-
After his essay last month in which he worried that many efforts to measure nonprofit results have gone far off course, Mario Marino of Venture Philanthropy Partners returns with an essay looking at the "whys" and "whats" to measure rather than the "hows".
-
New York City is beginning an effort to encourage city resources to be deployed in data-driven ways. The project includes a number of foundations and a member of the working group who is building it told me they are looking to the impact investing focused IRIS project as a model. New York City spend $4 billion a year on human service contracts.
Philanthropy Daily Digest
Email This Post
0Comments
Does Logic Impair Philanthropic Effectiveness?
One of my favorite new (to me) blogs is the fantastically named Full Contact Philanthropy, authored by David Henderson, CEO of Idealistics Inc. and social enterprise consultant Dan Elitzer. In the wake my back and forth with Martin Brookes over the role of guilt in social investing, Dan left a comment that I want to share.
My objection to Martin feeling guilty about making a non-optimized charitable donation focused on the need for empathy in philanthropy to not be displaced by logic. But Dan took the argument a step further and argues that ignoring the empathic urge undermines philanthropic effectiveness.
Dan writes:
Rather than look at Martin’s gift as a betrayal of his social investment ideals, I think it is more productive to see it as a positive act of consumption and parenting. Instead of viewing his donation to the donkey sanctuary as replacing a more effective act of philanthropy, look at it as replacing the purchase of a toy or movie or other consumer product or service unconnected to charity. Certainly the joy he and his daughter received from his donation to the animal sanctuary was more “meaningful” than an equivalent amount of joy from some non-philanthropic activity.
I agree that the logical conclusion of Martin’s line of thinking would be that “we should all feel bad that we spend a penny on anything discretionary.” Inequality and injustice would cease to exist if we all felt compelled by the same moral compass that directs Martin. Unfortunately, we don’t all feel that way, and it is unproductive for people like Martin to spend too much time self-flagellating over such matters. Denying ourselves all “unnecessary” comforts does not lead to a mental state in which we are suited to effect good works on a larger scale. Granted, we all need to find the right balance for ourselves between absolute hedonism and strict abstention, but wasting too much time ruminating on the subject just prevents us from moving on with the important work we have to do.
To Sean’s larger questions about the role of guilt in the nonprofit sector and the obligation to right inefficiencies vs. giving with our emotions, I say we need to be aware of the role of guilt and other emotions (both rational and irrational) and better understand how they affect giving. Network for Good and Sea Change Strategies recently put out a fantastic (and free) ebook by Katya Andresen, Alia McKee, and Mark Rovner, which uses learnings from the discipline of behavioral economics to help explain why people so often make irrational decisions, especially when it comes to charity. The title is Homer Simpson for Nonprofits, and you can download it here. It offers actionable steps for nonprofits to better align their communications and fundraising strategies with the way people actually make decisions, not the way we think they SHOULD make decisions.
One of the principals discussed in the book is the relative strength of social norms over market norms. If we deny the role emotions play in philanthropy, we step away from effectiveness, not towards it. Rather than beat ourselves up when we give “inefficiently,” let’s strive to direct that energy to better understanding what led us to make that irrational choice and how we can better help our rationally preferred causes take advantage of the factors that drove us to give to our emotionally preferred cause.
Dan brings up the role of the emerging discipline of behavioral economics in helping us understand how people actually behave rather than how we think they should behave. Behavioral economics is a favorite topic of mine and one that I think can lead to great insights in philanthropy (I’ve just downloaded the eBook Dan points to).
As I work to craft the Tactical Philanthropy track at the Social Capital Markets conference, I want to follow up on the suggestion of Duke University’s Ed Skloot to include a session about what philanthropy can learn from behavioral economics. But I’m at a bit of a loss about how to structure such a panel and focus the conversation.
Do you have any thoughts about how to create a fantastic panel discuss about the intersection of behavioral economics and philanthropy? If so, leave a comment or shoot me an email!
Email This Post
1Comments
Philanthropy Daily Digest
-
David Henderson makes the case that the social sectors current interest in "micro" solutions is misplaced and won't lead to the big changes that we need.
Email This Post
0Comments
Philanthropy Daily Digest
-
The Center for High Impact Philanthropy at the University of Pennsylvania has weighed in on my debate with Martin Brookes about the role of guilt in social investing.
