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Dana Variano warns against the limitations of the new LA Times charity fundraising rating system. I believe that bad systems are more dangerous than no system.
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Peter Deitz “rescues” a debate between me and Cynthia Gibson from 2007.
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ABOUT SEAN STANNARD-STOCKTON
Sean Stannard-Stockton is the president and chief investment officer of Ensemble Capital Management, located in Burlingame, CA, midway between San Francisco and Silicon Valley. From 2006 through 2012, Sean authored the Tactical Philanthropy blog and wrote regular philanthropy columns for both the Financial Times and the Chronicle of Philanthropy. In 2012, Sean officially ended the blog to focus on growing Ensemble Capital.
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One Comment
Sean,
Thanks for pointing us to the LA Times system. Here’s the comment I would have left at the Times site, if they had offered that opportunity. (I left this also on PhilanthroMedia, too.) The points Dana raises in caution are all excellent, and I agree with you that a bad system is more dangerous than none. In this case, the Times’ matrix, while an interesting idea, is a bad system. There is no way that it won’t be misleading to users. First, by my quick count, it presents data only on aproximately 354 charities. In Los Angeles County alone, there are approximately 7000 nonprofits with revenue over $25,000 (i.e., 990 filers). Way too small a sample size to stand in for the whole, but because of the Times’ (steadily diminishing) authority, that is how readers are likely to take it.
The data is pulled apparently from filings with the California Attorney General (disclosure: I know many people in the AG’s charitable section, they’re excellent, but way too understaffed), and only from professional fundraisers. This data is really only useful regarding the specific engagement of a professional fundraiser. The worst performing charities indicated in the matrix may very well have excellent overall fundraising performance, if you were to add in the results of fundraising by their staffs and volunteers. And the best performing ones likely are doing far better when you take their staff and volunteer fundraising into account.
We’d all be better off if the Times instead pulled this and later tried to present something more comprehensive. (I’ve plenty more to say about what that would look like, but have gone on too long already.)