Susan Bell is director of the William and Flora Hewlett Foundation’s philanthropy program. When Paul Brest talks about an “Online Information Marketplace for Giving”, he’s talking about an idea that is the province of Hewlett’s philanthropy program.
Here’s an interview with Susan on the topic, which the Hewlett Foundation released recently.
I noted two items of particular interest to me:
- Susan refers to a “social marketplace”. This is important to me since I’ve been arguing that marketplaces are not just transactions, but are fueled by human interactions.
- She predicts a future 5-10 years from now where “there will be more funders of nonprofit organizations who will be making better decisions so more money flows to the higher-performing ones. That might mean that there is some fallout in the marketplace. There might be some nonprofits that are not as strong that don’t make it. But the silver lining of that is that more money would then be focused on the best organizations.” I agree with this 100%. Functioning philanthropic capital markets will be a huge boon for high impact nonprofits that will benefit from funders finding them, rather than them having to spend so much time and money on fundraising. These markets will be devastating for nonprofits that do not actually impact the cause they are focused on. They will uplift the entire field as “weak competitors” fold and capital flows to the highest sources of “social return on investment”.
Here’s the full interview:
Susan Bell, vice president of the Hewlett Foundation, also directs its Philanthropy Program, which works to improve the Foundation’s grantmaking and makes grants to improve philanthropic practice and the effectiveness of nonprofit organizations. A key element of that work is to improve the information available to philanthropists when making decisions about where to give. With the assistance of the consulting firm McKinsey & Company, Hewlett’s Philanthropy Program currently is exploring how to create such a "social marketplace" of information.
Before joining the Foundation, Susan Bell spent more than fourteen years in strategic planning, development, alumni relations, and communications for Northwestern University, the Sierra Club, and Stanford University. At Stanford, she also helped direct the Environmental and Natural Resources Law & Policy Program.
How do philanthropists, large and small, currently make their decisions, since the most helpful information often isn’t available?
Unfortunately, philanthropists who are thoughtful about the changes they’d like to make happen don’t have good tools to guide them. So they make decisions based on word of mouth, gut feel, or where they already have existing affiliations. It’s pretty clear when they come to us for advice that they don’t have an easy way to make sound decisions.
Generally speaking, do they have any ideas about what they would find helpful?
Yes and no. Those that know enough about the kind of information that could be made available would like more. But many haven’t even thought of that. So as we go about building some kind of repository of information about nonprofit organizations, there are two kinds of questions we’re trying to answer: What type and quality of information could be put in it? And, if we build it, will they come?
What do you mean when you say there needs to be a "social marketplace" of information for the philanthropic world?
It’s analogous to the business world, where you have information and people that you can turn to, essentially, to shop. In the business world, access to information lets investors make sound decisions about which enterprises deserve their support. We’d like to see something similar in the world of charitable giving. It would be helpful to people who want to give to know what options exist and what options are best, based on their interests.
But at some point the metaphor breaks down, doesn’t it? In business, you essentially have a widget that you want to invest in. It’s not so simple when you’re trying to solve social problems, as varied as they can be.
Right, a nonprofit’s widgets tend to be people doing good things by trying to make change happen. So philanthropists aren’t investing in products; they’re investing in people doing work. Making the most effective investment presents some incredible difficulties because it’s hard to attribute change to the actions that someone in a nonprofit takes, and it’s hard to compare one kind of change with another to know which one might be having more impact on a problem.
Your choice to give is very values laden. It’s not based on objective information in the same way you might decide to fund a business. It’s based on what interests you as a donor. But that’s also the beauty and excitement of philanthropy. You get to invest in what you really care about by investing in people who are doing good work on that issue.
Still, given two organizations doing the same kind of work, it stands to reason that one might be more effective. And we’d like to create tools to help that one get more support.
Whom do you see this marketplace of information primarily serving? Are we talking about people who give $100 to the United Way, or to wealthy prospective donors who may give tens of thousands of dollars?
We’re in the process right now of working with McKinsey and Company to determine who would be the best audience. It’s probably major individual donors or family foundations more than large professional foundations, where the donor or a person handling his or her finances would be readily able to get the information needed.