-
The CFO of the Gates Foundation stepped down last week and now has an op-ed in the Financial Times calling for foundations to become more financially sophisticated in their use of program and mission related investments.
-
I've always thought it would have been intriguing if Warren Buffett had set up his own foundation because I'm convinced he would have had a very different approach than the one deployed by the Gates Foundation. Now Buffett is talking a bit about how he selects charities to support.
-
A number of well known UK based universities have come together to create the UK's first research Centre for Charitable Giving and Philanthropy.
-
Lots of new comments on Martin Brooke's post about his feelings of guilt.
-
Holden Karnofsky offers a good take on the issue of social investor guilt and how we should think about donations that are "non-optimized".
Email This Post
0Comments
Philanthropedia: Capturing Expert Recommendations of Nonprofits
This is my newest column for the Chronicle of Philanthropy. You can find the archive of my past columns here.
A Philanthropic Network Passes On Recommendations of Worthy Charities
March 7, 2010 | Chronicle of Philanthropy
In all the talk about measuring results in philanthropy and how best to determine which nonprofit groups are effective, a simple fact is often overlooked. All across the country, foundation program officers, senior nonprofit staff members, and academic researchers know which nonprofit groups are doing great work.
Now a new group called Philanthropedia is working to capture this knowledge about top nonprofit groups and make it available to everyone.
This sort of information, personal recommendations from people in a good position to pass judgment, is a fundamental process that people use to make decisions.
Getting recommendations from experts can mean asking your friend who loves to eat out what she thinks about the new restaurant in town or consulting a book review in The New York Times before choosing your next novel. Recommendations from trusted experts are so valuable that we often pay large amounts of money to gain access to them before making critical investment, legal, or medical decisions.
Philanthropy itself is largely built on recommendations. Studies show that one of the main reasons donors give to certain groups is that a friend asked them to do so.
When those friends are fellow supporters of organizations and not professional fund raisers, they are in effect recommending a group that deserves support. But while those sorts of recommendations motivate action, they are not unbiased or delivered by an expert.
Philanthropedia is working to make expert recommendations of nonprofit groups as accessible as the expert recommendations that help shape our decision making about which movies to see, restaurants to patronize, or retirement strategies to deploy.
Working with a quickly expanding network of experts that includes grant makers, nonprofit staff members, scholars, and other experts, Philanthropedia is making available expert recommendations on topics that include organizations working to curb climate change, improve education, extend small loans to struggling entrepreneurs abroad, and reduce homelessness in the San Francisco Bay area.
Co-founded by Howard Bornstein, a former employee of the Bill & Melinda Gates Foundation, and Deyan Vitanov, an entrepreneur who had previously built an online community for computer programmers, Philanthropedia began operations last year with extensive support from the William and Flora Hewlett Foundation.
The Philanthropedia team uses a survey methodology similar to one developed by the RAND Corporation to use expert recommendations in situations involving a large degree of uncertainty.
Given the nonprofit world’s current inability to systematically measure the effectiveness of nonprofit programs or even agree on what attributes make for a well-run organization, Philanthropedia’s approach makes a lot of sense.
The big weakness in Philanthropedia’s model is that the recommendations it offers are only as valid as the expertise of the organization’s network.
Because so much of philanthropy is not based on evidence, it is quite possible that the nonprofit groups recommended by the organization’s experts are not truly the most effective ones. It could be that the people in the network have biases that produced flawed ideas about what makes a nonprofit group successful.
However, in a recent background paper, Philanthropedia showed that the nonprofit groups it recommends have little in common based on how much money they raise, how well known they are, and their age, number of employees, and accountability ratings from Charity Navigator.
This means that the experts are picking up on something else. Given that the experts are foundation employees whose job it is to analyze nonprofit groups, researchers who have spent years studying conservation, education, poverty, and other topics, and nonprofit senior staff members who see firsthand the activities of their peers, it seems likely that many of the groups Philanthropedia recommends are among the best.
In the wake of the Haitian earthquake, the Gates foundation, the Ford Foundation, the charity research group GiveWell, the University of Pennsylvania’s Center for High Impact Philanthropy, and the nonprofit Acumen Fund all made grants or offered recommendations of which organizations were in the best position to help.
