This is part six of a six part series exploring the sessions in the Tactical Philanthropy track at the Social Capital Markets conference.
Session Description: Nonprofit Analysis: Beyond Metrics
Over the last few years, mainstream nonprofit analysts and rating groups have moved beyond simplistic metrics like the "overhead expense ratio." Join three of these groups, Root Cause, GiveWell and Charity Navigator as they present their analysis of DC Central Kitchen, a prominent job training and meal distribution nonprofit. You’ll hear three robust approaches to analyzing nonprofits as a way to determine the degree to which a social investment in the organization may lead to impact.
- Ken Berger, Charity Navigator
- Andrew Wolk, Root Cause
- Elie Hassenfeld, GiveWell
- Michael Curtin, DC Central Kitchen
One of the worst habits of “new” philanthropy is to import simplistic versions of business practices to the nonprofit sector. One of the places we see this habit is in the idea that we need to build some sort of unified ranking system to judge nonprofits. While the idea that we can somehow score nonprofit effectiveness on a simple scale is appealing, it is a dangerous simplification of an important idea.
In the for-profit world, the urge to create simple systems to do things like pick stocks runs deep. But these systems are understood to be of little value or sometimes outright scams. The truly great investors use robust systems that evaluate investment opportunities across a variety of qualitative and quantitative areas.
So I’ve been thrilled to watch nonprofit evaluation groups move beyond simplistic measures and embrace the complexity, human judgment and uncertainty that is at the heart of understanding whether a nonprofit is good at what it does.
For this session at SoCap, DC Central Kitchen, the nonprofit founded by Robert Egger, has agreed to open themselves to evaluation by Charity Navigator (using their new methodology), Root Cause and GiveWell. At SoCap, each group will offer their evaluation of DCCK with the organization’s CEO Michael Curtin in the room to offer his own views.
Our hope for this session is that it will help demonstrate that there are multiple, valid approaches to evaluating a nonprofit. Kudos to DC Central Kitchen for being willing to open themselves to outside evaluation and engage in this process.
You’ll find more information about DC Central Kitchen’s commitment to transparency and achieving impact here.
3 Comments
A really interesting idea Sean, and a great way to raise the debate on how to analyse charity effectiveness. At NPC we agree that there shouldn’t be ‘one’ approach to charity analysis – we’ve been very open about admitting that our guide to analysing charities, The little blue book, will be a continous work in progress.
It would be great if we could do a similar event in the UK but sadly I think we’re still a long way off from this.
This is a really good idea. NPC was invited to be involved and showcase our analysis alongside the others. We wanted to take part but our approach to analysis involves direct contact with the charity together with an understanding of the ‘market’ in which they operate. This approach is described in ‘The little blue book’, as Jane notes, but is difficult to apply from our base in the UK.
I echo the point about there being no single, right approach to analysis. Consensus might emerge in the future, but for now the important point is to air, discuss and consider different methods. To that end this is a valuable exercise and I wish it well (while also wishing we were able to take part…).
I would guess that while some common approaches might emerge, there will always be disagreement. We see this in financial analysis where there is general agreement about certain aspects, experts come to wildly different conclusions when they make judgments about an organizations likely future performance.