Category Archives: Cross-Disciplinary Conversations

Evaluation 2.0

April 25, 2008 – 10:21 am

I believe that in many aspects of life, a kind of pendulum effect exists. This effect describes the way in which people’s opinions tend to swing back and forth around reality. Rather than reflecting reality, people’s views vacillate in an arc around true reality. This creates a kind of boom/bust scenario that is very evident in the stock market (dot com stocks will make me rich! Ahh! Dot com stocks are poison!), but also shows up in politics, educations, pop culture, etc. I ran across a well put description this morning on Yahoo Answers:

I think the idea is that: somebody gets a good idea, and then a whole lot of people 1/2 understand it, and make it absolute, taking it to an extreme. Until somebody discovers “another” great idea, (the way things were originally done), and everybody jumps on that runaway train to hell.

The lesson: Moderation. A little common sense goes a long way. Don’t just “swing with the pendulum” of fashion in teaching/learning methods.

I think that there is a strong pendulum effect in philanthropy. I see it at work when we talk about metrics, evaluation, “philanthrocapitalism”, venture philanthropy, etc. Today I want to share with you an excellent article in the Financial Times by Gara LaMarche, the president of The Atlantic Philanthropies. I think LaMarche describes well the way in which approaches to evaluation have “swung too far” and his recommendations for a middle ground makes a ton of sense.

The philanthropic world, poked and prodded by a wave of new donors fresh from success in the business world, is grappling with the issue of evaluation. How do we know that grants – or, as they are now often called, reflecting the influence of the profit-making sector, “investments” – are making an impact?…

…Evaluation is a learning tool for the organisation and the funder, not a stick with which to beat grantees.

…Doing this correctly takes money… Funders should recognise and support their grantees in their efforts to learn what works.

…Evaluation should measure only what is important. Data should never be collected for the sake of it. The “metrics” obsession that has overtaken some funders has not always recognised this. Funders should never make grantees jump through hoops, distracting them from their core mission and costing valuable staff time, for reporting on trivial things. And there is nothing more demoralising, from the grantee’s perspective, than doing all this paperwork only to have it ignored.

…Both funders and the organisations they support need more humility about cause and effect. Organisations working for social or policy change should understand that no significant change was brought about by one organisation working alone.

…Finally, the most important thing: start with what you believe. If you have a passion about ending the death penalty or the isolation of older people – whatever it is – find a way to advance it first and worry about how to measure it second.

You can read the full, excellent article here.

By Sean Stannard-Stockton | Also posted in Evaluation, Impact Measurement, Philanthropy | Comments (5)

The Growing Blog Team

April 24, 2008 – 9:03 am

After the success of last year’s One Post Challenge, I thought that putting together a large blog team for the upcoming Council on Foundations conference might lead to a more dynamic conversation. So far, the list of people signing up has been excellent. You can read some background on what I’m looking for here and here. If you’ll be at the conference and would like to sign up to participate, shoot me an email. The conference this year combines the annual events for corporate philanthropy, community foundations, family foundations and private foundations. I would particularly like to add some representatives from family foundations to the list below.

The confirmed bloggers are:

My hope at last year’s conference was to open a “portal” into the event through which non-attendees could participate. While I think I was at least partially successful in providing a view into the event, the “participation” I was hoping for (for instance, a reader posting a question which I could then ask at a session and then blog about the answer) did not really occur. After the huge success of the One Post Challenge in creating reader debates around certain issues, I’m hoping that this year, we might get more of a back and forth going.

Let me know if you want to join the team and mark May 3-7 on your calendar for an explosion of activity on this blog as I begin posting entries from 10+ bloggers.

By Sean Stannard-Stockton | Also posted in Foundations, Giving Blogs, Philanthropy, Social Media, Transparency | Comments (0)

Global Philanthropy Forum

April 10, 2008 – 12:13 pm

I’m at the Global Philanthropy Forum conference today and tomorrow. 500 people talking about international issues. Not the same crowd you get at a lot of these events because the forum targets family foundations. But the kinds of families that draw the Archbishop Desmond Tutu and the Queen of Jordan as opening speakers. Larry Brilliant and Richard Rockefeller are here, but so are Sean Parker (developer of Facebook Causes) and Peter Gabriel (the muscian).

The Forum was started in 2001 with a recession looming as a way to engage donors on international issues that are often abstract. In a recession, donors often pull back from causes that do not offer the immediacy of local issues. What I find interesting about the Forum is that the stated goal is to get the attendees to work together. About half have been giving for 7 years or less, while the other half are mostly multi-generational donors.

To measure the impact of the conference, Forum CEO Jane Wales says that their greatest metric is tracking how influential the attendees become in each others’ future giving. 83% of attendees from last year’s Forum say that an attendee they met was instrumental in a giving decision they made after the conference.

