Too Much Charity?

June 13, 2008

A recent edition of the Chronicle’s online Philanthropy Today got me scratching my head.

One piece, Mass Charities Urged to Merge and Pool Resources, reported that the Boston Foundation was urging the 36,000 nonprofits in Massachusetts to consider either merging or at least sharing resources with their like-minded compatriots. Their message … too many groups for too few — indeed, dwindling — resources. The number of nonprofits in Mass has almost doubled in recent years.

Another piece, Aid Groups Urged to Revamp Operations in Poor Countries, indicated that with tens of thousands of "unregulated" aid groups operating in the health field, they’ve become difficult for health officials in those countries to manage and deal with effectively. Each charity "does its own thing" and ometimes the charities even compete with local health authorities by hiring away the indigenous health professionals who are in short supply.

So, is the message here that there can be too much of a good thing?

Are all these groups, be they in Massachusetts or the developing world, equally competent and deserving? That of course would fly in the face of all human experience. Are some redundant to others? Of course. Are some mere ego trips for their leaders? Bingo again.

The problem is, there no "market" (or an extremely inefficient one at best) for weeding out the under-performers. Regular Agitator readers can probably detect me becoming more and more agitated on this point.

Note that I’m not pushing the "all nonprofits should be more business-like" line.

What I am pushing is "perform or die" … and figure out a way — your way — to establish that your nonprofit actually is performing … performing in the sense of achieving substantive goals, not just processing stuff.

Maybe there should be a "sunset" provision of some kind on IRS charitable status.

Here’s a crude approach that will doubtless offend many readers … you lose your charitable status if you can’t demonstrate at the end of every five years that you have more resources than at the beginning of the period. Sure, there are groups that might be clever enough to be raising more money even though they aren’t accomplishing much. But, heck, if their donors are too incapable of demanding to see and assess the case, well I guess they’re getting what they paid for, aren’t they?! Who else is supposed to make that judgment? And for those groups that are raising less, the "market" has spoken … it’s time to exit the playing field gracefully.

Of course I believe any sunset rule, formal or informal, should be more intelligently grounded. Maybe the guys at Give Well blog can come up with something.

But meantime, I just can’t believe Massachusetts or Africa would be worse off if half as many nonprofits (or even fewer) were expending the same level of resources in each region as today’s number of groups are. I think scale matters … a lot.

Would I shut the door on new charities? No. Especially if they succeed at putting old ones out of business!

As reported by the NY Times a few weeks ago, new group like Nothing But Nets springs from the pages of Sports Illustrated. A new movement is galvanized that in barely two years has bought and distributed 2,029,286 malaria-fighting nets, presumably representing over $20 million in contributions … introducing all sorts of new people, especially young people, to giving and social action, and forging powerful alliances with marketing machines like the NBA. Spectacular!

Have they forced an under-performer off the playing field. I don’t know. But I submit that if they did, it would be an added bonus!

Tom

Posted by tbelford | Filed Under Don't Miss these Posts, accountability, charities, marketing metrics | 3 Comments 

Donors Need Emergency Help - II

May 16, 2008

Yesterday we wrote about the difficulty, during natural disaster calamities, for donors to assess which relief charities might put their donation to work most effectively.

From Matthew Sherrington, now at EveryChild in London (and formerly at Greenpeace USA) here is a very informative description of the way disaster relief fundraising is coordinated in the UK. Does anyone think this might work in the US?

Dear Agitator,

There’s a bit of a disconnect between your wanting donors to humanitarian disasters to give from the heart and “leave the brain out of it”, and your proposed solution of country-by-country reviews for donors to consult. Seems like too much work to me, for both someone to compile, and for donors to plough through. However, your point about wanting to ensure donations are used most effectively is of course spot-on.

An alternative solution to your problem is the set-up here in the UK – the Disasters Emergency Committee (DEC), www.dec.org.uk which is a consortium of thirteen humanitarian agencies. When a disaster is deemed massive enough by the committee members, (which unfortunately also means one getting massive media attention), the DEC kicks in as a coordinated appeal, supported by endorsed air-time appeals by broadcasters including the BBC. http://news.bbc.co.uk/1/hi/world/7390971.stm

Member agencies don’t (indeed, can’t) advertise for funds because the DEC takes that on. Rules stipulate that the member organizations’ own appeal income is pooled for the period of the joint appeal. And monies raised are allocated to members according to their ability to operate and spend it on the ground in response to that emergency. The DEC-funded response is collectively evaluated too. That’s about the sum of it – you could check the exact procedures with the DEC directly.