But we’re not ruling out smaller donors. Anyone might do an Internet search and welcome landing at a Web site with a helpful tool for decision-making.
More specifically, what kind of tool does the Hewlett Philanthropy Program envision creating to help with this?
It’s probably some kind of technology-based application. We don’t know what it looks like yet. But if you take DonorEdge, the great resource site that the Greater Kansas City Community Foundation created, and amplify it, that’s what we’re considering. You as a consumer could go online and be able to see an easy-to-use form with information on a variety of nonprofits that goes beyond financial information to describe a group’s work, what its goals are, and whether it’s reaching them. You’d want to see its strategic plan, how that’s being implemented, and what effect it’s had.
Like DonorEdge, there might also be some consulting services. Most people need help to think through what it is they care about and what they are trying to do before the tool really becomes effective.
How long will it be before this tool is developed, and how will we know we’ve arrived at your goal?
Right now we’re just launching the study of what motivates people to give, if they will use a tool if it’s available, and what kind of information would be available to put into it. We should know in the next few months what the possibilities are and what form the tool should take.
Then we have some decisions to make working with a lot of partners-other funders, other nonprofits already are working on these kinds of tools-to decide where to go next. I’d say in the next year we should have some real progress on the design of something if it looks like it’s feasible and helpful. We’ll either put people together to work on the project, or create something, or both.
Are other foundations interested in this?
The reason Paul [Hewlett Foundation President Paul Brest] focused on this in our most recent annual report is we hope very much to have partners on the funding side. The number of donors interested in funding things in the field of philanthropy unfortunately remains relatively small. But when we have some more detail, we hope to present the idea to other funders and see if they will join us. We’ve had some early interest.
What will the world of giving look like in five or ten years if you succeed?
If we’re successful, there will be more funders of nonprofit organizations who will be making better decisions so more money flows to the higher-performing ones. That might mean that there is some fallout in the marketplace. There might be some nonprofits that are not as strong that don’t make it. But the silver lining of that is that more money would then be focused on the best organizations.
8 Comments
Really nice of you to post this, Sean. Susan Bell raises some very, very interesting points. In particular can’t wait to see the findings from the research she says Hewlett is undertaking to determine “what motivates people to give, if they will use a tool if it’s available, and what kind of information would be available to put into it.” That will give you lots to blog about!
I love data and I am giddy about seeing these concepts advance but I don’t worship at the mythical alter of the information marketplace.
It is hard enough keeping up with all of these good Tactical Philanthropy posts!
Gobs of research suggest that the patterns of decision-making in the financial markets, for example, are hardly objective.
My financial planner and for that matter my doctor, my lawyer, my Senator, my Governor, and my 6 year old, often pull decisions directly out of their keisters.
We all know how decisions in business, government, sports, law, science, are finessed with data but can be as wacky as a hat on a church lady.
Canned data is seductive but it often leads to bad decisions.
I don’t expect a better information marketplace to provide much in the way of answers — I look forward to how it can raise good questions.
You make a terribly important point. Markets and data do not automatically produce perfect decision making. They aren’t even designed to do that. The stock market for instance sets the price at which an even amount of people will want to buy or sell a stock. But every transaction only occurs when someone wants to sell and someone wants to buy at the same price. By definition, they can’t both be making the correct decision.
But better, more available information (both data and qualitative information contained in the “conversation” I discuss) helps people make the best decision possible. They won’t always be correct. Imagine I showed you 3 cards in a deck and then asked you to guess the next one. If instead I showed you 45 of the cards, your guess would be better. If I also explained probability theory to you, you’d do even better.
Or think in qualitative terms. Imagine you had to pick your spouse after one date. If instead you spent a couple years getting to know them, you’d make a better decision. But you still might end up divorced.
I like your last line. Information does not provide answers, it helps you ask better questions.
What interests me about this post is how it neglects to consider the information that IS out there.
Being extremely interested in creating a competitive information marketplace rating non-profit organizations, I would love to see an organization take the role of a Moody’s or Standard & Poors and give us a better approximation of the effectiveness of the causes we give to.