There’s a lot that I believe is brand new in today’s philanthropy, but I agree 100% with Amanda Moniz’s statement from yesterday:

In order to grapple honestly with the strengths and weaknesses of beneficence, it is important to recognise that new and better practices are often old methods that have been revived…

I just happen to think that concept is being applied incorrectly to the debate we’ve been having. A famous phrase of wisdom in financial markets is the often ignored warning to never believe that “Its different this time”. I’m glad to see that at the Forum we have a venue for new philanthropists to learn from multi-generational donors and vice versa.

By Sean Stannard-Stockton | Also posted in Effective Giving, Foundations, New Philanthropy, Philanthropy, Social Entrepreneurship | Comments (1)

Donors Want Impact?

April 9, 2008 – 9:43 am

In response to my recent Financial Times column about new approaches to funding growing nonprofits, the following letter to the editor appeared in the April 5 edition of the FT.

Sir, Sean Stannard-Stockton (“Non-profits look to invest in themselves”, March 29) errs when he concludes his interesting column by saying that “while yesterday’s donors were content to give to a non-profit based on emotional appeal, today’s donors want to know their money is really going to have an impact”.Since the late Renaissance and the Reformation era when the conceptual and applied shift towards “modern philanthropy” with its pursuit of rationalised solutions to systemic problems occurred, donors have sought to optimise the outcome of their investments. Today’s “venture philanthropists” promise greater results and more accountability by borrowing from the practices of venture capital, just as “scientific philanthropists” of the late 19th century did by adopting the principles of the reigning intellectual framework of science.

In order to grapple honestly with the strengths and weaknesses of beneficence, it is important to recognise that new and better practices are often old methods that have been revived - because the problem of an unequal distribution of resources endures - and that perpetual frustration with the limits of philanthropy is a prime reason for the continual reworking of ideas.

Amanda B. Moniz,
Department of History,
University of Michigan

Michael Edwards of the Ford Foundation responded to the same sentence in my column saying, “[you] assume that impact considerations are new, when in fact they have been around for fifty years or more - just not expressed in the ways you
think are satisfactory.”

I agree that the concept of impact (attempting to give in ways that can do the most good for your dollar) is not new within institutional philanthropy. Because a lot of my readers work at institutional foundations, consult for these foundations, or work at nonprofits that receive grants from these foundations, I often address issues of institutional philanthropy. But I’m not an expert in institutional philanthropy. My firm, Ensemble Capital, serves individual philanthropists. When I talk about The Second Great Wave of Philanthropy, I’m talking about major shifts going on with individual donors. When I write for the mass audience of the Financial Times, I’m writing for individual donors. But given how my writing on this blog veers into issues of institutional philanthropy on a regular basis, I can see how it is my fault if people perceive that I’m declaring “impact” as a new concept to foundations. It is not.

Individual donors have always been aware of the idea that their donations could do more or less good depending on which nonprofits they funded. While they might not often use the word “impact”, the concept makes sense if it is explained to them. But I reject the idea put forth by Moniz and Edwards that “donors” (and that was the word I used, not “foundations”) have embraced impact considerations for half a century.

If in fact donors understood impact, which at its core assumes that some donations do more than others, than you would assume that these donors would strive to achieve higher levels of impact. Yet there are almost no mass market books that discuss this issue, almost no articles in print or online, almost no organizations that help donors achieve impact.

Now before you send me emails pointing to Inspired Philanthropy or Don’t Just Give It Away, before you point out that I’m writing a mass market column on these very issues at the Financial Times, before you tell me about excellent consultants like The Philanthropic Initiative, Arabella Philanthropic Investment Advisors, or my own firm Ensemble Capital, let me just say that all of that adds up to just a bit more than zero.

Individual donors have access to almost nothing compared to individual investors. Every bookstore in the country has a whole section devoted to personal finance (books on which generally ignore charitable giving while lavishing pages of copy on other obscure financial issues). Every daily newspaper devotes space to advising individual investors and we have many mass market publications targeted directly to the individual investor. Investors issue with investment advisors is not so much finding one (believe me, there are thousands of advisors trying to find you right now), but picking from amongst the many qualified professionals.

Most individual donors don’t even know the difference between a nonprofit and a foundation. Institutional philanthropy actual is making a effort to let people know what they do since most Americans cannot even name a single large foundation. Individual donors with a portfolio of appreciated assets still mostly write checks to charity instead of transfering assets or setting up a philanthropic account (this is similar to saving for retirement in a checking account because an investor had never heard of a 401k).

I could go on and on.

I actual have my own criticism of the sentence in my column that Edwards and Moniz call out. When I wrote “while yesterday’s donors were content to give to a non-profit based on
emotional appeal, today’s donors want to know their money is really
going to have an impact,” I actually overstated the case in the opposite direction of the way they saw it. Edwards and Moniz argued that the statement was false because they believe yesterday’s donors were focused on impact. I would say that my statement was flawed because in fact, not even “today’s donor” knows what impact is. “Tomorrow’s donor” will be the ones deeply concerned with impact. But at least today we have real movement in that direction.