Each of them listed Partners in Health as one of their choices. While this fact does not guarantee that Partners in Health is the most effective nonprofit organization working in Haiti, it does offer a useful piece of information for donors trying to decide what groups to support.
Philanthropedia offers the potential to gather this sort of information for different causes and to offer recommendations that are international, national, or local in scope.
What is fascinating about Philanthropedia is that its process is not only effective but it is also inexpensive to run and easy to expand.
Other organizations working to identify outstanding nonprofit groups by conducting original research may offer some advantages compared with Philanthropedia.
But Philanthropedia’s system allows it to analyze far more nonprofit groups by simply bringing to light what experts already know.
Philanthropedia could quickly become a great way for donors to learn from the people in the best position to know which organizations are the most effective.
Sean Stannard-Stockton is chief executive of Tactical Philanthropy Advisors in Burlingame, Calif., and author of the Tactical Philanthropy blog. He is a regular columnist for The Chronicle of Philanthropy.
Email This Post
0Comments
The Guilt of the Social Investor
Once upon a time, people gave to charity to relieve their guilt. People felt guilty that they had more than other people and so they “gave back” to repay their debt to society.
Then social investors came along and decided to change all that. They insisted that their giving was not intended to discharge a moral obligation. Instead, they were making proactive “investments” meant to generate positive “social returns”. These social investors were operating higher up in Maslow’s hierarchy of needs as they sought self actualization rather than the more lowly need of being accepted by their community.
But then something strange happened. Social investors began to experience a new kind of guilt. And now, putting the sarcasm aside, we turn to Martin Brookes. Martin is the CEO of New Philanthropy Capital. I admire Martin and his firm very much. But recently, he posted an entry to the New Philanthropy Capital blog that typified the emerging guilt complex of the social investor.
Martin, who has long pointed to fact that donkey sanctuaries in the UK (where he’s based) have long received far more donations than charities that work to end domestic violence, wrote the following:
I admit it, I’m guilty of wasting charitable funds
By Martin Brookes
I need to confess to a misallocation of charitable funds, as well as a flouting of my own personal rules. In short, I gave some money to an animal charity.
Recently, I wrote a blog post about why I don’t give to animal charities. This argued, in essence, that giving money to (say) donkey sanctuaries rather than domestic violence charities represented a misallocation of charitable funds, and that this is wrong.
On holiday in Cyprus last week, my five year-old daughter Alice asked to go to the local donkey sanctuary. I couldn’t resist and she ended up having a fine time walking and grooming Popeye and Lorraine, (Alice and Popeye are pictured), two aged and well looked after donkeys. She then asked to adopt Lorraine, which we duly did, handed over more money by way of donation and bought several gifts.
This broke all my rules about charities. The only compensation is that it makes me feel like a better dad. But it was charitable giving to make me feel good, not charitable giving for public benefit.
To make matters worse for me, the donkey sanctuary in Cyprus is funded by The Donkey Sanctuary here in the UK, the very charity NPC used for the comparison with domestic violence charities. The most recent published figures show The Donkey Sanctuary had an annual expenditure of £19.6 million in the year to September 2008. Reserves were £37.1 million. That is, to put it mildly, rather a lot. After my visit, that reserves figure is now a tiny bit higher.
After my visit to the donkey sanctuary, I felt good as a parent, but bad as a donor. Alice feels marvelous and is inseparable from her picture of Lorraine, but that is not a sensible charitable objective…
I’m all for social investing. My take on effective philanthropy, what I call Tactical Philanthropy, makes no mention of making donations to donkey charities to make your child happy. But I think that guilt, whether the traditional guilt that comes from noticing inequity or the neo-guilt of the non-optimized social investor, is one of the worst emotions to drive charitable giving.
Here was my response to Martin:
Martin, with all due respect, your guilt around this is crazy. Under your logic, we should all feel guilty about all of our giving that does not go to the single best charity in the world. Under this logic we should all feel bad that we spend a penny on anything discretionary. Under this logic, we should all feel permanently anguished by the fact we don’t spend every waking moment focused on the needs of others.
