Foundations and nonprofits are constantly looking for the right tools to measure success.

One of the most effective sources of information might come from the people who rely on an organization, suggests a new the book, The Ultimate Question 2.0, in which the veteran management consultant Fred Reichheld demonstrates that asking one simple question of a business’s customers can often reveal more about their performance than more traditional financial or product analyses.

The question is: "How likely is it that you would recommend Company X to a friend or colleague?"

Since recipients of nonprofit services don’t typically pay the costs of the services they receive, this approach to measuring results must be modified when applied to the social sector.

But a number of organizations are working on ways to reach out to beneficiaries of a nonprofit or foundation as well as to the general public. In so doing they may find the same connection Mr. Reichheld did.

The Center for Effective Philanthropy is one of the pioneers of this work.

For more than a decade, it has conducted studies of grant recipients and others to help foundations figure out how to reinforce strengths and fix weaknesses. Its flagship Grantee Perception Report has now been commissioned by more than 190 foundations.

The center has also been working on a Beneficiary Perception Report. Its pilot program is called YouthTruth and gathers the feedback of high school students who attend schools supported by The Bill & Melinda Gates Foundation.

In a report published this month, the Center for Effective Philanthropy notes that few foundations collect information from beneficiaries. The fact that the intended recipients of foundation programs are rarely asked for feedback highlights how much room there is in the social sector for Ultimate Question type measurement approaches to be deployed.

Keystone, a London charity, is also doing important work to gather and analyze the views of people a charity tries to serve.  They are working with students in university service learning programs to gather what they call constituent voice; feedback from the beneficiaries of nonprofit programs

Since foundations serve the public good and not just one group of beneficiaries, they must reach out to a lot of different kinds of people to assess their work.

The James Irvine Foundation, for instance, has been publishing their Grantee Perception Report from the Center for Effective Philanthropy and actively seeking public feedback on their annual performance. Importantly, the foundation’s president, Jim Canales specifically says they are looking for feedback from critics of their work.

"The power dynamic inherent in philanthropy makes it critical that we resist the temptation to talk more than listen," Mr. Canales writes, "precisely because people will always listen politely to anything we have to say, regardless of its utility."

He recognizes that nonprofits tend not to tell foundations when they’re doing a bad job and it is the rare foundation that has ever lacked enough groups eager to take its money.

A similar dynamic exists between many beneficiaries and nonprofits, because a person in need of social services rarely is in a position to turn down subpar assistance. Few nonprofits ask such clients what they could do to better serve them. But organizations could make more vigorous efforts to encourage such feedback.

It is with this dynamic in mind that I’m reminded of a plea by Frederick Hess of the American Enterprise Institute for foundations to not react defensively when they are criticized but instead to actively seek out and encourage criticism.

"Foundations need to make it conscious policy to welcome-and even encourage-criticism." Mr. Hess wrote in Philanthropy, the magazine published by the Philanthropy Roundtable.

"Given that even tart-tongued observers will be unusually reluctant to share their thoughts, foundations need to make it extravagantly clear that they will not blacklist critics-or look kindly upon those who do. Only this kind of scrutiny, will flag blind spots, wishful thinking, or ineffective spending.

Whether the foundation personnel agree with such assessments, engaging with them is essential to forestalling the plagues of hubris and groupthink that are so much a part of human nature."

It is asking a lot of any organization to actively seek out criticism. But it is only by asking for constructive feedback that nonprofits and foundations can expect to improve the quality of their contributions to society.

An Alternative to ‘Giving USA’ Could Give Charities More Timely Data
By Sean Stannard-Stockton | Chronicle of Philanthropy

The report “Giving USA” is widely considered the official source on how much Americans give and which causes they support. Such data are important: They help nonprofits plan their budgets, fund raisers judge their performance, researchers track giving trends, and everyone understand the current state of philanthropy. However, “Giving USA” data are released only once a year and not until six months after year’s end.

So might it be possible to track philanthropy in real time?

A little-known fund-raising consulting firm called Philanthromax thinks it can and is now releasing monthly charitable-giving statistics just two weeks after each month ends in its “Atlas of Giving” report.

According to the most recent report, covering February 2011, charitable giving grew 8.8 percent over February 2010. That followed an 8.2-percent increase in January for a year-to-date increase of 8.5 percent. However, the “Atlas” forecasts that while growth in charitable giving will remain strong for the next couple of months, the strength will dissipate later in the year with October, November, and December all showing declines. The projection for the entire year is that giving will rise 3.4 percent.

Just like “Giving USA” data, and most major economic numbers like the gross domestic product or the nation’s employment report, the “Atlas” creates estimates of total giving. It isn’t actually possible to literally count every donation, since many taxpayers don’t itemize deductions, and even itemized-deduction statistics are not released by the Internal Revenue Service in a timely manner.

However, the “Atlas,” whose historical estimates largely mirror the historical results from “Giving USA,” is unique in that its estimation process relies exclusively on economic data and forecasts that are updated monthly, such as income, stock market, and employment measures. That means that the “Atlas” can calculate estimated giving levels every month and create giving estimates for future months that will be accurate to the degree that the underlying economic estimates are accurate.

If the “Atlas” estimates and forecasts are correct, this real-time information could be extremely valuable for nonprofits. It would be easy for nonprofit executives to view strong early fund-raising results and feel confident that they can pay for their growth plans. Or if early results were slow, they would know to be wary of a weak end to the year and plan accordingly.

I’ve reviewed the data that drive the “Atlas” in some depth and interviewed Philanthromax chief executive, Rob Mitchell, to better understand how “Atlas” develops its estimates and forecasts.

I’m not a statistics expert by any stretch, but my sense is that the “Atlas” estimates over long time frames are consistent with “Giving USA” findings. However, in any given year, “Atlas” estimates have often shown significantly different magnitudes of change than “Giving USA.”

For example, in a typical year, Philanthromax will generate a result that is within 3.8 percent of “Giving USA” figures.

That sounds close, except that when you measure the year-over-year change, it means that if “Giving USA” says donations grew by 3 percent, Philanthromax could show anywhere from a drop of nearly 1 percent to a gain of nearly 7 percent. But over time, the variance cancels itself out and Philanthromax ends up posting numbers that on average are within slightly more than half of 1 percent of “Giving USA” figures.

Since both groups use estimates, it isn’t possible to determine which is more accurate. Unfortunately, the “Atlas,” citing the proprietary nature of its work, will not make the details of their process public the way that “Giving USA” does. As more organizations seek to devise new ways to measure giving, I hope that researchers will gain access to the methods used so that they can be rigorously tested.

That is important because Philanthromax isn’t the only organization trying to devise better ways to track charitable giving. The Center on Wealth and Philanthropy at Boston College, has built a system that estimates and forecasts the charitable giving of households on a quarterly basis. Its approach differs from “Giving USA” because it includes a calculation of how much the level of joblessness in the country affects giving.