By Sean Stannard-Stockton | Also posted in Effective Giving, Foundations, Grantmaking, Impact Measurement, Media, New Philanthropy, Philanthropy | Comments (12)

Robert Wood Johnson & the Long-run

April 8, 2008 – 9:04 am

Referencing my post on short-term vs long-term focus in philanthropy, the Robert Wood Johnson Foundation asks for ideas via their blog:

Last Friday, in his thoughtful blog, Tactical Philanthropy, Sean Stannard-Stockton, wrote about the often-missed opportunity philanthropies have to focus on the long run…

On the Pioneer Portfolio, we’re interested in understanding those long-term trends, because they are driven by forces and create conditions that make today’s radical ideas tomorrow’s successes.

Recently, we’ve been watching trends of patient empowerment, IT/communications technology, and data mining/rapid learning. What trends are you watching and what implications do you think they have—long term—for health and health care?

You can click here to leave a comment on their post.

By Sean Stannard-Stockton | Also posted in Effective Giving, Impact Measurement, Long-Term Philanthropy | Comments (0)

Michael Edwards Responds

March 28, 2008 – 9:02 am

In my recent post on Albert Ruesga’s Metrics Mania comments, I mentioned a “growing backlash against philanthrocapitalism”:

At a time when we are seeing a growing backlashing against “philanthrocapitalism”, it is interesting to look at what is being grouped under that term. For many people, “metrics” and the push for more “evaluation” of philanthropy is an unwelcome element of a “business-like” approach to giving. I believe that evaluating nonprofits and philanthropy in general is necessary for a the Third Sector to become a high-performing, high-impact driver of social good. But as I wrote last week, I think that much “evaluation” takes a scientific approach to measurement that is borrowed from the hard sciences, while the lessons of the liberal arts (under which investing and financial markets should be categorized) are more appropriate.

That link in the paragraph above connects to the essay Philanthrocapitalism: After The Goldrush, by Michael Edwards. Edwards is also the author of the newly released book Just Another Emperor: the Myths and Realities of Philanthrocapitalism. Mitch Nauffts at PhilanTopic has written a brief review of the book. I’m in the middle of reading it and will comment further in the future. But in the meantime, Michael Edwards emailed me after reading the post in question:

Nice piece, thanks Sean. However, just so we are clear, it is misleading to conflate the “growing backlash against philanthrocapitalism” with opposition to “a push for more evaluation in philanthropy.” The two may be related in some people’s minds, but not in mine, nor I suspect in the minds of many others who are passionate about measuring social change but skeptical about the role of business metrics. I’d encourage visitors to your blog to read “The Myths and Realities of Philanthrocapitalism” (downloadable for free from www.justanotheremperor.org) and check out the examples of SCOPE, SPARC and Make the Road New York that are described in the book’s conclusion. All of these organizations take evaluation very seriously, and they are developing creative ways to measure their impact on both short-term service outputs and long-term structural or systems change. Isn’t that where the real debate should be?

In reply I wrote:

I found your essay fascinating and I’m about half way through Just Another Emperor. I plan to post about my opinions of your ideas once I finish the book.

Personally, I think that the definitions of the new words being thrown around in philanthropy is really important. I do think that many people see “measurement” as “business-like”. But I’m glad to hear you don’t. I’d like to give you full access to express your thoughts on my blog. From what I’ve read of your writings so far, I do disagree with a lot of it. But that should only make the conversation more interesting! Personally I think that nonprofits and philanthropy can learn a lot from business thinking, but that there are huge limitations to the analogy.

Michael is director of governance and civil society at the Ford Foundation, although his book notes clearly that he is writing “entirely in a personal capacity”. I look forward to the unfolding conversation around “philanthrocapitalism”. I believe that as the Second Great Wave of Philanthropy continues, we are in the midst of a battle over the future of philanthropy. How words get define, what ideas become cultural norms and who emerges as leaders will all greatly influence how philanthropy is practiced in this country.

By Sean Stannard-Stockton | Also posted in Philanthropic Capital Markets, Philanthropy | Comments (2)

Albert Ruesga on Metrics Mania

March 26, 2008 – 9:20 am

Albert Ruesga, who blogs at White Courtesy Telephone, was a panel member at the recent Metrics Mania debate at the Bradley Center for Philanthropy & Civic Renewal. Albert posted the text of his comments today and they are outstanding.

At a time when we are seeing a growing backlashing against “philanthrocapitalism”, it is interesting to look at what is being grouped under that term. For many people, “metrics” and the push for more “evaluation” of philanthropy is an unwelcome element of a “business-like” approach to giving. I believe that evaluating nonprofits and philanthropy in general is necessary for a the Third Sector to become a high-performing, high-impact driver of social good. But as I wrote last week, I think that much “evaluation” takes a scientific approach to measurement that is borrowed from the hard sciences, while the lessons of the liberal arts (under which investing and financial markets should be categorized) are more appropriate.

Albert, I think, would agree. He writes:

Measurement and evaluation, when done properly, are not just a bit of value-added for philanthropic or nonprofit work, they’re absolutely essential. Only a fool would disagree with that proposition.