But the concerned general public knows where to go, hopefully with confidence that money will be spent appropriately through the most effective organizations on the ground. Inter-agency competition is put to one side for the period of the joint appeal, in the interests of maximizing response to the emergency first. In return, the DEC doesn’t subsequently market to donors itself.

You can check out the current Burma appeal, and a record of past appeals, including the £390 million (about $800 million) raised for the 2004 Asia Tsunami.

www.dec.org.uk/

If you check out the sites of consortium members, you should see their home page appeals are all identified with the DEC appeal. For example:

www.oxfam.org.uk

www.savethechildren.org.uk

www.worldvision.org.uk

I’m not sure anything similar exists in the US.

Best wishes,

Matthew
Director of Fundraising & Marketing
EveryChild
matthew.sherrington@everychild.org.uk

Posted by tbelford | Filed Under Don't Miss these Posts, accountability, fundraising | 1 Comment 

“Donors Need Emergency Help”

May 15, 2008

So writes Holden Karnofsky of the GiveWell Blog, attracting these comments in the Chronicle of Philanthropy.

His point is that in the present humanitarian crisis in Myanmar, prospective donors are confronted by dozens of organizations raising funds for relief. How is one to know which group might most effectively use the funds?

Part of me doesn’t want a donor to even blink an eye before opening their wallet. Or even better, clicking their mouse. I want them to react to a humanitarian crisis quickly and generously … from the bottom of their heart. Leave the brain out of it.

My only advice in a crisis situation might be … stick with a name brand. Maybe there is indeed an obscure Myanmar-focused NGO with some special ability to move more quickly and effectively on the ground. But even so, the $25 impulse donor is not likely to do the homework to identify them, and they can be confident that an established aid group will "deliver the goods" when all is said and done.

But another part of me knows that each and every dollar counts, and wants to believe that no humanitarian dollar will be wasted or ineffectively spent. And that concern increases geometrically with the size of the gift that might be at stake.

So, at $25, I’d have one set of performance concerns and expectations; at $25,000, quite a different set.

I’d love to see someone host online a developing country-by-country assessment of which NGOs are doing what. Not just relief work, but ongoing human and environmental betterment. Something that goes far beyond "percentage spent on overhead" scorecards. With "reviews" of that work by knowledgeable observers, both locals and outside experts … and even donors. Like Amazon book reviews.

Then, whether a disaster strikes, or donors are looking for some longer term philanthropic engagement, they have a ready resource to consult.

Does this exist? Am I behind the curve here? Is Holden?

Tom

Posted by tbelford | Filed Under Don't Miss these Posts, accountability, fundraising, philanthropy | 3 Comments 

More On Trust

May 7, 2008

In a lot of things I’m reading lately, the "trust" issue keeps popping up.

Here’s a piece on trust and brands.

Your nonprofit is a brand. If you’re fortunate, it’s a brand your target audience has heard of. The Agitator’s DonorTrends survey recently asked donors for their perceptions of 100+ national nonprofit brands. The results underscore how invisible most nonprofit brands are.

But while awareness is great, and hard to come by, it of course is just a foot in the door. A chance to attach a bit of meaning and affect. In fact, one could argue that awareness doesn’t really exist without some attached value connotation … however well- or ill-founded. And that brand meaning can be negative or positive.

What any brand must strive toward is earning the trust of its audience. Nothing is more precious. And nothing can be more fatal than losing that trust, once gained. Just consider the travails of the ACLU over the past few years.

How is your nonprofit going about earning trust? And what clumsy mistake might you make to lose it?

Tom

Posted by tbelford | Filed Under Don't Miss these Posts, DonorTrends, accountability, branding, nonprofit management | Leave a Comment 

How Trustworthy Are You?

May 4, 2008

Nothing much gets done when trust is absent. Certainly no fundraising.

So how trustworthy are you?

Here’s a self-evaluation survey concocted by Charles Green, co-author of The Trusted Advisor, and a blogger on the role of trust in marketing, sales and business in general. If you take the quiz you’ll find your trustworthiness ranked against other respondents, and get some advice from Mr. Green on shoring up the weak links in your "trust equation."

It would be interesting to see a "trust quotient" developed for institutions!

Any perfect 15’s out there?