In addition, the rise of online and mobile giving means that donations contributed electronically can be tracked directly and quickly.

However, nobody collects all that information in one place; it’s up to the organizations that handle donation processing to offer estimates, and that means we never get a full picture of what is happening.

In my mind, the jury is still out on the validity of the “Atlas of Giving” and many of the other measures showing how much Americans give.

However, all these efforts to offer better and more timely measures of giving are important because they can help nonprofits run more efficiently. And improved data about the state of giving can influence the behavior of foundations, philanthropists, and government agencies.

While one can only hope that philanthropy never succumbs to a Wall Street-style, manic-depressive obsession with short-term data, the arrival of new real-time estimates are a major step forward for nonprofits and donors alike.

Donors and Nonprofits Face a Defining Moment in Responding to a Crisis
By Sean Stannard-Stockton | Chronicle of Philanthropy

The economic crisis of the 21st century’s first decade did not cause the apocalypse for American philanthropy that many experts had feared. In fact, charitable donations topped $300-billion during each year of the recession, a sign of philanthropy’s resilience.

But now as the second decade opens, we may well face philanthropy’s defining moment.

How donors, foundations, and nonprofits handle the challenges and opportunities of the coming 10 years will determine if philanthropy in the first half of this century is an important player in shaping how the world works or merely an honorable effort that has limited influence.

Many economists have described the post-recession economy as “the new normal,” a term coined by Mohamed El-Erian, former director of the unit that manages Harvard University’s endowment, in his book When Markets Collide.

Mr. El-Erian, who crafted the term before the global financial crisis erupted, used the phrase to describe his view that the engine of economic growth would no longer be the United States but emerging market economies. He believes the new normal will ultimately be healthier for the global economy, although he acknowledges that it will cause many problems in America and elsewhere as the engines of growth in the economic world shift gears.

For philanthropy, the new normal would make an enormous difference to donors and charities that have been working to increase standards of living for the billions of people who live in poverty in the developing world. Efforts to promote global health and international development and to aid struggling entrepreneurs could be accelerated as the economies of developing nations grow stronger.

But as history shows, accelerating economies do not always increase standards of living equally across all income levels. The new normal presents philanthropy a chance to demonstrate that it can strengthen the connection between economic growth and broad-based increases in standards of living.

In the United States, philanthropy also must focus on what the new normal means. Ballooning budget deficits and debt at the federal, state, and municipal levels of government are problems that people of all political beliefs agree must be solved. Even a rapid increase in charitable giving could not possibly make up for the cuts in government spending that will probably be made over the next decade. The billions of dollars contributed to charities each year are minuscule compared with government outlays.

However, to the extent that philanthropy can help build high-performing nonprofits that are able to deliver effective programs and services in low-cost ways, it can be a major part of solving the nation’s deficit woes. Perhaps just as important, however, are philanthropic efforts that prevent the problems that end up costing society the most to deal with—problems like drug addiction, illiteracy, and criminal behavior.

The U.K. is moving to formalize that idea. It now issues “social impact bonds” that will provide government payments to private investors who finance nonprofit programs that are able to reduce the government’s costs. For now, the bonds apply just to groups that reduce the number of people who commit crimes after they are released from prison. But that idea should be expanded to other causes and to the United States. Philanthropy must embrace this sort of sophisticated financing strategy that aligns the interests of government, donors, and private investors.

The nonprofit world must not let itself be a victim of government spending cuts but instead offer solutions that help close the deficit by offering social programs that deliver better results at a lower cost to taxpayers.

Nonprofits will also need to get more involved in helping America climb out of the unemployment crisis.

One reason job growth is so sluggish is the misalignment between the skills of American workers and the skills needed by companies in the United States. Nonprofits and philanthropists can help fix that problem.

Nonprofits themselves already contribute mightily to the employment market—after all, they employ one in 10 workers and as a group have produced faster growth in new jobs than their for-profit counterparts.

But nonprofits also play a critical role in the job market by offering retraining classes for workers, by employing individuals who otherwise wouldn’t find jobs and preparing them to enter the traditional job market, and by stimulating job growth in critical areas such as education, health care, and clean energy. Retooling the American work force for the new normal must become a top priority for philanthropy.

When a crisis ends, it is natural for people to breathe a sigh of relief and attempt to return to the status quo before the crisis. While the financial emergency is behind us, the challenges ahead will take every ounce of creativity and hard work we can muster.

Philanthropists and nonprofits must not relax and retreat but instead must redouble their efforts as active players in shaping how society works. If philanthropy ignores the big issues caused by the changing economy, it could become little more than a morally righteous activity—and not a vibrant, powerful force for social good.

Next Steps: Let’s Learn From Innovation Fund’s Applicants
September 6, 2010 | Chronicle of Philanthropy

A critically important philanthropic experiment nearly got derailed last month by rounds of second-guessing and speculation.

The Social Innovation Fund, a federal effort to spread good nonprofit efforts nationwide, got into hot water in part by bowing to requests from potential grantees to keep their applications confidential when publishing them would in fact lead to more social impact.

In an age when Web tools make it easy to provide reams of information quickly and effortlessly, many people expected the Social Innovation Fund to push the envelope of transparency. The Social Innovation Fund’s policy not to release grantee applications or the ratings and reviews of the experts who judged the proposals generated significant criticism.

The issue mushroomed from a somewhat academic debate into national news when a prominent nonprofit expert, who served as a reviewer, wondered in The Washington Post why an organization his review committee rated poorly had ended up a winner. What’s more, he said, the group with bad reviews had lobbied the government to create the Social Innovation Fund, adding yet more fuel to the demands to release the applications and evaluations from reviewers.

To its credit, the Social Innovation Fund moved fast to recover from its missteps—working feverishly over one weekend to get everything online as a controversy erupted on a quiet Thursday in August—and has now made public all the application materials of the organizations that won grants as well as the ratings and comments of reviewers. It also clearly described the fund’s process for selecting grantees in a way that explained how the group that got a poor review in one round did very well with other experts and ended up a finalist.

At the heart of the Social Innovation Fund is an exploration of an underappreciated approach to philanthropy.

Rather than simply paying nonprofits to carry out their programs, as the government and most large foundations typically do, the fund focuses on expanding high-performing nonprofit organizations. This type of growth capital is largely absent from the philanthropic marketplace, a primary reason why proven approaches are so rarely able to reach their potential.

Some nonprofit commentators have criticized the Social Innovation Fund’s budget as too meager, but it is important to note that the fund’s budget—a combination of government and private dollars totaling $123-million—makes it a significant grant-making entity. Many foundations give more than that in a year, but most foundations earmark only a minority of their grants to spread good ideas and build the capacity of nonprofits.