But here I mean not just the kinds of formal evaluations described by Gary Walker in his essay, but informal evaluation as well: the kinds of course corrections we naturally make when we embark on a project, take a false step, and adjust what we do accordingly. Evaluation is not and should not be the sole province of the highly compensated consultant. We evaluate all the time; our own eyes and ears notice things the most astute consultant will never notice; and we’ll often be our own worst critics.

Now here’s where the metrics schmetrics comes in, perhaps: More nonsense has been spoken and written about evaluation than about any other subject in philanthropy. The number of people practicing evaluation without a license and without a proper scientific and philosophical grounding in the subject is, in my view, a scandal. Worries about evaluation, engendered in part by logic models the length of whale intestines, have become the math anxiety of the philanthropic world…

…I want to make clear that I’m not in the least anti-evaluation. As I’ve written elsewhere, I’m concerned that we tend to seek a kind of scientific or moral certainty from a formal evaluation where none exists. The questions that funders most often bring to an evaluator—Was this program worth our $25,000 investment? Should we continue funding it?—are questions only they, the funders, can answer. Say we measure a 25 percent drop in the truancy rate for a hundred kids in some program, and a 25 percent increase in their test scores. Is that worth $25,000 to you? Each donor needs to answer that question for him- or herself. As donors we will never be absolved of our responsibility to use our good judgment.

“Evaluation… the math anxiety of the philanthropic world.” What a great line. Evaluating nonprofits and social good in general is not about math. When I advocate for a financial markets-type approach to evaluation, I am not calling for number crunching. I wrote about this concept in January and will repost my comments from then rather than repeating myself:

Economics is often called the “dismal science”. I know that many people think that finance is boring. But the vision of financial markets as nothing but numbers and spreadsheets does not capture the reality. Do investors buy stock in Apple because they spent hours and hours processing spreadsheet calculations? No. While at the end of the day, buyers of Apple stock believe that the return on capital being generated by the company will make for a profitable investment, the information they use to determine that are not just numbers. The way in which Apple has captured the imagination of the consumer, (an intangible piece of data that cannot be added to a spreadsheet) is by far the most valuable asset that Apple has and it is a major reason why investors have flocked to the stock.

Have you ever watched CNBC, the news channel of the financial markets? It is far from some kind of spreadsheet crunching lecture. Every day, investors or all types come on the show and make passionate arguments for why certain companies are good investments. While numbers and calculations underlie much of their thinking, it is the story, the human story of the companies they discuss that take center stage.

Warren Buffet is widely considered the best for-profit investor of his generation. Does he sit in a corner office reading a spreadsheet the way that Phil suggests? The quote below is from noted investor Whitney Tilson (Tilson is a huge fan of Buffet and a fellow columnist of mine at the Financial Times):

If the future were predictable with any degree of precision, then valuation would be easy. But the future is inherently unpredictable, so valuation is hard — and it’s ambiguous. Good thinking about valuation is less about plugging numbers into a spreadsheet than weighing many competing factors and determining probabilities. It’s neither art nor science — it’s roughly equal amounts of both.

The lack of precision around valuation makes a lot of people uncomfortable. To deal with this discomfort, some people wrap themselves in the security blanket of complex discounted cash flow analyses. My view of these things is best summarized by this brief exchange at the 1996 Berkshire Hathaway annual meeting:

Charlie Munger (Berkshire Hathaway’s vice chairman) said, “Warren talks about these discounted cash flows. I’ve never seen him do one.”

“It’s true,” replied Buffett. “If (the value of a company) doesn’t just scream out at you, it’s too close.”

Taking liberties with Tilson’s quote, I would argue that donors should not “wrap themselves in the security blanket of metrics” because “the lack of precision around measuring the impact that nonprofits achieve makes them uncomfortable.”

World-class investors do not sit in their office crunching spreadsheets all day. Neither should world-class donors. But the underlying logic of both should be that of achieving the highest return on investment.

By Sean Stannard-Stockton | Also posted in Effective Giving, Evaluation, Impact Measurement | Comments (6)

Tactical Philanthropy Reader Survey Response

March 17, 2008 – 10:52 am

Here’s some of the results from the Tactical Philanthropy Reader Survey:

Of the people who responded, 87% read the blog at least once a week. So these answers reflect the opinions of my dedicated readers.

Readership was split very evenly between foundation employees, nonprofit employees and consultants or other for-profit entities who serve nonprofits, foundations or donors. About 1/3 of readers fell into each group.

75% of readers said that they generally or very strongly agree with the views expressed here. The rest were neutral with only 3% saying they disagreed. Frankly, I’d rather more dissenting readers participated in this discussion.

Although a few readers have emailed me asking that I move the “links list” posts to a sidebar, the overwhelming majority of readers asked that I keep the feature and leave them in the main blog area.

When asked “why do you read Tactical Philanthropy?”, the most common theme was based around “staying abreast of innovation and new ideas in philanthropy”. Recently, I’ve had feedback from some people suggesting that I am too focused “over the horizon” rather than at what works right now. To tell the truth, I think that there are people in philanthropy who have been in the field much longer than I have who are better positioned to discuss the current situation. I’m personally more interested in where philanthropy is going. That being said, I am going to try to spend more time discussing actually examples of innovation (such as VolunteerMatch’s prospectus rather than discussing these concepts in theory).

