(Sean Stannard-Stockton is on vacation. This is a guest post from Jacob Harold, a program officer at the William and Flora Hewlett Foundation.)
It’s easier to figure out which inkjet printer to buy than how to write a smart check to fight homelessness. In an information age, philanthropy is caught in a strange kind of information vacuum.
To return to the toolbox metaphor in the previous post, where can we find a flashlight? Where do we get some useful information that could help donors make some better decisions? (In a future post I’ll talk about how we might make sure the information actually gets used by donors.)
One source is obvious: we should get information about nonprofits from nonprofits. In a sense, we already do: we can get financial data from the nonprofits via the IRS and Guidestar. And we can get marketing materials from the nonprofit itself—usually some generalities and a few anecdotes. But what about the substance of the work—the day-to-day struggles best summarized in an articulated strategy and whatever quantitative and qualitative measures of progress the nonprofit uses?
It is a great irony that the nonprofit sector, which has done so much to bring openness and transparency to the world, has so struggled to “open its programmatic books.” The nonprofit community (including foundations) has a ways to go, but new tools have emerged and are helping nonprofits capture and share their programmatic data.
Constituents offer a promising source of information about nonprofits. Volunteers, experts, peers, and (God forbid!), the final beneficiaries of a nonprofit’s work all offer unique and potentially meaningful insights into an organization’s effectiveness. Tapping these new sources of information will be no easy task, but in the end they may prove to provide more light than we could ever need.
I just recently learned about the NetSquared Mashup Challenge, and it seems to have a lot of potential for configuring, using, and sharing information that will benefit nonprofits. They’re finding ways to combine all different sorts of information sources to come up with new outcomes. It’s actually prett fascinating.
I think that’s right. NetSquared has done a lot to help us understand how Web 2.0 technologies might be applied to social problems. The nonprofit marketplace may be especially ripe for these approaches because there’s a common “unit of analysis” (nonprofits) but so many different potential sources of information.
Exactly. I love the fact that it’s gotten people to expand their thinking. So much of data collection and analysis is redundant, IMHO, so why not use the sources that are already out there instead of reinventing the wheel?
Completely agreed for those cases where data is redudantly collected (e.g. finanical information which nonprofits have to provide to each funder and the IRS). But the truth is, there are no comprehensive sources of data about nonprofits’ programs. Guidestar has some programmatic information on about 120,000 nonprofits. DonorEdge, GiveWell, GreatNonProfits and others have in several cases collected deeper programmatic information. So we have some breadth and some depth, but a ways to go! But in all of these organizations (and many others) we have a great base to build upon.
One group seems to be left out of your list of sources of information: donors. Can’t we learn a lot from other donors, either actively or passively? For instance, if I see a donor has given to 10 non-profits that seem to have had success, then I might like to co-fund with that donor on another project. I don’t even really care what his or her criteria are for selection – apparently good choices are being made. Course, if I can learn more about the selection process, that’s even better. Following the money should have some value, along with the other methods.
This method of co-funding is actually an approach we’re considering at San Diego Social Venture Partners. If other donors believe we’re effective philanthropists, then they may trust our selection criteria, without knowing the details of the non-profits themselves.
Any thoughts appreciated.
You’re absolutely right. I should have included donors. It’s certainly true with private sector investors: if Warren Buffet makes an investment, others are likely to follow. Foundations employ thousands of staff members in order to make good grantmaking decisions–but as a group we don’t do a good job at sharing what we’ve learned, how we make decisions, or why. Many individual donors are also deeply thoughtful and well-informed, but there’s no systematic way to capture their thinking and experience. (Yet!)
By any and all accounts, Warren Buffet is an extremely intelligent man and obviously one of the best investors of all time, however when it comes to understanding, evaluating, and taking action in the non-profit sector, he “punted.” In essence, he said to his good friend, Bill Gates — “This non-profit stuff is too hard for me to figure out, – here you deal with it!”
I think that this is one of the greatest examples of the complexity of the non-profit sector, and one that more non-profit leaders should use an example, to use Jim Collin’s words, of why “Business Thinking is not the answer.”
Bill Huddleston, CFC Expert
I don’t know Bill. I think that Warren actually applied his “business thinking” when he decided to leverage an existing philanthropic resource to further his aims rather than setting up his own foundation. I don’t think that he “punted”, instead I think he identified the work that Bill Gates was doing as something he could confidently put his money behind. Remember, he could have always just waited until he died to give any money away. That would have been punting.
Welcome back from your vacation.
With 1.4 million non-profits to choose from, Warren Buffett could have given his money to any of them, whether while alive, or as a bequest. I don’t think he made a bad choice at all about giving his money to the foundation run by his close, billionaire friend. They are in a rather exclusive club after all.
My point is that for someone who is arguably the best evaluator of business organizations alive, he chose to not try and develop an evaluation mechanism for non-profits, other than to indicate by his actions that he believes in the mission of the Gates Foundation.
I doubt that he poured over any performance evaluation reports before deciding to give his fortune to the Gates Foundation, rather it was because of the personal connection between the two men.
I also realize that it’s a phased in gift, so if he does change his mind, he has that option.
The point is that the non-profit world is very complex, and it is difficult to make informed decisions, which has been the point of many other posts.
I think the non-profit sector sells itself short when it jumps up and down and says “We need to more like a business!”
Non-profits are fundamentally different than businesses, and if you beat that particular drum loudly enough, and long enough, a very good question is going to be — “If you’re just like a business, why shouldn’t you be taxed like a business?”
I agree that analyzing nonprofits is very difficult. But keep in the mind that the Gates Foundation isn’t a stereotypical “old boys club” foundation funding the opera. My take is that just as some investors choose to buy a mutual fund rather than pick individual stocks, Buffett recognized that analyzing nonprofits is very different than analyzing for-profits and so he decided to “hire” someone else to “manage” his philanthropic dollars.
But I don’t see any how any of that is a rejection of “business thinking”.
Just to go back to David’s original comment about co-funding a project with a donor.
One of the challenges that charities face is how much information can be shared between the charity and perspective donors.
I have a client who has put forward a challenge grant to a recipient organization. The problem that the organization is facing is that the people that they are approaching to match the challenge want to remain anonymous and the person who put forward the request wants to know who is matching his gift. He wants to know so that he can personally stay connected to the impact that is being generated and to thank those who stepped up outside of the charity.
I think we have a long way to go in educating our clients (either donors or charities) on how to best communicate their stories and impacts. How anonimity can be used in some cases, but for leveraging for impact it can be a barrier.
All the best,