If the Social Innovation Fund is in fact a revolutionary experiment in providing growth capital, why has there been so much consternation about the fund’s transparency of its grant making?

One of the primary goals of the Social Innovation Fund is to identify more effective approaches to solving critical social problems and broadly share this knowledge. When the fund didn’t want to release the proposals, it raised questions about its commitment to spreading the smartest approaches across the country.

A secondary reason the fund should have published all the applications right from the start was to discourage second-guessing and speculation as to which organizations applied, which ones did not receive a grant, and why.

Now that the fund has made additional information available, nobody has uncovered any conflicts of interest or undue pressure. All the evidence suggests that the process was fair.

The fund needs to show it learned from its mistakes. It erred when it first promised grant seekers that it would not make public their applications. It should announce immediately that next year’s process will include an explicit notice to grant seekers that all applications will be made public.

As we put to rest the second-guessing and speculation about the process, let us not forget the fund’s goal of sharing knowledge about effective approaches to solving social problems.

To jump-start the sharing of ideas, The Chronicle and I have started a public repository for all applications.

We urge applicants that did not win grants to submit their proposals. Social Venture Partners, one of the organizations that did not receive a grant, has already done so. It can be viewed here.

The repository is not meant in the least to shine negative light on any of the applicants. Fully 70 percent of the applications were rated “strong,” the second-highest rating, or better by at least one of the two committees that did the first round of reviews.

Many of the proposals, winning or losing, reflect years of experience deploying growth capital in support of high-performing nonprofits and will help to advance the field of knowledge.

The Social Innovation Fund almost lost crucial momentum over the debate about its openness. Now it is up to the unsuccessful applicants to keep things moving in the right direction. By voluntarily posting their applications, they will help to cement the Social Innovation Fund’s commitment to transparency and help it reach its goal of broadly sharing knowledge about what works.

Sean Stannard-Stockton is chief executive of Tactical Philanthropy Advisors, in Burlingame, Calif., and author of the Tactical Philanthropy blog. He is a regular columnist for The Chronicle of Philanthropy.

Gates-Buffett Example Worth Its Weight in Gold
By Sean Stannard-Stockton | Chronicle of Philanthropy

The collaboration of Warren Buffett and Bill and Melinda Gates transfixed the nonprofit world four years ago when they announced the biggest philanthropic merger in history, producing a foundation that will probably be worth at least $60-billion one day. But last month’s announcement that the Gateses have joined forces with Mr. Buffett on a campaign to persuade the nation’s billionaires to give 50 percent of their wealth could be an even more important milestone—especially if it persuades Americans at all income levels to increase their giving.

While much has been made of the amount of money the Bill & Melinda Gates Foundation gives away now that it has an infusion from Mr. Buffett, what is far more important is the way the personal decisions made by two of the world’s wealthiest men affect other donors.

The Gates foundation is responsible for only 1 percent of annual charitable giving. But the cultural importance of Mr. Gates deciding at age 48 that running his foundation was more important than running Microsoft and of Mr. Buffett deciding he would give away most of his wealth while he is alive was remarkable.

Those decisions are a striking departure from the historical philanthropy of America’s wealthiest individuals. Many people have undertaken their major giving late in life or simply taken care of through bequests left in a donor’s will.

For as long as we have had records, Americans have given roughly 2 percent of their income to charity each year. Today, American foundations, corporations, and individuals give about $300-billion a year.

If every billionaire decided to give 50 percent of his or her net worth, it would result in $600-billion for charitable causes.

But of course, much of the $600-billion would flow into foundations or go to charity over many years. So a better way to look at the impact of the pledge is that it could trigger a permanent $30-billion per year increase in charitable giving, or 5 percent of the $600-billion pledge. If the money flowed to nonprofit groups any faster, it would run out at some point and therefore not make a permanent impact on the level of charitable giving.

Now $30-billion is real money. After all, today all the foundations in the United States combined give a total of about $40-billion. But such giving would result in only a 10-percent increase in the amount charities receive every year.

It is very likely that even without the pledge, Americans will increase their giving by $30-billion within two to four years simply because that is what happens whenever the economy starts growing again after a downturn.

However, just as the announcement of the Gates-Buffett collaboration in 2006 inspired many other people to get more involved in philanthropy, it seems likely that their new campaign could do much to increase giving far beyond the exclusive circle of American billionaires. It will certainly motivate some billionaires outside the United States. Chinese government officials have already called on their country’s billionaires to increase their giving in reaction to the Gates-Buffett campaign.

But most important would be for the Gates-Buffett “giving pledge” to act as a sort of tipping point that helps accelerate the growing public interest in philanthropy and kick-start a gradual increase of average giving from 2 percent of income to 4 percent of income.

The result would be an increase in charitable giving of $300-billion every year. That’s 10 times what the giving pledge might raise even if every billionaire in the United States committed to the idea.

A 10-percent increase in charitable giving would elevate the resources of the nonprofit world to a level we’d normally not see for several years to come. But a 100-percent increase would mean access to resources today that otherwise would not appear for a generation.

That’s what potentially makes the Gates-Buffett giving pledge a really big deal.

Big announcements make the news, but it is the giving of everyday individuals that really drives philanthropy.

Sean Stannard-Stockton is chief executive of Tactical Philanthropy Advisors, in Burlingame, Calif., and author of the Tactical Philanthropy blog. He is a regular columnist for The Chronicle of Philanthropy.

Grant Makers’ Fiduciary Duty Should Extend to Grantees

For all their talk about innovation, foundations are in the grip of self-imposed constraints that limit their ability to undertake truly innovative activities.

The problem is that most foundation board members believe their primary role is to uphold their fiduciary duty to preserving a foundation’s assets and to follow a donor’s intentions, when in fact their top allegiance should be to the beneficiaries of their foundation’s work.

It is time for a new interpretation of fiduciary duty that focuses squarely on a foundation’s obligation to its beneficiaries.

If foundations took such a view, they would act completely different. Take decisions about how much of a foundation’s endowment to give to charity every year. The legal requirement to spend at least 5 percent of assets each year is based on the idea that requiring foundations to spend more would mean that some foundations’ assets would eventually run out, and that would be a problem for funds designed to operate forever.

But the real question for foundation board members is not how to meet a legal requirement; instead they must decide whether it is wise to give more to beneficiaries now. Unless the donor has stated that he or she wants to guarantee the foundation will operate forever, there’s nothing wrong with spending more, and perhaps doing so will guarantee that the foundation does a better job of meeting its mission.

A similar situation confronts board members as they contemplate whether to offer nonprofit groups low-cost loans and undertake other so-called program-related investments, finance advocacy work, or support for-profit companies, individuals, or other entities that do not have charity status. Such actions are clearly allowed by law, but foundations are often reluctant to try such tactics because they consider them too risky.