Tom

Posted by tbelford | Filed Under Don't Miss these Posts, accountability, fun | 2 Comments 

Nonprofits Have No Claim On Ethical High Ground

April 18, 2008

The Chronicle of Philanthropy recently reported a study by the Ethics Resource Center on ethical standards and behavior in nonprofits.

Guess what?

Nonprofit ethics are pretty miserable … and apparently in decline. This based upon a survey within our own community.

Should we expect the public (specifically donors and would-be donors) to believe differently than nonprofit employees?

We’ve all become complacent with the assumption that as "do-gooders" we as a sector can somehow automatically lay claim to higher ethical reputation than say, mortgage banks.

But how many scandals at prestigious nonprofit institutions like the Smithsonian, United Way or the Red Cross (let alone all the local potboilers that pop up almost daily on my news feeds) do we think the public needs to witness before that presumptive advantage over other sectors and professions has vanished?

Well I think it has vanished. “Do-gooders” doesn’t translate in the public vernacular to “Be-gooders” anymore.

On the positive side, most consumers these days ascribe as much integrity to — and reward with as much loyalty — a company that is really green, or a fish market that consistently delivers the freshest fish, or any service provider who under-promises and over-delivers.

The integrity playing field has been leveled. No sector — as such — can generically claim an advantage.

And while equal opportunity corruption and malfeasance chips away at the sterling reputation of the nonprofit sector, so too does the intensifying focus on nonprofit performance.

It is inevitable that this focus puts a spotlight on both excellence and mediocrity. As donors become more aware that not all nonprofits are created equal … that they don’t all deliver on their promises … guess what? The overall standing of nonprofits as a sector diminishes.

If a bank, an airline, a cable provider or our toaster can let us down, why not a charity? It’s all the same. The most prominent nonprofit brands display warts for all to see, while the smaller nonprofits have no brand reputation (i.e., bankable goodwill) to begin with.

With multiple charities pursuing every conceivable goal, charities have become a commodity, and are increasing eyed and evaluated as such.

No wonder the hard data indicates a rather steep fall-off in donors (15%-20% in the past three years), particularly new donors.

More on what donors are thinking about nonprofits as The Agitator begins to report on its latest DonorTrends survey in the weeks ahead.

Tom

Thanks to DonorPower Blog for reminding me of ethics.

Posted by tbelford | Filed Under Don't Miss these Posts, accountability | 1 Comment 

How Many Billionaires Does It Take To Fix A School System?

March 12, 2008

I just loved this headline in last Sunday’s NYT Magazine.

So I was seduced into reading the piece, even though I have no special interest in education philanthropy. The format was an edited transcript of a conversation amongst several leading lights in the education field.

Setting aside the education I received on the topic at hand (one-fourth of all foundation giving goes to education, etc.), I was most struck by some observations that apply in any arena of social change.

1. How slow both funders and practitioners have been to focus on and measure outcomes, versus process or inputs.

2. How inexplicit all the players can be about their theory of change … what is it and how will we know if we’re right … before just plowing ahead?

3. The fundamental classic choice that often must be made between strategies built upon reforming from within through progressive leaders, versus challenging "the system" through disruptive outsiders.

4. The critical role played by truly successful social entrepreneurs … in other words, the importance of finding and betting on exceptionally talented individuals. They are worth their weight in gold … far more valuable than your most successful hedge fund manager!

If both funders and practitioners would give a lot more careful, systematic thought to these four areas, whatever their substantive areas of focus, before the money gets spent, maybe the world would become a better place faster.

Tom

 

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Measure Impacts? Duh!

March 10, 2008

Sunday’s (March 9) NYT Magazine has a series of articles on philanthropy and fundraising … definitely worth reading, though seasoned practitioners will find some more insightful than others.

The Agitator found three especially intriguing, and we’ll blog on those …

The title alone makes this one worth reading … How Many Billionaires Does It Take to Fix a School System? More on this piece tomorrow.

Second, What Makes People Give? … A fascinating look at what empirically-focused academic researchers are discovering about fundraising. Of course, those of us steeped in the quintessentially empirical world of direct marketing think we have all these answers already! I suspect Roger will be posting on this one.

And the third, which I’ll focus on today, is called For Good, Measure.

This article noted a remarkable statistic. According to a survey by the Urban Institute and Grantmakers for Effective Organizations, only 43% of all staffed foundations in the US said they formally evaluated the work financed by their grants to nonprofit organizations. That’s astonishing.