You did a great thing for your daughter. She had a moment of feeling empathy for someone else. As a five-year-old, that’s a big developmental moment (I know, I have a four and six-year-old). And in that moment, when she felt the most fundamental emotion that drives all of philanthropy, her father stepped up, fought back the analytical monster in his mind who insisted that this was an illogical allocation of philanthropic resources and demonstrated that empathy (for your daughter) was more important to you then satisfying your own needs to feel logical in your giving.
You should be damn proud, Martin. Your actions exemplified the very best of the human urge to care for others. Without that urge, the work of New Philanthropy Capital would be pointless.
Yes, the way the situation mapped to the example you use to highlight the importance of analytical philanthropy is ironic. But it is this very irony and your awareness of it that makes your support for your daughter’s empathetic urge so tangible.
Be proud of yourself, Martin. You’re a great philanthropist.
Martin responded here with a thank you for my compliment to him, but an insistence that he was guilty as charged. What do you think? Was Martin’s support of the donkey sanctuary a betrayal of his social investing ideals or was it a heroic parental act? What role does and should guilt play in philanthropy? As we become more and more aware of the inefficiencies in the charitable sector, what obligation do we have to direct all of our giving towards righting those inefficiencies even if doing so draws us away from the emotions that drive our giving?
Email This Post
7Comments
The Nonprofit Institutional Imperative
Warren Buffett is known to warn investors away from companies who have fallen prey to the Institutional Imperative. The Institutional Imperative is the phrase Buffett uses to describe the way that many management teams, generally for reasons of greed, manage their company to the benefit of the institution rather than for shareholders.
The Institutional Imperative leads to companies making acquisitions of other companies which increase the size of the institution, but do not increase shareholder value. It leads to companies following what other companies are doing so that they do not risk looking bad instead of charting the course that would best lead to enhanced shareholder profits.
In short, the Institutional Imperative describes how many management teams manage their organization for the sake of the organization instead of recognizing that they should be managing their organization for the sake of shareholders.
I believe that many nonprofit organizations are in the grips of a variant of the Institutional Imperative.
The for-profit Institutional Imperative is driven by greed (management teams that want to run bigger organizations) and a desire to not look bad (management teams that follow the herd, even during periods of irrationality such as the dot-com boom and the period leading up to the financial crisis). The nonprofit Institutional Imperative is driven by fear, the fear created by running an organization which is constantly fighting for survival.
Nonprofits, even large ones, rarely have enough money. Even when their revenue is high, they frequently do not have the philanthropic equity on their balance sheet that would give them the ability to invest in the future. When an organization, or an organism, is in survival mode, it must shut down nonessential functions. It must operate so as to preserve itself. In the case of a nonprofit, this means focusing on fundraising and executing existing programs.
The nonprofit Institutional Imperative is responsible for the fact that so few nonprofit measure their performance, track the outcomes of their work or make the resources available to share information about what works (and what does not) with the field.
The nonprofit Institutional Imperative leads nonprofit management teams to run their organization for the sake of the organization rather than for the sake of stakeholders.
Warren Buffett believes that simple human nature is responsible for the Institutional Imperative. Observing that many for-profit and nonprofit organizations fall prey to the Institutional Imperative is not a criticism so much as a recognition that the normal human emotions of greed and fear lead management teams of both for-profits and nonprofits to run their organizations in ways that do not maximize benefits to shareholders and stakeholders.
But great organizations are led by teams who refuse to succumb to the Institutional Imperative. They recognize that the organization they lead is not itself an entity to preserve so much as a vehicle for delivering value to shareholders and stakeholders. The gifted executive is one who realizes that they have been entrusted with stewarding this value creating vehicle. They have been given the responsibility of maximizing the value that their organization creates, not simply tending to the care and feeding of the organization.
Before making every decision an executive team should be able to answer “Yes” to the question, “Does this action enhance value to our shareholders or stakeholders?” NOT “Does this action benefit our organization?”
By throwing off the shackles of the Institutional Imperative, you can align all of your resources towards your true goal. You can do more with less because you are putting every ounce of effort into creating value.
You can truly make a difference.
Email This Post
5Comments
The Cost of Information Sharing in Philanthropy
My last post on the way that information has different characteristics in the social sphere compared to the for-profit sphere, generated a string of reader comments. The comments covered a lot of ground and I encourage you to check them out here. But one recurring theme pointed to the costs of sharing information being something that was difficult for nonprofit entities to cover.