This tension between protecting the organization against risk versus maximizing returns to beneficiaries also exists in the for-profit world. But while corporate leaders may inappropriately take actions with the best interest of their organization in mind, it is clear that their fiduciary duty is to their shareholders.

If the board of a public company finds that it can maximize shareholder value by liquidating or otherwise closing down, its obligation to do so is clear.

Organizations, both for-profit and nonprofit, exist as vehicles to produce value. They have no essential value in themselves.

They are simply useful constructs for generating value to shareholders or beneficiaries.

Asking foundations to change their interpretation of fiduciary duty is no trivial matter. In 1994 a major shift in the approach to making fiduciary investment decisions was ushered in by the Uniform Prudent Investor Act, devised by a group that recommends how states should shape their laws.

The act, which has been adopted by many states, instructed fiduciaries to evaluate the appropriateness of individual investments within the context of a portfolio rather than in isolation. That shift allowed even conservative investment accounts such as pension funds, to place a portion of their assets in risky investments as long as they constructed a diversified portfolio.

Interestingly, private foundations and university endowments have been some of the most aggressive at shifting their approach to investments as a result of this reinterpretation of fiduciary duty.

While historically those groups deployed simple, conservative investment strategies, the new approach to exercising their fiduciary duty transformed their activities.

The financial experts who oversee university endowments in particular are now considered to be some of the most sophisticated investors in the world and deploy some of the most cutting-edge investment strategies.

Why then do foundations approach nontraditional activities that are clearly legal and very much in the best interest of their beneficiaries with such trepidation?

The fact is that the biggest risk of these activities is the foundation’s reputation.

Not pursuing them increases the risk that a foundation is unable to assist its beneficiaries.

Even though many foundations say they are set up to serve “at-risk populations,” the fact is that grant makers who strive to limit risk to themselves are actually transferring risk to the very people they seek to serve—and those who are least able to absorb additional risks.

One of the most basic rules of investing, both for-profit and philanthropic, is that risk and return are correlated. Those who seek to maximize return must be willing to bear additional risk.

Foundations, by virtue of their ability to make decisions without any obligation to answer to voters or shareholders, are in a unique position to absorb risk in the pursuit of social impact.

Just as corporate board members and officers should make decisions based on what is best for shareholders, foundation board members and officers should interpret their fiduciary duty as requiring them to act in the best interest of their beneficiaries.

Sean Stannard-Stockton is chief executive of Tactical Philanthropy Advisors, in Burlingame, Calif., and author of the Tactical Philanthropy blog. He is a regular columnist for The Chronicle of Philanthropy.

Philanthropists’ ‘Soft Power’ May Trump the Hard Pull of Purse Strings
April 18, 2010 | Chronicle of Philanthropy

In 1990 Joseph Nye Jr. of Harvard University coined the term “soft power” to describe an approach one country can take to influence the behaviors of another. The term describes the way that a nation’s values, culture, policies, and institutions can change the behavior of others in a way that is far different but potentially more effective than the “hard power” approach of coercing a specific action or offering incentives for good behavior.

The importance of soft power is now widely accepted in the analysis of international affairs. And it is becoming increasingly important in the world of philanthropy. Over time, soft power may very well eclipse the hard power of grants and other financial transactions.

Historically, foundations have been primarily focused on making grants. Awarding money to nonprofit institutions is the primary way that foundations exercise power. Yet the attempt to shape events by providing or withdrawing grants is a form of hard power that leans heavily on the idea that influence is best achieved through offers of incentives or threats of penalties.

Mr. Nye defines soft power as “the ability to obtain the outcomes one wants through attraction rather than using the carrots and sticks of payment or coercion.”

Foundations can achieve soft power by demonstrating in their own behavior how they hope others will act.

Soft power exists whether or not a foundation or other big donor intentionally deploys it as a resource or is even aware it exists.

In 2006, when Bill Gates announced that he would leave Microsoft to join the Bill & Melinda Gates Foundation full time and Warren Buffett announced his intention to give 85 percent of his wealth to the Gates foundation, a great deal of attention was paid to the enormous hard-power potential that the Gates foundation held as the largest grant-making foundation in the world.

However, what was more important was the soft power that came from Bill Gates, announcing at age 48, that philanthropy was more important to him than running Microsoft and Warren Buffett announcing that instead of leaving all his money in a bequest, as he had long pledged, he wanted to give his fortune away while he was alive.

Since the announcements from Mr. Gates and Mr. Buffett, their actions have been cited by many other wealthy individuals who have launched their own philanthropic efforts.

The new Social Innovation Fund run by the federal government is another example of exerting soft power. While the fund’s $50-million a year budget has been criticized by many as too limited to make a real difference, its focus on supporting groups that have proved their effectiveness rather than financing specific projects is encouraging foundations and philanthropists to pay greater attention to the merits of those approaches.

Hard power in philanthropy depends on control of monetary resources. But charitable giving represents only 20 percent of the financial resources available to nonprofit groups, and even the Gates foundation, the largest in the world, accounts for only 1 percent of the nation’s total charitable giving.

Soft power, on the other hand, depends largely on maintaining the goodwill of the people a donor hopes to influence. In the context of all charitable giving to Haiti, which now totals $1-billion, the $1-million in grants from the Gates and Ford foundations to the group Partners in Health was negligible.

But the selection of this particular group out of the field of so many organizations trying to help in Haiti sent a powerful signal to other donors. The amounts each foundation gave were relatively small, but their reputations for selecting effective grantees is a form of soft power that has the potential to persuade others to give to the organizations they support. By effectively deploying their soft power, smart foundations had the potential to influence the hundreds of millions of dollars donated to Haiti.

The Gates and Ford foundations, and most other large philanthropies, have far more soft power at their disposal then the hard power represented by their grant-making budgets.

In a recent essay for the Stanford Social Innovation Review, John Brothers, principal of Cuidiu Consulting, described the “carrot and sticks” philanthropy of foundations that provide and withdraw financial resources as a system of reward and punishment to motivate the nonprofit groups they support.

Mr. Brothers writes that “carrot and sticks philanthropy is part of the problem and is not remotely close to the solutions needed to help our most challenged nonprofits.”

Where, then, should we look for more effective practices? Soft power seems to offer the ideal way for more foundations to wield influence, especially at a time when their money is stretched as the nation seeks to rebound from its financial crisis.

A Philanthropic Network Passes On Recommendations of Worthy Charities
March 7, 2010 | Chronicle of Philanthropy

In all the talk about measuring results in philanthropy and how best to determine which nonprofit groups are effective, a simple fact is often overlooked. All across the country, foundation program officers, senior nonprofit staff members, and academic researchers know which nonprofit groups are doing great work.