What are the other 57% doing?! Possibly …

  • Throwing mud at the wall … and not caring what sticks.
  • Giving money to vanity projects, where the desired impact is simply seeing one’s name on the plaque or at the top of the annual dinner program.
  • Just taking the tax deduction.

Seriously, what other explanations (setting aside sheer stupidity or laziness) are there for a foundation not to seek to understand what impact it is having … let alone exploring whether other ways of spending their money might have more impact?

Various folks in the biz interviewed in this article comment to the effect that measuring results, comparing alternative strategies, looking either metaphorically or actually for "social returns on investment" are still new concepts for most in the philanthropy world. Wow!

Doesn’t that provide a direct response to the lament of Warren Buffett, quoted in the article, that philanthropies are "tackling problems that have resisted great intellect and lots of money"?

Lots of money maybe … but great intellect? With no evaluation, it seems more likely that "great intellects" might have been busily throwing more good money after bad.

Arguably, this great awakening to mere common sense is better late than never. It’s good to see that the upstart Gates Foundation actually employs someone with the title of "director of impact planning," and the venerable Rockefeller Foundation has recently hired a vice president to focus on evaluations.

Still, with "breakthroughs" like these only now occurring at places like Rockefeller, it’s easy to resonate with the NYT writer’s observation: "…it’s easy to see why some of the newest entrants to the field would look at the political culture of traditional grant-making and ask why they shouldn’t blow it up."

Tom

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I Was Master Of The Philanthropy Universe, Until …

January 1, 2008

I screwed up bigtime.

This is probably how Holden Karnofsky, prime mover of the Give Well blog is feeling today.

For a couple of weeks in December, HK was the darling of mainstream media coverage of philanthropy. A brash young hedge fund manager, turned instant philanthropy savant, prodding establishment philanthropies on issues like transparency and penetrating empirical evaluation of grant impacts. Featured breathlessly by the Chronicle, the NY Times, the Wall Street Journal, MSNBC and several others.

He should have ended the year on a high. But he over-reached, and tried to manipulate the blog world, as he confesses in this sort-of “mea culpa” post on his own blog. He was “outed” for fraudulent self-promotion by readers of the blog MetaFilter, as you can read here. Holden Karnofsky has seriously damaged the credibility of the Give Well blog. [It will be interesting to see if any MSM follow-up on his transgression.]

Having given Holden an Agitator raise in my post of December 10, titled Who Wants Holden Karnofsky's Money?, here's my take on the sad affair.

As I originally said, I've felt schizophrenic about HK and GiveWell. On the one hand, I called him breathtakingly audacious, a punk. On the other, I applauded Give Well's philosophic orientation, analytic rigor and transparency of thinking.

My ambivalence continues today!

The evidence suggests that HK is an immature, under-informed, smart-ass. There's no excuse for his attempt to generate fake interest in his blog. A lot of folks in the philanthropy world will be grinning at this turn of the screw.

But as a provocateur, he is indeed asking the right questions. All centered at the end of the day (ironically, considering his blogging mis-capades) on the issue of accountability.

  • For funders, how carefully have they really vetted the recipients of their benevolence … do they really know what's working and what's not … and why aren't they transparent about their evaluation and decision processes, so as to benefit everyone trying to accomplish good?
  • For nonprofits, how well can they document that their strategies and programs are actually effective? Not just in process terms, but in terms of truly delivering the results they claim to be pursuing.

These are legitmate questions. To be sure, HK didn't invent them. But damn if he hasn't pushed them in everyone's face over the last year. For which he deserves some credit.

So today I'm deeply disappointed that HK couldn't be content with his considerable fame lately in the mainstream media. He's dug himself a deep credibility hole that will be tough to climb out of. He'll need to work overtime prove his integrity.

But I don't want to throw the baby out with the bathwater. I'll stand by my conclusion of December 10 regarding Give Well, with one qualifier about HK:

“I look forward to their work maturing and becoming richer with hands-on experience. Until then, I can live with what I perceive as the occasional intellectual misdemeanor or sensitivity lapse. And I'll urge everyone to monitor their efforts.”

The qualifier?

Thanks to the folks at MetaFilter, we know that, for now, we can't look at HK quite the same way. He's tarnished his reputation, even for those of us who are receptive to his message. One really bad judgement like this — not just a “lapse,” but a deliberate deception — we might tolerate (some of us, anyway … see below); but another episode like this and he's toast.