So, I went on a quest to find just that. I ended up on the other side of the table with Trent Stamp, executive director of Charity Navigator (www.charitynavigator.org), who, in addition to his blog (trentstampstake.org), runs the only independent, effective non-profit rating organization out there. (and it also happens to be a darn good website)
I am currently at the Yale School of Management and I understand the behavioral implications of human decision-making – ie illogical as often as logical. But for those who are out there who want a quant-based approach to seeing how our charities stack up, Charity Navigator does the job.
I just hope McKinsey & Co can do the simple websearch it took me to find Charity Navigator. And I hope they recommend helping CN reach new heights instead of reinventing the wheel and creating yet another non-profit doing the same thing: something we do not need.
David, thanks for stopping by and commenting. I’d love for you to stay involved in the discussion.
Re-inventing the wheel is a big problem in philanthropy, but not in this case. Many people in the field think that Charity Navigator is not just not good enough, but that it is actually promoting a concept that is detrimental to the field.
I wrote a column in the Financial Times specifically about Charity Navigator’s faults that you can find here. Take a look and tell me what you think.
Dear Sean,
I was reading with interest (actually more akin to
delight) your view on Hewlett’s philanthropy program. I have some ideas
that you might be interested in relation to how IT could be used to improve philanthropy, its provision, gaps and practice.
Think my assessment is similar to yours but I do feel that one ‘social marketplace’ architecture
needs to be created (and, in its early stages,) disseminated from the top
down. Also believe that we have yet to think about the huge potential for
analysing the data that will flow from such an environment and how
advertising revenue from the environment’s brand could itself be used as social capital.
So for your interest and that of other readers:
The problem
At the moment NGOs, charities, universities and even some Foundation/grant
givers (in terms of their overall knowledge base) use static
software/databases, limited and clustered human memory and even old paper lists when they set about trying to decide who they should work with and
why. Yes there is ‘fundraising software’ but these are not really any
different from the static sources or techniques.
Non profits don’t strive for a complete and accurate sense of the real time
objectives or activities of potential partners or how to marry them to
benefit respective missions. Nothing can ever beat face to face human
interactions or receiving a great application. However, both funder and
grant seeker need to establish the right knowledge and their now exists
technology that could create efficient systems for realising opportunities
by intelligent interaction with missions, activity and organisational
identities.
The idea
A dynamic user led and focused software platform/environment for grant
givers and grant seekers to interact and compete could be developed whereby
their real time objectives and organisational identities interact and
compete for the best ideas and resources. A second generation internet
platform whereby a Foundation’s (for example) publicly available governance
and philanthropic objectives are matched (automatically) with various
university (for example) academic objectives, personnel and events both
proactively and reactively.
Impact
Philanthropy is pretty much in the business of working with poor and
vulnerable people and more and more poor and vulnerable people are becoming
empowered with the ability to develop and manage their own philanthropic
relationships. An efficient system and real time knowledge base would be
immensely helpful and efficient in terms of time and money – not to mention
getting down to business and making the best possible relationships work.
Why now
As can be seen from the social networks, eBay, Wikipedia, Amazon, Google – the same real time user focused technology exists now and can be used for this purpose. also, more and more people are becoming involved in
philanthropy and more and more people see a need for improvements in
accountability, focus and efficiency. The wonderful thing about philanthropy
as opposed to business – is that all information is open and free, it just
needs to flow better and better for everyone.
This platform could be up and running in 3 years when the majority of groups
(from the very small to the very large, form the local, national to the
international) could be interacting and benefiting.
The vast data of such a third sector (virtual and open) environment could be
analysed by civil society social scientists – providing new (and first time) knowledge on a global multi $billion philanthropic ‘industry’ – which would perhaps have very real implications for policy analysis and social change in terms of public, private and governmental policy, its gaps and possible prediction of future areas of need.
the social engineering around this software concept is difficult for me to imagine.
We are working on a project similar to the one outlined but on a more individual / personal basis.
It’s clear that the net will be a major channel for individuals who want to contribute to causes, not just financially, but also with personal skills and time.