Now a new group called Philanthropedia is working to capture this knowledge about top nonprofit groups and make it available to everyone.

This sort of information, personal recommendations from people in a good position to pass judgment, is a fundamental process that people use to make decisions.

Getting recommendations from experts can mean asking your friend who loves to eat out what she thinks about the new restaurant in town or consulting a book review in The New York Times before choosing your next novel. Recommendations from trusted experts are so valuable that we often pay large amounts of money to gain access to them before making critical investment, legal, or medical decisions.

Philanthropy itself is largely built on recommendations. Studies show that one of the main reasons donors give to certain groups is that a friend asked them to do so.

When those friends are fellow supporters of organizations and not professional fund raisers, they are in effect recommending a group that deserves support. But while those sorts of recommendations motivate action, they are not unbiased or delivered by an expert.

Philanthropedia is working to make expert recommendations of nonprofit groups as accessible as the expert recommendations that help shape our decision making about which movies to see, restaurants to patronize, or retirement strategies to deploy.

Working with a quickly expanding network of experts that includes grant makers, nonprofit staff members, scholars, and other experts, Philanthropedia is making available expert recommendations on topics that include organizations working to curb climate change, improve education, extend small loans to struggling entrepreneurs abroad, and reduce homelessness in the San Francisco Bay area.

Co-founded by Howard Bornstein, a former employee of the Bill & Melinda Gates Foundation, and Deyan Vitanov, an entrepreneur who had previously built an online community for computer programmers, Philanthropedia began operations last year with extensive support from the William and Flora Hewlett Foundation.

The Philanthropedia team uses a survey methodology similar to one developed by the RAND Corporation to use expert recommendations in situations involving a large degree of uncertainty.

Given the nonprofit world’s current inability to systematically measure the effectiveness of nonprofit programs or even agree on what attributes make for a well-run organization, Philanthropedia’s approach makes a lot of sense.

The big weakness in Philanthropedia’s model is that the recommendations it offers are only as valid as the expertise of the organization’s network.

Because so much of philanthropy is not based on evidence, it is quite possible that the nonprofit groups recommended by the organization’s experts are not truly the most effective ones. It could be that the people in the network have biases that produced flawed ideas about what makes a nonprofit group successful.

However, in a recent background paper, Philanthropedia showed that the nonprofit groups it recommends have little in common based on how much money they raise, how well known they are, and their age, number of employees, and accountability ratings from Charity Navigator.

This means that the experts are picking up on something else. Given that the experts are foundation employees whose job it is to analyze nonprofit groups, researchers who have spent years studying conservation, education, poverty, and other topics, and nonprofit senior staff members who see firsthand the activities of their peers, it seems likely that many of the groups Philanthropedia recommends are among the best.

In the wake of the Haitian earthquake, the Gates foundation, the Ford Foundation, the charity research group GiveWell, the University of Pennsylvania’s Center for High Impact Philanthropy, and the nonprofit Acumen Fund all made grants or offered recommendations of which organizations were in the best position to help.

Each of them listed Partners in Health as one of their choices. While this fact does not guarantee that Partners in Health is the most effective nonprofit organization working in Haiti, it does offer a useful piece of information for donors trying to decide what groups to support.

Philanthropedia offers the potential to gather this sort of information for different causes and to offer recommendations that are international, national, or local in scope.

What is fascinating about Philanthropedia is that its process is not only effective but it is also inexpensive to run and easy to expand.

Other organizations working to identify outstanding nonprofit groups by conducting original research may offer some advantages compared with Philanthropedia.

But Philanthropedia’s system allows it to analyze far more nonprofit groups by simply bringing to light what experts already know.

Philanthropedia could quickly become a great way for donors to learn from the people in the best position to know which organizations are the most effective.

Sean Stannard-Stockton is chief executive of Tactical Philanthropy Advisors in Burlingame, Calif., and author of the Tactical Philanthropy blog. He is a regular columnist for The Chronicle of Philanthropy.

Twitter Presents a Chance for Savvy Charities to Reach More People
November 12, 2009 | Link of Chronicle of Philanthropy

Late one Friday afternoon this fall, Matt Flannery, the co-founder of Kiva.org, posted a message on Twitter: “It seems like my Twitter account is getting attacked by spam. 500 new followers a minute. Anyone else experiencing this?”

In fact, a small group of people who use Twitter to talk about philanthropy had also been inundated with followers. But the reason for the instant increase wasn’t anything as spurious as a spam attack. All the people who suddenly attracted new followers had just been added to Twitter’s official “suggested users” list of people worth following. Traditionally, Twitter’s suggestions have included celebrities like Al Gore, Shaquille O’Neal, and Oprah Winfrey, so adding the likes of Matt Flannery and other stars of the philanthropy world represents a big shift.

Twitter’s decision to elevate people in philanthropy to its list of those worthy of watching is important for the nonprofit world. It gives people at foundations and other nonprofit organizations a new platform to attract supporters and discuss important issues — but people in philanthropy will need to change their ways if they plan to capitalize on this important moment.

It is easy to dismiss Twitter, since it requires that people post their thoughts within a limit of 140 characters at a time. Many press releases put out by foundations feature headlines two or three times longer than an average “tweet.”

But this has been the year for Twitter to enter the mainstream of online social networks. While President Obama was considered cutting edge when he released his choice of a running mate in 2008 via text message, it’s clear he would have used Twitter to make such an announcement if he were trying to stir the same kind of excitement this year.

Twitter allows people who broadcast messages to get the word out to anyone who has signed up to listen. And reading the messages doesn’t require any special access; just sign up to follow someone and you can get all the public messages the person sends.

Twitter has also gotten some attention in philanthropy this year. At the annual conference of the Council on Foundations this spring, people were using Twitter to post messages about many of the sessions, in part because the council created an official Twitter account from which it encouraged conference goers to chat about sessions they attended.

But to a large degree, Twitter posts about philanthropy end up circulating within a small group of people who are passionate about the subject. While a hot topic might capture the interest of a small number of Twitter posters, those tweets rarely if ever “go viral” and branch out to reach the millions of people who use Twitter for reasons that go well beyond philanthropy.

However, that could soon be changing, as Matt Flannery learned.

When Twitter decided to add a group of philanthropy-focused people to its suggestion list, it vastly expanded the number of people who now get updates on nonprofit issues.

In addition to adding Matt Flannery, Twitter highlighted organizations like the Skoll Foundation and the Acumen Fund as well as individuals like the nonprofit-social-media expert Beth Kanter and the social entrepreneur Kjerstin Erickson.

The results of getting on Twitter’s suggested user list are phenomenal.

