My friend Perla Ni, founder and chief executive of GreatNonprofits.org, is the author of an article in the Financial Times today. I assume that many readers will think that my thinking on philanthropy and the vision that Perla presents are at odds. I do not. I think Perla is correct to a large degree. I think the confusion comes down to the assumption most people make that for-profit investors are driven by metrics. I think most great investors (both for-profit and social investors) must “use their heart and their head”.
By Perla Ni
Published: March 15, 2008
There’s a trend in philanthropy to treat the act of giving as an “investment decision”. This is partly because non-profit management is taught increasingly in business schools, and partly because more wealthy donors with a business background are are becoming involved.
Donors are younger, more active and may have made their money in finance. They believe, as I did until a couple of years ago, that there is a holy grail of metrics, and if we just worked harder to find it, we could measure all non-profits, lay them side by side and figure out which ones were more effective in doing good in the world.
What gets lost in all of this focus on evaluation and numbers is the grace and joy of philanthropy. Philanthropy inspires. It tells stories. It reconnects us with others and reminds us of our shared humanity.
Two years ago, I visited a local homeless shelter located between the train tracks and the bus depot. It provided homeless people with free breakfast, a place to hang out and referrals.
I asked the director, a Unitarian minister, how he measured effectiveness. I had expected him to say something about the number of people he had helped find jobs, or the number of breakfast sandwiches it handed out, etc. Instead, he replied simply: “Last year one of our [homeless] regulars died. We paid for his coffin and his burial. And 10 people, who he’d gotten to know here, showed up for his funeral.” He paused. “Does that answer your question?”
That sobering encounter made me think hard. The fact that the non-profit provided a place where a homeless person made friends who cared enough to go to his funeral – something that would not fit into anyone’s investment metrics – speaks volumes about how this non-profit made an impact on this person’s quality of life. The organisation did something incredibly decent for this homeless person at his death. It pulled at my conscience and my heart.
I shouldn’t be so surprised by this story’s effect on me. After all, recent research on philanthropy points to the fact that it is a highly emotional and social behaviour. The work of Deborah Small, a professor of marketing at Wharton business school, shows that presenting potential donors with metrics suppresses donations because it lowers empathy. It is empathy, her research says, that triggers giving.
This rings true intuitively – we’ve all pulled out our cheque books at some point at the sight of the picture of the child in India with a cleft palate.
That’s not to say that effectiveness does not matter and we should look only to our hearts. It matters a great deal, but the human dimension is just as important. Many non-profits are trying to make a difference in people’s lives. And that’s hard to do. People are not products. We are complicated – changing our attitudes, ideas and behaviours can take years and it’s difficult to isolate which single factor contributed to any specific result.
And so, when people ask, “how do I know whether this is a good non-profit?”, I respond as follows: “Go and visit. See for yourself. Volunteer for a soup kitchen and sit down next to an ex-felon. Ask them about their lives. What got them into trouble? How are they coping out of jail? How is this soup kitchen helping?” You will be amazed by the stories. It’s eye-opening, vivid and inspirational.
The other advantage of this first-hand approach is that you’ll see that the work of the non-profits extends beyond tangible, immediate or predictable results. Many such organisations – even those that provide direct services – also work to educate, change attitudes and affect policy. These efforts towards systemic change – think about the various efforts by environmental non-profits in the past 30 years – have a long pay-off timeline and only years later do we see the results of their efforts.
Philanthropy is all the more powerful because of these poignant stories. Let’s not rob such giving of its human pulse by regarding it only as an investment decision.
Bono, of the rock group U2, was inspired to become a philanthropist after travelling to Africa. “I saw it. I heard it. I felt it,” he said.
This is the gift of philanthropy. It will awaken you to the joys, sorrows and above all, the hopes of life and our world.
The writer is founder and chief executive of GreatNonprofits.org, an organisation that provides donors and volunteers with reviews and stories of non-profits posted by non-profit clients, volunteers and donors. She is also founder and former publisher of Stanford Social Innovation Review and a co-founder of Grassroots.com.