Via Lucy Bernholz’s twitter feed, I’m following along with the DonorEdge Conference where Jacob Harold of the Hewlett Foundation’s Philanthropy Program just gave an address. Jacob talked about the “Elephants in the Philanthropic Room” and said there were two of them:
On their face, these don’t seem like elephants, they seem like statements of the obvious. But I remember the heated debate that exploded when at the second NetSquared conference someone suggested “some nonprofits just suck.” To many, this was an intolerable comment (even though, it is objectively true). The fact is, even though they try hard and are good people, some nonprofits are not very good. Some of them are even doing harm. The resources these organizations are using are being wasted and could be used by a better organization to make a real difference in the world. The nonprofits that can do more good with the available resources are better than other nonprofits.
Are some donors better than others? In my post yesterday I talked about a shift from thinking about philanthropy as the act of making a gift to the thinking about it as the achievement of impact. When we measure philanthropy by looking at the gift, then it is hard to argue that some donors are “better” than others. Maybe more generous. Maybe more rich. But better? However, when we think about philanthropy as the achievement of impact we begin to see that by making gifts to the right nonprofits in the right way, some donors can achieve more impact than other people who give the same amount of money. These donors are better donors.
All this makes many people uncomfortable. These really are “the elephants in the philanthropic room.” But why? It doesn’t seem to make us uncomfortable if someone tells us they think Honda is better than Toyota, or Starbucks is better than Dunkin’ Donuts. We’re all free to believe that some investors are better than other investors or argue over whether the 1998 Yankees were better than the 1986 Mets.
Say it after me:
Some nonprofits are better than others!
Some donors are better than others!
Its OK! That’s how life is. Just because some donors and nonprofits are better than others doesn’t mean the others aren’t good people who are trying hard. Doing good is hard work. Really hard work. And some people and organizations are better than others at doing this hard work well.
I’m not sure why these are elephants either. It seems a bit out of context.
But, I would append a “for you.” at the end of those statements. The goal is to find the best donor or grantee “for you.”
If we said, “Some customers are better than others!” I don’t think there would be any controversy. 🙂
Duh. Yes, you’re right. This is blatantly obvious if not stupefyingly clear. I don’t direct my exasperation at you, but rather the nonprofits that are a bit “behind the curve”.
Nonprofits should spend more time in business school. Nevermind, looks like the business students are taking them over anyway.
Eugene, they are elephants in the room, because nonprofits and donors do not like to acknowledge these two statements. Most people want to focus on the fact that all donors and nonprofits are trying to do the right thing.
There is an element of “for you” that makes sense. But I would argue that some donors and some nonprofits are just objectively better than others. Just like some companies and some investors are objectively better than others.
Jonathan, glad you agree, but I’d also argue that most MBAs should spend more time in the social sector before they suggest that nonprofits are behind the curve. Some of my best friends are business students, but I don’t think MBAs are the key to optimizing the nonprofit sector. Maybe have tried and failed.
Sean: I believe in objective measures and indicators to gauge performance, but the conclusion I draw from your statement is that I could find the single best nonprofit out there.
It is in some part objective, but it is also in some part relative.
A for-profit example: Companies have awesome CEOs as a start-up only to fire them when they grow to a certain size. At one point they had the best management objectively speaking. Later, they didn’t.
Yes. That makes sense. The probably with saying “for you” is you get back to a relative framework where anyone can believe that any nonprofit is great. Some companies and some nonprofits are great and some are not. But I don’t believe it is possible to say any one is “the best”. There is too much relativity in the question for that.
Sean, I apologize for the heated reply. You must understand that those who measure performance by “what feels good to them” simply frustrate me. As you pointed out, there are objective measures in which we may gauge performance. They should be utilized to keep nonprofits accountable. Those nonprofits that do not perform to par should be weeded out of the market like any other for-profit company. This may not feel good, but it’s the only way to move the social cause forward.
I agree Jonathan. I just don’t think that business school is the answer to getting the mind shift to move.
Not that there’s anything wrong with business school. Like I said, some of my best friends are MBAs!
Although each of these points is probably worthy of a separate discussion on its own, I think the overall distinction you are making is really about the difference between “doing” good and just “giving.”
On the NPO side, I really believe that the rise of socially beneficially for-profits is a huge disruptor in the non-profit space. As for-profits have been forced to explain how they will acieve social good within the context of a for-profit entity, the issue has naturally expanded to “how will you achieve social good, regadless of legal form?”
From the donor side the problem is a lot harder. Donors give primarily because it makes them feel good.
Attempting to “professionalize” donors by shifting their focus away from raw sentiment to more thoughtful forms of giving is difficult to say the least.
There is also the sticky issue of whether making the process of giving more of an “intellectual” exercise threatens the emotional basis with which most people give decisions. I recently read a study that compared fundraising appeals that used raw emotional messages and stories to those that used nubmers driven appeals and ones that used a mix of the two. The hands down winner was the raw emotional appeal – so much as adding numbers to an emotionally driven message made the package perform worse. That outcome is a rather tough pill to swallow for those that would hope to get donors to inject more thoughtfulness into the giving process.
Over the last decade or so, donors have been conditioned to consider things like the percentage of total fundraising that makes its way out the other end. I think we will start to see these sort of less useful metrics naturally supplanted by impact-based metrics, but it not clear who will champion this shift in the near term. I wholeheartedly agree with the need to awaken the donor community to the idea that “just ‘giving’ is not enough,” but it seems unlikely that non-profits (who are still struggling to articulate and measure their impact) will be the ones who drag donors along.
Great points Muhammad. I wrote recently about the study you’re referencing.
I agree that donors want emotionally appealing experiences. But I believe that funding an organization that manages to accomplish real good and have this good communicated back to a donor is far more emotionally satisfying than just giving.
An example: Imagine you want to provide funds to subsidize college eduction for disadvantaged kids. Let’s say one nonprofit promises to do this and tells you sad stories about the kids who need your help.
Nonprofit #2 tells you about the same kids, but also demonstrates that they system actually works. As you fund the organization, they don’t just keep telling you about the kids that need your help, they convince you that the kids you set out to help are actually being successfully helped! This is the emotionally satisfying outcome for the donor and the outcome the nonprofit is striving for and the outcome the served population needs.
That is a great example and an excellent post on that study. You make a convincing case for how NPOs, should they choose, can simultaneously connect with donors emotionally while distinguishing themselves in terms of impact.
But while it is easy to understand why to shift to an impact focus is important, I am struggling to see who will drive this shift if not donors and and not the NPOs themselves? It does not seem like this is the sort of information that donors are likely to take the initiative to seek out (yet) nor type of information that NPOs are anxious (or even able) to provide.
Like i mentioned, I think socially beneficial for-profit organization will help stir the pot a little, but I dont think that alone will trigger a paradigm shift from “purpose” to “impact.” If NPOs dont want to provide it and donors dont know to ask for it, where does the shift come from? How do you create demand for something that neither side appears to want?
That’s the question isn’t it Muhammad? I’m working on a few things that I hope will help the process along. More later.