Since he was added, Mr. Flannery’s follower count has ballooned from a couple thousand to more than a hundred thousand. If the experience of the past is a guide, then the new philanthropy-focused members of the list can expect to add half a million or more followers over time. The exposure is seen as being so valuable that the Internet entrepreneur Jason Calacanis once offered Twitter $250,000 if it would add him to the list.

Those kinds of numbers make Twitter a key forum for discussions of philanthropy, in many cases outstripping the number of people who subscribe to print and online publications about nonprofit affairs.

But what is even more important about Twitter’s decision to highlight nonprofit leaders in its list is that it is yet another sign that philanthropy itself is becoming more and more a part of mainstream culture. News organizations are devoting more attention to nonprofit affairs, Product Red made giving a prominent part of the consumer world, and the NBC drama The Philanthropist brought the topic to prime time.

As a result, philanthropy is no longer a topic of discussion reserved for the ultra wealthy, nonprofit executives, or academic researchers. As with any topic that goes mainstream, many insiders will complain that the subject is too nuanced for the masses to understand.

But the people and organizations that can figure out how to speak authentically about philanthropy to a mainstream voice — without dumbing down the subject or talking over the heads of the newly formed crowds — will dominate the discussions about the nonprofit world in the coming months and years.

For the most part, people in philanthropy have a tradition of speaking in jargon-filled messages to other philanthropy insiders.

But preaching to the choir never changed the world.

While it might be a strange new world for philanthropy, unless more people at foundations and charities learn to speak to the newly gathering mainstream audiences, they may blow a huge opportunity to radically expand the influence of the nonprofit world.

Sean Stannard-Stockton is chief executive of Tactical Philanthropy Advisors, in Burlingame, Calif., and author of the Tactical Philanthropy blog. He is a regular columnist for the The Chronicle of Philanthropy.

Providing the Capital Organizations Need to Run — and Grow
By Sean Stannard-Stockton
October 1, 2009 | Link to Original Article

According to Paul Brest’s excellent book Money Well Spent, strategic philanthropists devise ways to solve problems and select grant recipients who can best carry out the approaches donors think will work best.

Another breed of donors is growing — people I refer to as tactical philanthropists.

While strategic philanthropists seek to solve social problems, tactical philanthropists are social investors.

Investors, in both the for-profit and the nonprofit contexts, provide capital to organizations that solve problems. Good investors take great interest in the solutions deployed by the organizations they finance, but they themselves are not problem solvers.

As many philanthropists have rushed to use the currently trendy vocabulary of financial investments when they talk about giving, the meaning of the word “investment” has become confused. A true investment is not defined by whether the investor earns a profit — whether and how much money is returned are just terms of the deal — but the intention of the transaction.

Tactical philanthropists view their grant-making activity as investing in nonprofit organizations because they are not simply paying organizations to carry out programs, they are providing the capital needed to operate and expand a great organization.

Venture philanthropists represent one approach to tactical philanthropy. They provide capital to support a portfolio of nonprofit groups the way a tactical philanthropist does, but a venture philanthropist generally gets very involved in how an organization works. Venture philanthropists may expect a seat on the board for large capital commitments or expect that the nonprofit organization be receptive to extensive nonmonetary support, such as management training.

Venture philanthropy done well and with nonprofit organizations that welcome a highly involved supporter can produce outstanding results.

But getting donors involved is not automatically a panacea. According to “More Than Money,” a report by the Center for Effective Philanthropy, most foundations that provide assistance beyond a grant provide only limited support.

“Providing just two or three types of assistance to grantees appears to be ineffective,” the report says. “It is only in the minority of cases when grantees receive either a comprehensive set of assistance activities or a set of mainly field-focused types of assistance that they have a substantially more positive experience with their foundation funders than grantees receiving no assistance.”

Tactical philanthropists can also be investors who do not focus on providing assistance beyond a grant. Warren Buffett, one of the greatest investors of all time, is known to ask many questions of the companies he is invested in, but does not dictate how they run their businesses. He invests only in organizations where he thinks management is competent and knows best what decisions to make. Mr. Buffett has said, “When you have able managers of high character running businesses about which they are passionate, you can have a dozen or more reporting to you and still have time for an afternoon nap.”

Both venture philanthropists and social investors who take a hands-off approach have something in common. They put their energy into choosing the organizations in which they invest rather than the problems they wish to solve. Tactical and strategic philanthropists both seek a better world in which the problems we face have been solved, but tactical philanthropists see their role as supporting organizations that can achieve social change rather than solving problems themselves.

As one tactical philanthropist told me recently, “I don’t know how to fix the problems in our city, but I know who knows how to fix those problems and it is our job to support them.”

There is no doubt that we need both strategic and tactical

philanthropists. But in recent years, the phrase strategic philanthropy has begun to be used as shorthand for “effective” philanthropy.

We do not all need to be problem solvers. Many outstanding problem solvers are hard at work in nonprofit organizations around the world. In many cases, the best approach might be for philanthropists simply to invest in these organizations and provide them the capital they desperately need to carry out their solutions and grow.

Charities Should Be Held to ‘Philanthropic Equity’ Standards
By Sean Stannard-Stockton
August 20, 2009 | Link to Chronicle of Philanthropy

It is time for nonprofit accounting standards to recognize the concept of "philanthropic equity."

For too long, donors have looked at nonprofit financial statements and believed that as much money as possible should be spent on programs and as little as possible should be spent on the organization itself. This logic is fundamentally flawed because, no matter how great a program is, only a high-performance organization can deliver, expand, and improve effective programs.

The fact is nonprofit groups need two kinds of cash flow: revenue and equity. Recognizing the distinction between revenue and equity is critical to building great organizations. Revenue is cash flow delivered to an organization in exchange for execution: delivering goods and services.

Equity is cash flow delivered to an organization for the purpose of building the organization. Without the ability to account for philanthropic equity, it is simply not possible to distinguish between donations that keep a nonprofit running and those that are intended to build the organization.

Like a for-profit company that offers a great product but doesn’t have the resources to invest in great management, technology, and infrastructure, a nonprofit organization without equity is doomed never to fully realize its potential. Just as some people are customers of a company and others are investors in it, donors can play the role of providing nonprofit organizations either revenue or equity, or both. But for donors to evaluate a nonprofit group’s need for equity and the effectiveness with which it uses that equity, the two forms of cash flow must be recognized separately. The current nonprofit accounting standards ignore the existence of equity and treat all cash flow as revenue.

High-performing nonprofit groups need equity to grow and improve. Unfortunately, nonprofit groups are systematically starved for equity capital. Since we tend to get those things we measure, it is critical that we begin to explicitly measure equity on nonprofit financial statements.

