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On Political Books
How taxpayers subsidize failing philanthropies.
Stern, like Gates and others, describes some of the skewed incentives in the nonprofit sector that discourage rigorous M&E: donors often give out of personal, emotional, or “warm glow” motivations; they do not rely on performance metrics and in fact often chastise grantees that spend too much on “overhead,” the kind of organizational infrastructure necessary to measure (and often achieve) results.
Despite his pessimism, Stern points to bright spots in the charitable sector. The common characteristic of the organizations he extols—New Profit, Inc., a venture philanthropy “rooted in the idea that business innovation could propel the charitable sector forward,” Youth Village, an organization that works with emotionally and behaviorally challenged children and their families, and the Nurse Family Partnership, focused on home visitation for maternal and early child health services—is a devotion to rigorous M&E and proof of social impact. This is not the same, it is worth noting, as a business model or orientation. In fact, the randomized control trial approach to evaluation, a kind of gold standard of evidence for many in the field of social services, and one that Youth Village and the NFP remarkably achieve, draws not from the for-profit sector, but from the fields of science and medicine.
This may seem semantic, but it is an important distinction in parts of the nonprofit world, where, despite Stern’s remonstrations to the contrary, a “business knows best” bias has come to prevail. Jim Collins, author of Good to Great and well known for his insights into high-performing companies, asserts, “We must reject the idea—well-intentioned but dead wrong—that the primary path to greatness in the social sectors is to become more like a business.” Collins instead argues that the “culture of discipline” required for high-performing organizations across sectors “is not a principle of business; it is a principle of greatness.” Or, as Phil Buchanan, the president of the Center for Effective Philanthropy, recently wrote in the Harvard Business Review, “No type of organization—government, business, or nonprofit—has a monopoly on effectiveness. And nonprofits are typically tackling the most complex problems of all. If those problems could have easily been solved by government or business, they wouldn’t exist at all.”
Stern laments that organizations like New Profit, Youth Village, and the NFP are too few and far between. “For all its prominence,” he writes, “the social entrepreneurship movement” that these organizations represent “has hardly put a dent in the American charitable world.” I would posit otherwise. Omidyar distinguishes between “charity” (relief for immediate suffering) and “philanthropy” (from the Latin “love of humanity,” aimed at solving the root cause of problems). Arguably, the philanthropy industry has been profoundly influenced by the social entrepreneurship movement; nearly all professionally run foundations report to be engaged in some kind of formal evaluation of the impact of their grants. The fact that foundation funding only represents approximately 15 percent of total giving, in dollar terms (roughly 75 percent of giving is from individuals) understates the outsized role of philanthropists like Gates and Omidyar, organizations like New Profit, and thoughtful books like With Charity for All, in shaping practices in the field. Perhaps the most interesting and underreported manifestation of the social entrepreneurship movement’s sway is in the public sector, where, as Stern describes, there is a new penchant for evidence-based grant making and use of tools like innovation funds that allow government agencies to work with intermediaries like New Profit to channel public dollars to high-performing nonprofits. These kinds of partnerships indeed offer a better way to give, and a better use of all resources, public and private, to advance the common good.
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Watson on March 05, 2013 10:52 AM:
I'm all for measurement across all sectors in society. The question that must be deeply reflected upon and answered in regard to philanthropy is "what constitutes evidence." When striving to improve complex, interrelated social structures or create parallel tracks that will perform where existing structures are failing, it is critical to know what to measure, how to measure it, and what time horizon makes sense. New Profit and Youth Village are, indeed, great organizations. But somewhere, sometime, someone supported them before they became what they are now. What was the evidence that they would work before there was evidence that they do work?