Tom

P.S. Most of HK's critics on MetaFilter are anonymous … and you know how The Agitator feels about anonymity (it sucks)! As is usually case, anonymous critics can get rather vitriolic and righteous. There's no shortage of venom in this MetaFilter outing. And almost no evidence that most of the critics have read any of Give Well's material. Which doesn't stop them from imputing all sorts of sins to HK. Let me be clear … there's no defense for HK's deceptions. But it's unfortunate that one needs to read through so much bile to get to the facts.

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Who Wants Holden Karnofsky’s Money?

December 10, 2007

I confess to having a schizophrenic reaction to Holden Karnofsky's Give Well website and blog.

Karnofsky is a 26-year-old hedge fund expatriot who decided he wanted to give away some money (his own and some friends), but had serious problems with what he saw as the lack of credible metrics on the program accomplishments of charities.

So for about a year now, Holden and his associate, Elie Hassenfeld, have been researching the strategies, progress claims and program evaluation methodologies of hundreds of nonprofits involved in their targeted issue areas (e.g., saving lives in Africa, K-12 education in NYC).

Often their conclusions boil down to one spin or another on … “the emperor has no clothes.” Far more often than not, Holden concludes that the nonprofits he studies are pursuing unchallenged strategies with little rigorous, systematic examination of actual outcomes. Nonprofits simply persist with their chosen strategies because that's what they know how to do.

I've been fascinated to watch Give Well's investigation unfold … and to see my own reaction to it.

On the one hand, Give Well's audacity is breath-taking. Here's, arguably, a 26-year-old punk, who doesn't know what he doesn't know, telling legions of veteran do-gooders that they are possibly, indeed probably, wasting their time and their donors' money!

For example, his examination of 107 nonprofits working in the “Saving Lives” area yields a “cost per life saved” measure that would warm the heart of any zealous cost-benefit analyst. Others would find it naive or chilling.

He asks Give Well's grant applicants to jump through hoops of strategy and program justification that most nonprofits — doing their own cost-benefit analysis — wouldn't attempt for a half-million dollar grant, let alone the modest amount (they mention $140,000) they plan to allocate across their chosen few. Frankly, I'm astonished that his applicants have gone to the trouble.

On the other hand, Karnofsky is truly putting to shame much larger foundations and major donors who haven't shown any remotely proportionate determination to ask probing questions about the efficacy of the groups they support. Or to share the answers when they do ask.

If, hypothetically, your typical major funder devotes 1 erg of rigorous results analysis per dollar given away, I'd speculate that Give Well devotes 1000 ergs for each $1 it gives away?

I suspect that a group that does put itself through the “Karnofsky wringer” will find that its own thinking has been sharpened. They will have been asked to answer tough questions, justify their core assumptions, and document real outcomes … perhaps for the first time in a long time.

To the sheer level and rigor of their effort, add the fact that Give Well's analysis is totally transparent … it's all published online for any donor (or offended nonprofit) to examine, incorporate, improve upon or rebut. Another reason for so many other funders to be shamed.

So how to I resolve my schizophrenia about Give Well?

I look forward to their work maturing and becoming richer with time and hands-on experience. Until then, I can live with what I perceive as the occasional intellectual misdemeanor or sensitivity lapse. And I'll urge everyone I can to monitor their efforts.

Give Well, just by virtue of its approach — its relentless and public search for strategies with documentable outcomes — is providing the philanthropic community with a terrific model.

Moreover, if you are a donor active in one of Give Well's issue areas of focus, you can find already a treasure trove of useful analyses and comparisons of alternative strategies and program effectiveness to inform your giving. Some of their specific conclusions and occasional tone might alarm you, but usually they've staked out a case that warrants consideration.

If Give Well sticks at it, they'll make a huge contribution. Not so much via their own direct giving, but rather through their provocation and the public sharing of their analyses, successes and failures (and I'm confident that if Give Well becomes dissatisfied with one of their charitable investments, we'll hear about it!).

And if Holden Karnofsky, in particular, sticks at it, maybe he'll become the Warren Buffett of savvy philanthropic investing, with all of us looking forward to his annual shareholders meeting and letter!

Holden, you deserve a raise!

Tom

P.S. Holden will be the guest for the Chronicle of Philanthropy's online chat on Tuesday the 11th. Be there!

P.P.S. And don't forget to take our quick “Bait & Switch?” poll on email fundraising tactics here.

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