A new equity-like methodology, called the "sustainable enhancement grant," has already been deployed successfully among several high-performing nonprofit groups to help shed light on their finances in a way that allows them to attract equity-like philanthropic donations. The system was developed by the Nonprofit Finance Fund and it has been well vetted by leading law firms and accounting firms. Now it is time to build those concepts into standard nonprofit accounting guidelines.

Warren Buffett is known to believe that evaluating the amount of profit a company makes (what we in the nonprofit world might refer to as results) is not enough. To truly understand how well a company is performing, Mr. Buffett looks at the return on equity. This measure reveals the performance of a company in relation to the amount of capital invested in building the organization. The nonprofit world needs a similar measure. If we hope to encourage donors to truly invest in nonprofit groups, they must be able to understand how their "equity investments" are performing.

The need for this change is urgent. The newly created government Social Innovation Fund is designed specifically to increase the flow of equity-like capital to nonprofit groups. The bill authorizing the fund requires that the money be used to build the capacity of nonprofit groups to copy and expand proven programs. But without official accounting recognition of philanthropic equity, it will be impossible to evaluate whether those capital flows actually are used to effectively build the grantee organization or simply to finance operations.

According to the White House, the Social Innovation Fund is all about "finding and scaling the best social innovations." This is an important and achievable goal. But "scaling" a nonprofit group requires more than just making big grants. It means offering capital that is explicitly earmarked for building the organization itself, not for spending to deliver programs. But without philanthropic-equity accounting, only the handful of organizations voluntarily using the sustainable enhancement grant accounting system have the ability to actually account for how effectively they are using grants intended to help them expand.

There is too much at stake for donors to continue giving more than $300-billion a year without a better understanding of which nonprofit groups are using their money to build sustainable organizations and which are not. It is time for the Financial Accounting Standards Board to recognize philanthropic-equity accounting.

Data Don’t Tell the Whole Story of Charities’ Impact
July 2, 2009 | Link to Chronicle of Philanthropy

A week’s worth of The New York Times includes more information than the average American living in the 18th century would have encountered in his or her lifetime, according to the book Information Anxiety 2 by Richard Wurman.

As grant makers demand more data on which to base their philanthropic decisions, let’s remember that information by itself is not useful unless it is filtered using wisdom and relationships.

Philanthropy has entered an age in which information, especially quantitative data, is prized by foundations and other donors.

Many people believe that data can help us identify great nonprofit groups and effective programs.

Just as the global economy is operating in an Information Age, "knowledge workers" who seek to make available new types of information for the public good now populate philanthropy. However, information is a necessary but not sufficient condition for robust philanthropy.

That’s why it’s great that philanthropy leaders are starting to show their thought processes in regular Internet postings available for everyone to see. For example, Paul Brest, of the Hewlett Foundation, uses his blog for a rolling conversation about what makes for good philanthropy. So does Carla Javits of REDF, a group that uses innovative approaches to train needy people for jobs.

Adding to the store of knowledge through online postings are people such as Ken Berger, head of the Charity Navigator watchdog group, and Bob Ottenhoff of GuideStar, the repository of information from nonprofit tax forms.

As the amount of available information explodes, the wisdom to process it and put it in context becomes exponentially more valuable. In this environment, information becomes a resource that is valuable only when we place it in context. Access to information is no longer a competitive advantage. It is the ability to filter and process the flood of information that sets effective people apart. That is why the decision by a prominent foundation leader like Paul Brest to start a blog is so important.

No matter how wise someone like Mr. Brest is, each person has a limited capacity to understand the world around him or her.

That is why relationships are the third core element of a philanthropic trifecta — information, wisdom, relationships. Relationships, especially those with other wise people, allow grant makers to filter the information they receive through a network of expertise and place the information in context.

Wisdom allows an individual to place new information in the appropriate context and use it to make better decisions. But when wise people connect their ideas together, a communal understanding of philanthropy will sprout, and individuals can benefit from experience far beyond their own.

While these relationships are rooted in human connections, online tools like blogs and Twitter are allowing those networks to flourish without regard to geography.

Philanthropic leaders have long gathered to communicate among themselves, but the power of relationship-based networks is now being supercharged by the inclusion of people from all walks of life and geographic locations.

When I wrote recently in The Chronicle about the "Googlization" of philanthropy (Opinion, April 23), I argued that it would enable "collaboration and participation by unbundling the process of creating information from its distribution.

Since philanthropy is improved exponentially as more information is shared about which social-benefit efforts work — and which ones fail — this is a big moment for philanthropy."

But Pat Nichols, a management consultant to nonprofit groups, worried about the implications of my suggestion, and in a comment on my blog, he wrote, "It struck me that the capacity to Googlize philanthropy doesn’t improve philanthropy by itself. There are at least two sets of interwoven criteria at work — the criteria by which information is deemed important and, thus, selected or organized, and the criteria by which the reorganized information is applied in making giving decisions."

Mr. Nichols is exactly right and his comment gets to the core of the issue. Information is the raw material of effective philanthropy, but without the skilled processing of wise individuals and their extended relationship networks, information isn’t worth very much at all.

Gathering, filtering, and processing information is essential to great philanthropy. But this is a human-powered activity.

Computers can slice and dice the raw material of information. The Internet can provide access to the information to more people in new ways. But it is only through the skilled application of the uniquely human aspects of wisdom and relationships that we can use the information to make philanthropy more effective.

Charities Should Nurture Donors’ Passion for Giving
By Sean Stannard-Stockton|Link to Chronicle of Philanthropy
May 21, 2009

In a quest to make philanthropy more efficient and effective, many organizations and individuals have sprung up to improve the process of how donors give. Most of those efforts focus on giving advice to the biggest foundations, and only a handful of services focus on coaching individuals in the art and science of philanthropy. This imbalance in the way knowledge is shared is a key reason charitable giving is not meeting anywhere near its full potential to transform society.

When the prolific bank robber Willie Sutton was asked why he robbed banks, he responded, “Because that’s where the money is.” This reply also seems to explain why professional philanthropic research and advice has focused on large foundations.

However, it is a myth that large foundations dominate charitable giving.

Foundation grants accounted for only 13 percent of total charitable giving in the United States, according to Giving USA, while donations from individuals make up 82 percent of the annual total. (Corporations give the rest.)

Unfortunately, the extensive work that has been done to make foundation giving more efficient and effective cannot be easily transferred, because it fails to take into account the reasons people give.

In his 2006 book Strategic Giving, Peter Frumkin, a philanthropy scholar at the University of Texas, argued that five elements drive people to give a large share of their money away; change, innovation, equity, pluralism, and self-expression.

At big foundations, self-expression is rarely on the agenda. In most cases, it would be wrong for foundation employees or board members to think of grant making as their own personal self-expression,

But for individuals, self-expression is a vital part of giving. You cannot understand, or influence, a donor’s wish to encourage economic equity or pluralism without recognizing the way that such grants are inextricably linked to the donor’s self-image.

