Paul Brest Engages with Charity Navigator

Paul Brest, the president of the Hewlett Foundation, has been sharing his (not particularly positive) thoughts regarding Charity Navigator on his blog. In October of 2007 when I wrote an op-ed for the Stanford Social Innovation Review titled “Paul Brest Needs a Blog”, I argued that “Philanthropy needs a robust, cross-disciplinary conversation for a philanthropic marketplace to thrive. That conversation must include funders.”

With today’s post, Paul marks the beginning of a new era where major funders share their thoughts (both positive and negative) not just on the field of philanthropy, but on specific nonprofits. This is a big deal and I think Paul’s picked the right organization to engage with. Paul manages the Hewlett Foundation’s “Philanthropy Program” (the most prominent of its kind) and so has a vested interest in how philanthropy is practiced.

I believe that Charity Navigator, for the last couple of years, has been hurting the field of philanthropy by successfully marketing to individual donors and the media the idea that expense ratios are useful standalone metrics to evaluate charities. However, Charity Navigator’s new CEO Ken Berger has been actively trying to move the organizations towards a focus on outcome measurement and he has sought out my input and opinion. It is not your average person who seeks out those that criticize them for advice. When Ken first reached out to me he said that he had recently read one of my anti-Charity Navigator blog posts to a university class and described me as one of his most vocal critics. Yet Ken and I now trade emails, phone calls and blog comments all the time.

I think Ken is doing the right things at Charity Navigator and I’m 100% behind his efforts.

So back to Paul Brest. He’s publicly criticizing a registered 501c3! But he is doing it in a productive way. He writes:

Given all this complexity, how exactly could Charity Navigator cooperate with others in building an outcomes-driven culture? Here are several options:

1. Gather better programmatic data from nonprofits, as a short-term substitute for the long-term goal of data on outcomes (DonorEdge is doing this)
2. Gather data from experts (Nonprofit Knowledge Network is working on this)
3. Gather data from other constituents (GreatNonprofits is working on this)
4. Rate nonprofits on how transparently they report outcomes (IntelligentGiving in the UK does this)

Charity Navigator’s best option may be to shift its ratings from financial ratios to measures of transparency (#4) while supporting other organizations that gather and aggregate the first three types of information. Charity Navigator’s CEO has identified accountability and transparency as one of the three essential components of charity evaluation. While transparency ratings don’t measure outcomes directly–and transparency may have its costs–they are a step above Charity Navigator’s current financial ratios.

Ken isn’t taking all of this laying down having commented publicly on Paul’s blog in reaction to Paul’s last post on Charity Navigator.

This whole experience can’t be fun for Charity Navigator. And in the short term a public debate might sow seeds of doubt and confusion in the media (who regularly refer readers to Charity Navigator). It could lead to concerns among donors who might respond by giving less. But this is also the path to a better philanthropy. Ken is committed to improving Charity Navigator and I can personally vouch for the fact that Ken is driven and wants to make the changes for all the right reasons. Sometimes the path to  better tomorrow requires steps that hurt in the short term.

Paul has launched an important debate. But he’s not just criticizing Charity Navigator, he’s also laying out a framework that he thinks works. It seems to me that given the path Ken as set and Hewlett’s focus on improving philanthropy, that before this is over, Charity Navigator could see themselves on the receiving end of a major grant from Hewlett.

This leads me to my last point. Charity Navigator is the most influential voice in the donor education field. The media quotes and references Charity Navigator constantly. Individual donors now regularly demand to know what the overhead expense ratios are of nonprofits they support. Charity Navigator’s website gets millions of visitors a year and has successfully framed “low overhead” as equating to a “good nonprofit”. But at my urging, Ken recently read and loved Forces for Good, one of the best books on understanding high impact nonprofits.

Charity Navigator is the best platform through which to reframe individual donor’s and the media’s understanding of what makes a nonprofit great. We all have a vested interest in how this plays out and I think Charity Navigator deserves our support.