When I asked for readers’ single biggest criticism, I got the following:

“He should cover the wider landscape of the philanthropic world”

“sometimes gets a bit navel gazing and takes itself too seriously”

“Hasn’t yet addressed business models
that support the economic viability of donor educators/researchers who
do not get commissions. NGO’s and many wealthy expect to get donor
education materials free and a value for value exchange hasn’t yet been
developed.”

“Tactical Philanthropy is sometimes too
clinical and sometimes can get very high-minded and removed from what I
think philanthropy is about. I think of non-profit organizations as a
community response to a problem or need. It’s about will and momentum
and resources coming together, and managing all of the diverse
interests can be really tough. On the one hand, I wish more of my
non-profit peers read this blog, because we are spending the money you
and your peers deign to share with us, and on the other hand, I know
most of them would dismiss you as being lucky that get to have these
discussions. Perhaps I have a chip on my shoulder, but sometimes I look
for a sign that you respect non-profit leaders for doing the work they
do, even if you are also critical of that work. At least they are doing
it, so you have something to be critical of! (Let me add that I like
this blog a lot, that its been helpful to me and that I’m impressed
that you are doing a survey like this one.)”

“I wish you didn’t try to explain away every comment made by everyone who disagrees.”

“[You]don’t at all talk about how
philanthropy and nonprofits connect to policy. Strategic or tactical
philanthropy is not just about nonprofits that innovate or go to scale.
It’s about nonprofits that impact policy.”

Thank you to everyone who participated in this survey. Writing a blog is interesting because on the one hand I get to connect with a huge range of people who I might otherwise never meet. Yet on the other hand, it can be hard to know how people are reacting to the things I write. I might get 1 or 2 positive comments, but for all I know a bunch of readers are yelling at their computer screens in total outrage over my posts. It was nice to see that the large majority of readers who took the survey really enjoy the blog. It was also good to get some feedback on things I could do differently.

By Sean Stannard-Stockton | Also posted in Philanthropy, Social Media | Comments (1)

Do Nonprofits Want Funders to Be Critical?

March 5, 2008 – 9:25 am

A comment from an anonymous “director of development” was posted today on my Donors vs Investors III post (check out the growing conversation in the comment section of this thread):

Just to bring another perspective to this line of questions, here’s a fundraiser’s take. I’m sure there are lots of forward thinking, transparent non-profits out there who can speak candidly with anyone about mistakes and areas to improve, but my sense is that the vast majority are like my employer: they would never let any  information that might even suggest something less than sparkling about them be publicly revealed.

We have one foundation funder who is openly critical of us, and funds us with a contract and a set of concrete tasks the organization accomplish. I would call this funder a proactive investor. They didn’t just evaluate us, they made their findings known, and better yet continued to offer us money if we made an effort to clean up our act. Many staff are grateful for this funder, and believe our organization has improved with its participation.

So I guess my point is, perhaps a non-profit is best served by funders who can own their criticism, stand by it and use it as a tool. The many many non-profits out there who are less interested in critically evaluating themselves can benefit from proactive investors like the one I have described. And at least when I am in the room with this funder, I am more or less confident that what they say about us at conferences is what they say to my face.

Wow. I might be advocating for a more public dialog, but I’m surprised as anyone to hear a nonprofit employee say their organization has benefited from a major funder being openly critical.

By Sean Stannard-Stockton | Also posted in Effective Giving, Evaluation, New Philanthropy, Philanthropic Capital Markets, Philanthropy, Transparency, nonprofits | Comments (7)

Investors vs Donors III

February 29, 2008 – 9:41 am

To recap, my questions from my earlier post were:

  1. Why do investors take credit for picking great investments (”look how smart I am, I bought XYZ stock!”), while philanthropists, especially foundations, claim that the credit goes to the nonprofits they fund (”the grantee did all the work”).

  2. Why is it acceptable for investors to talk about investments they think are bad (”Don’t buy ABC stock, their management is terrible!”), while philanthropists never badmouth nonprofits, even if they think they are ineffective?

  3. Related to #2: Why do public companies generally ignore all the talking heads who say negative things about them, while nonprofits find it intolerable to have a prominent person speak negatively about them in public?

The responses from readers can be found here.

The primary response to Question 2 was that funders/donors do say negative things about nonprofits behind closed doors and within private circles. But that they do not do the same publicly for fear of damaging their relationship with grantees. The point was made that funders (unlike investors in public companies), must maintain a healthy relationship with grantees to do their job well. Most readers seemed to appreciate the positive long term impact on the sector of public criticism and general truth telling, but worried that in the short term it would be a large negative.

I think this is an entirely solid argument. Philanthropy is currently much more like venture capital than investing in the stock market (it is no coincidence that venture philanthropy approaches have gained a lot of credence in recent years). Venture capitalists invest in private companies where funding comes primarily from a small set of large funders. They also have an active role and continuing relationship with the companies they fund. This is different from stock market investing where most investors are passive holders of stock and do not interact with the company at all.