That can be a tricky proposition because Americans tend to think that “good” philanthropy requires sacrifice. Donors, our culture tells us, should not benefit from their giving. Giving is supposed to be motivated by a donor’s selfless desire to help others, and so the idea that a donor may use philanthropy as a form of self-expression seems to reduce the nobility of their gift.

If we ever expect to persuade more individuals to become effective philanthropists, the first step is to break the notion that philanthropy must entail sacrifice. Instead donors need to be encouraged to think about how professionals in many walks of life start with a passion and talent, and then train themselves in the skills they need to excel in the tasks they love. We don’t discount a musician’s performance because he clearly loves playing or an athlete’s accomplishment because she loves sport. So too must the passion for giving become linked with a desire to learn how to do it as well as possible.

The professionalization of philanthropy has produced a large amount of knowledge about what works. Large foundations and their advisers must learn to share their knowledge in ways that meet the needs of individuals who want to give money away.

Philanthropy is not simply a lifeless transaction that transfers money from one set of hands to another. Philanthropy is an act of creation that gives form to humankind’s highest ideals. Organizations and consultants that focus on philanthropy must recognize that they are in the business of spreading ideas and rendering them into tangible results. They can’t expect good results if they focus only on helping institutions become more effective grant makers.

It is high time that more organizations begin to serve the needs of individuals who make donations. Frankly, it will not be easy. Donors are idiosyncratic and motivated by a range of needs and desires that even they do not fully understand. But it is this very idiosyncratic nature that makes individuals far more willing than institutions to give money to causes that involve experimentation, risk taking, and new ideas. Individuals are the future of philanthropy. We need to stop failing them.

Sean Stannard-Stockton, a regular columnist for The Chronicle, is a principal and director of tactical philanthropy at Ensemble Capital Management and author of the blog Tactical Philanthropy.

Philanthropy’s Information Revolution
April 23, 2009|Link to Chronicle of Philanthropy article

By Sean Stannard-Stockton

Two years ago, Carla Dearing, then chief executive of Community Foundations of America, wrote an opinion essay in Worth magazine titled, “The Schwabification of Philanthropy.”

She argued that philanthropy was going through a transformation as the Internet not only reduced the cost of making philanthropic gifts to both donors and nonprofit organizations but also made it easier for donors to do their own research on potential beneficiaries rather than seek help from community foundations, the United Way, and other long-established institutions.

Just as Charles Schwab & Company had disrupted the business of investment management in the 1970s by lowering transaction costs and unbundling financial advice from transactions, so, too, would that change happen in philanthropy, Ms. Dearing predicted

That trend has proved to have staying power, and the Schwabification of philanthropy became a reality. Online donations, commercial donor-advised funds, and Web sites like Kiva.org and DonorsChoose are all direct results.

Now a new trend has taken hold: the Googlization of philanthropy.

If Schwabification focused on automating and reducing the costs of transactions, Googlization focuses on enabling collaboration and participation by unbundling the process of creating information from its distribution. Since philanthropy is improved exponentially as more information is shared about which social-benefit efforts work — and which ones fail — this is a big moment for philanthropy.

Philanthropy is unlike industries in which the Internet has destroyed business models that relied on the information producer’s maintaining control of distribution. The very technology that is killing newspapers and record companies will revolutionize philanthropy for the better.

According to Google, the company’s mission is to organize the world’s information and make it universally accessible and useful. While it does not produce much information itself, Google is the first place many people turn when they want to find information.

Without needing the cooperation of people who produce articles and other content, Google has organized valuable information so well that seekers of information turn to Google rather than go directly to content producers. What this means for philanthropy is that as philanthropic knowledge is captured and put online, third-party groups can organize this information and make it accessible and useful.

Today both PubHub, a project of the Foundation Center, and IssueLab aggregate publicly available research about organizations that serve the social good. PubHub focuses on foundation-financed research, while IssueLab focuses on research conducted by other types of nonprofit groups

Recently, Tony Wang, an employee at Blueprint Research & Design, a philanthropy consulting firm, spent a few hours of his spare time playing with Google’s Custom Search service and created a tool called PhilanthropySearch.org. It scans the Web sites of the 100 largest foundations, philanthropy consulting firms, university research centers, and other sites about philanthropy. If a foundation or other philanthropically oriented organization posts information on its Web site, the search tool will index it.

What is interesting about PhilanthropySearch.org is, first, how little time and money it took to create, and second, that it was created by an information seeker rather than an organization. The power of using online information tools in philanthropy is that they can organize the knowledge accumulated by nonprofit organizations and make it universally accessible.

But just as Schwabification was not an argument for one entity to dominate philanthropic transactions, the Googlization of philanthropy does not suggest that Google should come to dominate philanthropic knowledge aggregation.

The newly redesigned GuideStar Web site and the efforts of Charity Navigator to incorporate data about charities’ results in its evaluations expand on efforts to aggregate philanthropic information. But for those efforts to be successful, valuable information must be available in a digitized form.

Both groups are trying to find ways to encourage nonprofit groups to submit information that is not readily accessible. But all charities, foundations, and other organizations that serve the social good need to recognize the importance of knowledge sharing and to post as much information as possible, so that third parties can find ways to make it accessible and useful.

One group already capitalizing on the explosion of digitized philanthropic information is SocialActions.com. Its Web site aggregates more than 50 sources of online social activity, including Change.org, GlobalGiving, Razoo, and VolunteerMatch. Over time, people interested in giving money, volunteering, or taking some sort of action online may find SocialActions.com their first destination.

The Schwabification of philanthropy was about lowering the cost of administering philanthropy and thereby giving charitable financial tools to more individuals.

The Googlization of philanthropy is about organizing knowledge to allow for smarter giving by more people. Most important, the Googlization of philanthropy means that organizing the information will not be done by the information creators, but by third parties and — excitingly — the people who want to consume that information.

Sean Stannard-Stockton, a regular columnist for The Chronicle of Philanthropy, is a principal and director of tactical philanthropy at Ensemble Capital Management and author of the blog Tactical Philanthropy.

With my new Chronicle of Philanthropy column, I think I can build in more interactivity. For instance, I might refer in my column to a video hosted here at Tactical Philanthropy. Or I could source column ideas (as I started to yesterday) here on the blog. Or maybe we get really creative and crowdsource a column via a collaborative writing process.

Many of my readers are a lot more creative than me when it comes to understanding how to push the boundaries with social media tools. How do you think I should take advantage of the dual print/online media combination? And don’t forget that the Chronicle of Philanthropy has their own website where they’ve been hosting live chats and doing other interactive events. I’m sure they’ll be open to experimenting with new ideas as well.

How can we make this more than just another newspaper column?