Last summer, an epic debate took place on this blog as a number of readers and social sector leaders argued about whether donors should focus on supporting “high performing” or “high impact” nonprofits (see links here, here, here and here). The basic difference is that a high performing nonprofit is an organization that is run extremely well while a high impact nonprofit is one whose programs have been proven to work.
I took the position that donors should focus on high performing nonprofits, but argued that a “robust” definition of high performance was needed. Since then I’ve refined my robust definition of a high performing nonprofit to mean organizations that;
- base their programs on research about what works,
- actively collect information about the results of their programs,
- systematically analyze this information,
- adjust their activities in response to new information,
- and operate with an absolute focus on producing results.
My central point in the debate was that while high impact nonprofits were great, they were few and far between and their proven impact only showed what had happened in the past. A high performing organization, as long as it executed on the five points above, was well positioned to deliver impact in the future.
“When I look at the three charities that I consider to be most “blue-chip” (our three highest-ranked charities), I don’t see a path of a “strong organization that eventually figured out what to do and whether it worked. ” Rather, I see organizations that stayed as small as possible – or didn’t exist – until they had strong evidence of impact for their basic approach. They built their choice of programming into their DNA, as much as they could, from day one.
The reigning consensus seems to treat “evidence of impact” as a late (or at least potentially late) step in the development of a nonprofit, but in fact it has been the first step for the strongest nonprofits I know of.
This makes intuitive sense to me as well.
- Finding “approaches that work” is fundamentally a research challenge, and probably requires a completely different skill set from running an organization well.
- Once an organization is “up and running,” it may become a very poor environment for a good impact evaluation. To me a good impact evaluation is one that has a real chance of demonstrating failure, and the stakes may simply be too high for an organization that has already built up significant funds, donors, clients, stories, staff, habits, etc.
The truth is that if an organization wants to become “high-impact,” there are already proven approaches for it to choose from; if it wants to investigate an approach that isn’t yet proven, it can (like VillageReach) stay at minimal size and essentially act as a “research project.”
I highlight Holden’s post because I think it reveals a frequent, incorrect assumption about high performing nonprofits. In his argument, Holden conflates “high performing” with the idea of a large nonprofit that is operating at some level of scale. But if you look at my five point definition of high performance, you can see that it describes an approach applicable to organizations of any size.
Critical to my definition is that a high performing organization base its programs on research about what works. So when Holden says that, “Finding approaches that work is fundamentally a research challenge, and probably requires a completely different skill set from running an organization well.” I have to say that I agree. It may be that large, high performing organizations can also invent new approaches to achieving social impact, but the process is more of a research and development activity.
To be clear, people on both sides of the debate care about achieving impact. Those who favor high performing nonprofits do so only because they believe that these types of organizations are most likely to achieve impact over time. If impact where a perfectly quantifiable and repeatable process, then I would agree with the high impact crowd. But unfortunately I think that achieving impact is an imperfect process. Just because a program has been proven to work in one set of circumstances does not mean that the same process will work elsewhere.
A high performing nonprofit is one that is able to implement well researched, proven approaches (whether the research was conducted internally or externally) with a high degree of fidelity to the original approach. But then also has the organizational capability to track their programs as they scale, determine what is working in their specific case, course correct as needed and constantly look to improve.
There is great research about what works across fields as diverse as business, psychology, weight loss and baseball. But finding an approach that works does not mean that anyone can easily implement it. If this were so, then every well read person would be a successful business person, with a healthy psychological profile, who was in great shape and played professional baseball as a hobby.
But truly successful individuals (and organizations are just collections of individuals) make it a habit to base their activities on evidence about what works, be mindful about what is working for them, reflect on what changes they might make and have an absolute focus on achieving results.
Ask any venture capitalist and they’ll tell you that they bet on people, not business plans. I think a focus on high performing nonprofits is simply an extension of this concept that emphasizes betting on organizations, not research. Great business people craft solid business plans and great organizations depend on credible research. But smart investors and smart donors should place their bets on the very best people and organizations and never fall for the seductively idea that research and planning can guarantee a positive result.