Within the context of philanthropy as a private marketplace, I think the arguments for why public criticism does not work are valid.

I don’t think philanthropy is going to be a private marketplace for much longer.

Individuals already give seven times the amount that foundations give each year. Combining the Fidelity and Schwab donor advised funds (representing organized individual giving) gives you an annual grantmaker that rivals the Gates Foundation. Most high net worth individuals are only in the early stages of realizing that giving is something they can approach with a strategy that maximizes impact and tactics that make the most of what they have.

Public criticism of publicly traded companies is no big deal because the shareholder base is so broad. But a venture capitalist going on TV and knocking a private startup might cause it to go bankrupt as funding dried up.

Philanthropy is not yet a public market. The arguments presented against public criticism are all valid and correct today. We need to be preparing for tomorrow.

Venture Capitalists do talk about startups that they think are great. So do some foundations. Note the constant promotion of Nurse-Family Partnership by the venture philanthropy focused Edna McConnell Clark Foundation. You can read a great article about their approach here (note the reporter labels it as “controversial”). Maybe this positive commentary is a bridge to future criticism. Reader “young staffer” writes:

Foundations and donors actually don’t do enough to tout their successes and to make a strong, public case championing the relative effectiveness and strength of their best grantees. It’s not just that the grantees did all the work; it’s that we talk only about how our grantees do good things and yours do too. I think it would be way easier to get the ball rolling towards more criticism if it started from a place of making a case for the best social investments rather than highlighting the worst.

So why then don’t more “expert grantmakers” (mainly large foundations) publicly promote their knowledge? Reader Renata Rafferty writes:

Philanthropy in our society is frowned upon if it is considered self-serving. Therefore, to boast about one’s wise philanthropic investment “picks” would be, well, boastful and self-serving.

Look, if you have a billion dollar endowment and 30 employees working on a focused set of issues, it is not “boastful and self-serving” to talk about your “wise philanthropic investment picks”. If you are not making wise philanthropic investment picks there is something seriously wrong. I assume that large foundations are smart grantmakers. I’m not suggesting that they shout from the rooftops how great they are in an attempt to convince people. I just want there to be a public conversation about social investing the way we have a public conversation about the stock market.

Don’t forget that we’re talking about all of this within the context of a country where most people think nonprofits waste donations. It is hard to imagine that criticism could be all that damaging. You can’t fall very far once you’re already laying on the floor. Maybe Americans would have a better view of nonprofits if they heard experts talk negatively about some of them and positively about others. Realize that the underlying assumption that donors who want low “overhead expenses” from nonprofits is that the nonprofits are a value destroying entity that just gets in the way of the money going to the actual cause.

When a hedge fund manager goes on CNBC and talks about her favorite stocks, it is not “boastful and self-serving”. She is an acknowledged expert and the public appreciates (whether they agree or disagree with her picks) the opportunity to hear her thoughts.

By Sean Stannard-Stockton | Also posted in Effective Giving, Grantmaking, Media, New Philanthropy, Philanthropic Capital Markets, Philanthropy, Transparency | Comments (13)

NetSquared Update

February 28, 2008 – 3:38 pm

From the NetSquared Blog:

Google’s engineers, product and project managers want to help bring your NetSquared Mashup Challenge idea to life!

Next Friday, March 7th, NetSquared Mashup Challenge applicants have an incredible opportunity to participate in a Hackathon at the Googleplex in Mountain View, CA from Noon-5 PM.

A group of Google engineers, product and project managers will be available to help you think through your idea, answer questions, give advice and start building your mashup for social change!

Are you excited? We are!

To attend you need to submit your project idea to the NetSquared Mashup Challenge. The application process is just that, a process. Fill out what you know now, and begin soliciting feedback from others to move your idea to a completed mashup.

Once your project idea is submitted, you can register for the Hackathon by sending an email with the subject line: “Google Hackathon Registration” to net2@techsoup.org…

Click here for all the details.

A Hackathon at the Googleplex? 95% of my readers eyes just glazed over. 5% are in nirvana and just ran out the door to buy a case of Red Bull. 100% will be fascinated by results that show up at NetSquared in May.

By Sean Stannard-Stockton | Also posted in N2Y3, Philanthropic Technology, Philanthropy, nptech | Comments (0)

Investors vs. Donors II

February 28, 2008 – 12:36 pm

Yesterday I asked some questions about why donors behave differently from investors. The feedback has been wonderful. I’ve posted excerpts below (you can read the full comments here). I’d love to get additional comments on this issue. I’ll be posting my further thoughts on the topic soon.

Amy Sample Ward
I have a hard time reconciling the contradiction of all the hard work, time, energy, etc that program staff put in for the up-front due diligence in reviewing a proposal and then, if they find that the organization’s project isn’t one that the program staff and trustees decide to grant because of the information discovered in the due diligence process, the decision and background information informing the decision isn’t shared. When it is a corporate entity, people always advocate for openness and the opportunity for the public to say both good and bad things so that the company will publicly explain why and how for their good and bad press. But with nonprofits, and grantmaking, it’s a closed circuit.

