also agree with Zinn’s comment that “a high performing organization defined by that narrow set of indicators, metrics, market forces, etc., can still pollute the planet, violate the laws of the land, disrupt economies, and pillage the commons.” If you take a look at Leap of Reason, you’ll see that we spend a lot of ink decrying the many ways in which narrow metrics have been elevated above mission. Here’s one snippet:

    “I’ve witnessed some misguided efforts—often foisted on nonprofits by funders—that have produced unintended negative consequences that go beyond the waste of money. In these cases, funders have turned assessment into an exercise focused on cold numbers … rather than using it to help nonprofit leaders achieve lasting impact for those they serve.”

    But this is not a reason to give up on collecting relevant data. Mission and metrics are not mutually exclusive. In Leap of Reason, we include a number of good examples of nonprofit leaders who illustrate that being information-based is fully compatible with being mission-driven.

    Similarly, Christine Egger is right when she points out that leaders need to be accountable to “those they serve.” I think this is an outstanding point. To me, ensuring that we’re truly helping those we serve is truly THE NUMBER ONE reason for investing in performance management. In the book, we highlight both organizations that are doing an exemplary job of collecting and using information to improve the lives of those they serve as well as counterexamples in which nonprofits settle for mediocrity or cause potential harm to those who have given their trust.

    I appreciate the discussion that has begun and look forward to continued dialogue.

  6. Mario, I really appreciate your taking the time to respond to many of the comments in this thread. I’m reassured by your statement that “truly helping those we serve is truly the number one reason for investing in performance management.” The complete absence of any reference to that constituency was jarring.

    Yet, I would also gently suggest that ‘helping’ and ‘being accountable to’ are not the same thing.

    I’ve taken a deeper look at your writings and sense that you would likely agree, and appreciate the contributions you’re making to a more nuanced conversation about what that relationship might be, and how it might influence all kinds of commitment to practice.

  7. The ‘free market’ approach to the philanthropic sector that this article points to – one that assumes some sort of utopian self-regulation – presumes that a free-market approach works.


    I’m confident that much of the work being done by this sector – whether in the USA or elsewhere – is to shore up the damage done by the erroneous assumption that unregulated, competitive organisational activity is the most effective way to achieve impact.

    Eschewing an imposed system of metrics in favour of self-imposed accountability is not only foolish, but counter-productive. If standards for comparison existed, it would certainly make it easier for funders (let’s not call them ‘donors’ as funding may come from any sector from the individual, business, other non-profits or government) may be empowered to make informed decisions about where, when and what they fund.

    Just because we don’t have a sophisticated or nuanced enough system for metrics and reporting, doesn’t mean we shouldn’t continue to drive down this line.

    Much great work has been done by the Global Reporting Initiative (GRI), the Global Impact Investment Rating System (GIIRS), the Impact Reporting and Investment Standards (IRIS – involving Acumen Fund, B-Lab, the Global Impact Investing Network and the Rockefeller Foundation) and Pulse in creating tools for the reporting and measurement of impact.

    There is unquestionably a need for greater accountability – however, perhaps its time we dropped the idea that freedom equates to everyone making their own way. If we’re truly dedicated to having positive impact on the social and environmental conditions these organisations champion, what better pathway forward could be offered than continuing to collaboratively evolve a coherent, effective and universal system for reporting?

    • Thanks Cameron. I’m not sure my point came across clear for you. I’m not writing in favor of a free-market system for philanthropy. I’m arguing that philanthropy does not face the external accountability that helps eliminate low performers in business and government. This freedom is a blessing as well as a curse and I’m pointing to the need to instill a sense of self-discipline to achieve excellence.

      I don’t agree that any metric system will ever effectively create external accountability, it would still be up to the funder to make the choice to use and react to the metrics that you discuss.

  8. Thanks for all your comments, I addressed some of the concerns in my post today.

  9. T.J. Cook says:

    Though I do think there is some unfortunate inertia toward underperformance in the nonprofit model, perhaps it’s more about culture than structure when it comes to whether or not an organization is holding itself accountable to performance goals.

    I’ve worked with a number of orgs in the public sector, and universally they take longer to fire bad employees, can’t compete on wages and salary, and have a mixed bag of ways they measure their effectiveness, often spending more time thinking about innovating their fundraising than innovating their mission-doing.

    There’s something wrong with that, to be sure–it’s just not all the 501(3)c status’s fault.

    As Prentice Zenn said, there are equally troubling aspects about the way corporations can operate. I do think what the world needs now is a type of organization driven by for-profit mechanisms and accountable to non-profit purpose. That’s why I’m excited about the B-Corp, impact philanthropy (philanthrocapitalism, perhaps), and the broader social enterprise movement.