Gabi Fitz of IssueLab:
When we forget the original intention behind knowledge production in the social sector (namely that it will contribute to social good and social change) we also forget to dedicate the necessary resources to sharing this knowledge more broadly…
Just like any other social need that is not satisfied by the market (or is maybe even the result of a market failure), the work of making meaning from information, providing effective filters, and brokering knowledge in the social sector is a social service that needs charitable support.
Dan Elitzer of Full Contact Philanthropy:
I agree that unlike in the for-profit sector, information sharing in the nonprofit sector does not have a negative impact on the information-creator’s ability to achieve their goals. However, there is still an opportunity cost for organizations to package their knowledge and transmit it in a form that will reach and be actionable for other actors. Foundations may have the resources to engage in information sharing if they think it will advance their mission, but for most nonprofits, investing the time and financial resources to share their data or knowledge requires making cutbacks in other areas.
If a nonprofit staff member is directed to evaluate a program and capture information on how it can be effectively replicated, the time spent on that task is time not spent on providing direct client services or fund-raising or training new staff, etc. If that staff member then has to find a way to distribute that information so that others in a position to act on it will find it, that’s more time not spent on other mission critical work. Yes, the time spent on capturing and disseminating information may ultimately do more to advance the organization’s mission than whatever other activity was superseded, but unless the organization is confident it can make that case to its supporters, that’s a hard call to make.
These are important points. I think the way to address these concerns is though the Googlization of Philanthropy and the way that technology is unbundling the process of creating information from its distribution. In a Chronicle of Philanthropy column last April I wrote:
The Googlization of philanthropy is about organizing knowledge to allow for smarter giving by more people. Most important, the Googlization of philanthropy means that organizing the information will not be done by the information creators, but by third parties and — excitingly — the people who want to consume that information.
The point here is that we are witnessing the rise of information processing organizations like Google, Yelp and Twitter (when it is used to create information filters) which do not themselves create information, but which pay for the infrastructure of information distribution. Something similar could clearly occur in the nonprofit sector (with current examples like IdeaEncore, PubHub and IssueLab).
The rise of these intermediaries both bring light to the information that is already available and creates incentives for more information sharing. The Foundation Center’s Glass Pockets project is a good example. The site, which shows how transparent and accountable large grantmakers are, both allow users direct click through access to an enormous amount of information about foundations and importantly it helps set expectations around information sharing. Certainly foundations which are currently not sharing information which Glass Pockets deems necessary will at least need to give some thought to changing their policy.
The takeaway from all of this is that it is critical that the social sector, both nonprofits and grantmakers, embrace a cultural ethic of information sharing. That as a sector, we realize that we don’t need to “own” our social impact. If we have valuable information that can help inform the activities of others, it is our duty and our biggest impact opportunity to share this information widely. Even the Bill & Melinda Gates Foundation, the largest grantmaker in the world, makes up only 1% of the amount given to charity each year. So to the extent that they are able to share what they know to help inform the other 99% of giving, they have an opportunity for the impact from what they know to dwarf the impact from the money they give.
Email This Post
4Comments
Philanthropy Daily Digest
-
The European edition of the Wall Street Journal features a special report on social finance and philanthropy today.
Email This Post
0Comments
Philanthropy Daily Digest
-
In the wake of the Haitian earthquake, this conference that will look back at lessons learned post-Katrina takes on added importance.
-
I must say that I love the name of this blog and I've started following the great, but infrequent updates.
-
On the heels of my debate with Michael Edwards on the role of social capital markets, Alliance Magazine launches a new online debate format and asks "Civil society vs markets – a false dichotomy?". Tris Lumley of New Philanthropy Capital and David Bonbright of Keystone try to find common ground.
-
Jane Wales (Aspen Institute and Global Philanthropy Forum) is leading a group of philanthropists (many from GPF and the Philanthropy Workshop West) on a trip to Liberia. Liberia faces many problems, but has set up a "Philanthropy Secretariat" within the office of their president to coordinate partnerships with philanthropists.
-
Hot on the heels of the New York Times profile, the "Secret" Society for Creative Philanthropy gets profiled in the San Francisco Chronicle. They have plans for chapters in Maui, Krakow, Houston, Vancouver and Los Angeles.
Email This Post
0Comments