Pete Manzo
The clear sense I have received from many foundation presidents and program officers is that they do indeed talk about the nonprofits they do and don’t fund, among their peers. They clearly do talk, they just don’t share their perceptions with the broader public. So I interpreted your question to be why don’t foundations share their positive and negative perceptions outside of their private conversations. One reason might be not wanting to harm grantees, as the program officer you interviewed mentioned. Another reason may be that they don’t want to publicly stand behind what they say in private, or more likely, don’t want to put their foundation “on record” for their views; they may not feel they would have the foundation’s support if there is a backlash, and also, just imagine trying to work through a foundation’s governance and communications channels to get approval for making those kinds of statements.

Renata Rafferty
It’s all about what I call “The Tyranny of Nice.”

1. Philanthropy in our society is frowned upon if it is considered self-serving. Therefore, to boast about one’s wise philanthropic investment “picks” would be, well, boastful and self-serving.

2. Donors and institutional funders have two different reasons for not spreading “the bad news.”

Donors don’t do it because they do not want to insult, offend, or upset board directors and executives who may be their neighbors, friends or business associates whom they have to face. Why would a donor risk PO’ing a group of people in order to “save” the greater community of the faceless from making an unwise donation.

Foundation’s don’t do it because it doesn’t jive with the essential philanthropic resolve –the world can and will be a better place, and even poorly-performing charities hold the promise of getting better if they are not buried first.

Also, as foundations routinely deny grants for a host of reasons, publicly showing cause in some cases and not in others would cast doubt on ALL denied grantees — not to mention creating a whole lot more work for foundation staffs.

“young staffer”
Foundations might damage relationships with all their grantees if they start publicly criticizing those that encounter problems. My colleagues and I want our grantees to come to us with problems and challenges; if they don’t, we can’t help them (and we also can’t do any damage control with our own board if things are really getting rough). Foundations have a hard time building honest and open relationships with nonprofits because of the power dynamics. If you become the foundation that might “out” a struggling grantee and hurt or kill their fundraising, you stand to lose that trust. Now you’ve got grantees covering up problems. That makes it harder to be a good grantmaker. It’s also scary - foundation staffers worry about backing a grantee to their board that ends up on the front-page of the newspaper for its problems.

So criticism of grantees potentially hurts a lot of grantee/funder relationships, which makes a foundation staffer’s job harder both in terms of supporting their grantees and being responsible to their board.

A lot of nonprofits are fighting an uphill battle and doing it with the best intentions. They are under-capitalized, the staff are underpaid and overworked, and they are trying to serve the public. Criticizing them in public can feel like kicking a dog when it’s down, even if the results would be a more effective sector in the long run. You’ve already denied funding, which hurts. It’s hard to then advocate that others should deny funding too when you know these people mean well, face tough circumstances, and are probably meeting a need for some community members. Even if you think it’s not fixable, do you really want to tell a well-meaning staff that its efforts are not worth it and then turn to the people they are serving and say they should look elsewhere?

I think Sean’s first question, then, is the most interesting. Foundations and donors actually don’t do enough to tout their successes and to make a strong, public case championing the relative effectiveness and strength of their best grantees. It’s not just that the grantees did all the work; it’s that we talk only about how our grantees do good things and yours do too. I think it would be way easier to get the ball rolling towards more criticism if it started from a place of making a case for the best social investments rather than highlighting the worst.

Maggie F. Keenan
Why do investors take credit for picking great investments (”look how smart I am, I bought XYZ stock!”)…because they have something to sell!

While philanthropists, especially foundations, claim that the credit goes to the nonprofits they fund (”the grantee did all the work”). I whole heartedly concur with Renata… we are not self-serving.

Why is it acceptable for investors to talk about investments they think are bad (”Don’t buy ABC stock, their management is terrible!”)… because their marketplace is competitive.

While philanthropists never badmouth nonprofits, even if they think they are ineffective? Who told you they don’t? They do internally and I am certain info is shared among circles. My FAVORITE WORD MOKITA -a New Guinea word for “the truth that everyone knows but speaks nothing of.”

Tidy Sum
As noted, foundations DO talk about crappy nonprofits all of the time. It is part of in the old due diligence handbook that you have buried next to that bottle of Jack Daniels in your desk.

Foundations, if they do their work well, also talk pretty frankly with other nonprofit organizations.

Got NPO gossip? The nonprofit community LOVES to dish about their peers, their competitors, their collaborators and non-collaborators.

And those of us who suffered through a typical philanthropy conference find that the syrupy self-congratulatory vibe is filled with funders/donors patting themselves on the back about their latest and greatest investments, discoveries, and grassroots heroes of the day.

Jump into the conversation by adding your own comments to the list.

By Sean Stannard-Stockton | Also posted in Philanthropy, Transparency | Comments (0)

Social Marketplace Architecture

February 22, 2008 – 9:48 am

Reader Simon Marsh, shares his thoughts on the “Social Marketplace Architecture”:

The idea

A dynamic user led and focused software platform/environment for grant givers and grant seekers to interact and compete could be developed wherebytheir real time objectives and organisational identities interact and compete for the best ideas and resources. A second generation internet platform whereby a Foundation’s (for example) publicly available governanceand philanthropic objectives are matched (automatically) with various university (for example) academic objectives, personnel and events bothproactively and reactively.

You can read his complete comments here.

By Sean Stannard-Stockton | Also posted in New Philanthropy, Philanthropic Technology, Philanthropy, Social Media, nptech | Comments (0)

NetSquared N2Y3

February 20, 2008 – 9:34 am

NetSquared, the community of technology/nonprofit collaborators hosted by CompuMentor/TechSoup is hosting their third annual conference in May. I attended the first two and they are amazing. While each conference has had a different focus, they seem to bring out some of the most innovative people I’ve ever met.

This year’s contest will focus on Mashups for Good:

This year’s NetSquared Conference will bring together a unique mix of people from the public and private sectors to develop and release Mashups designed to provide deeper insight into the social issues affecting communities around the globe.

Those “people” are you — members of the NetSquared universe working on behalf of communities everywhere and the technical experts who care about these issues.

If we’re successful, we’ll learn something about cross-sector collaboration, meet new and interesting people, and build a unique gallery of Mashups that citizens, schools, and community-based groups everywhere can learn from, replicate, and build upon.

For more about Mashups, see Wikipedia’s definition.

For a better sense of what we mean, let’s take a look at a few of our favorite Mashups.

Go ahead, click on the examples below. Read the “about” pages to get a better sense of the project’s goal/mission, and how the site works. (Yes, this is kind of technical, but we’re going to help make sense of that. Enjoy!)

    * Maplight.org, a winning NetSquared project from last year, displays the link between money and politics by bringing together information about campaign contributions and legislative votes.

    * ChicagoCrimes.org is a browsable database of crimes in Chicago that lets users see information displayed on a map.

    * ActiveTrails shows visitors a list of active hiking and biking trails across the United States. Users play a big role in supplying information.

    * Tunisian Prison Map pulls from a variety of sources to locate the prisons on a map and links to videos and other information relating to the prisons.

On February 1, the Mashup Project Submission process for the NetSquared Mashup Challenge opens. Nonprofits and other social-change agents will be expressing their visions of how data can be recombined to advance social missions. NetSquared’s team will make sure that everyone gets the appropriate help they need to define their vision in a way that will be accessible and attractive to technical volunteers.

On March 14 at 5 PM, PST, the ability to publish a Project Submission will close.

03/17/08 - 03/21/08: Voting for the Mashup Project Challenge. Like last year, registered NetSquared users will be able to vote for their favorite Projects.

03/24/08: The top 20 Mashup Projects will be announced on March 24 and the winners will be invited to attend this year’s NetSquared conference in San Jose, CA, scheduled for 5/27 and 5/28. Each of the top 20 projects gets an allowance for travel (including airfare to and from the conference, along with a hotel room for two nights).

05/27/08 & 05/28/08: At the conference, Project Teams will have an opportunity to display and discuss their Mashups and attendees will vote to select the top three. All 20 projects at the conference will receive a share of $100,000 in prize money. The share will be determined by voting at the conference. Of course, there will be more legalese regarding the prize and its allocation after we open the application process on February 1, 2008.

By Sean Stannard-Stockton | Also posted in N2Y3, New Philanthropy, Philanthropic Technology, Philanthropy, Social Media, Transparency, nonprofits, nptech | Comments (1)

Alumni Giving Trends

February 20, 2008 – 8:48 am

Inside Higher Ed covers alumni giving trends today in “Donations Are Up, But Not From Alumni”. Examining the behavior of younger alumni, the site quotes an entry to my One Post Challenge:

Writing last year as a guest at the blog Tactical Philanthropy, Sam Huleatt, co-founder of a company that builds social networks for private schools, wrote that many colleges “instantaneously lose their relevance upon a student’s graduation.” New graduates have little interest in the alumni magazines, he wrote, that are a major way colleges communicate with alumni. “Why wait four months for ‘class notes’ when you could simply check Facebook to see what a friend is up to?” Further, while many colleges have online giving programs, many also still communicate with alumni as if writing a check is the normal way to give. “It likely shocks most development officers as to the percentage of young alumni who don’t write checks, or own stamps,” he wrote.

Huleatt also suggested that colleges need to think about ways to engage alumni who may not want or have the ability to make a financial gift. “Schools need to reevaluate what constitutes ‘giving.’ A recent graduate may not be able to afford an annual gift of $200, but if they help a rising senior find a job, isn’t that worth something? When was the last time a school published a list of alumni who helped find other alumni or students jobs over a given year? Don’t these people deserve credit?”

Blog content and user generated content continues to increase its mainstream relevancy as Mitch Nauffts notes today.

By Sean Stannard-Stockton | Also posted in Fundraising, Philanthropy, Social Media, Youth | Comments (0)