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The More We Know About Nonprofits’ Impact…Who Knows?

By Susan Carey Dempsey on November 18, 20102 Comments
Fill the Gap: Case 4B (Sep 09) REVISED
Image by americanartmuseum via Flickr

At a conference held in New York last week to discuss trends in philanthropy, a panel including Guidestar’s  President and CEO, Bob Ottenhoff, and Dr. Patrick Rooney, Executive Director of the Center on Philanthropy at Indiana University, talked about the increased demand for information on the performance of nonprofits. Harking back to the aftermath of Hurricane Katrina, Ottenhoff said he was overwhelmed by calls from donors asking, “Can you help us give to an organization that can really deliver impact?”

In my head I heard a little voice say, “I hope you were honest and said, ‘I really don’t know if I’m able to tell you that.’” This is not to cast aspersions on Mr. Ottenhoff or Guidestar, for the information they provide has helped to close an enormous gap. But if I were trying to answer that donor’s question, I would need much more information about how effectively a particular nonprofit operates, and so far it doesn’t appear that the tools to assess that performance have been designed.

Another panel discussion hosted recently by American Express and moderated by Matthew Bishop, author of Philanthrocapitalism, touched on this subject. Liz Livingston Howard, the Associate Director of the Center for Nonprofit Management/SEEK at Northwestern University’s  Kellogg School of Management, discussed the pressures on nonprofits from donors who want them to be accountable: 

That call to be transparent requires complex relationships, sophisticated accounting, a larger staff…

Yet how many donors will take into account the need to spend more on IT, or to upgrade systems, or to hire better educated, higher-paid personnel?

Dr. Rooney and Mr. Ottenhoff were speaking at the 2010 Gurin Forum, hosted by the Giving USA Foundation and Giving Institute. Its theme this year was:  “The Giving Count – The Numbers: What Do They Measure? What Do They Mean? Why Do They Matter?”

The Forum’s stated goal was to bring “all the principal organizations offering giving data together for a public conversation about: a) how data differ b) why it matters c) why we have an obligation to address issues of public trust and/or skepticism and d) how can we use these data to inform the work of non-profit organizations, and the donors’ decision making.”

Acknowledging that it is important to establish the credibility of the data being offered to the nonprofit sector, Dr. Rooney showed how closely COP’s results track to IRS charitable deductions. And on an encouraging note, he reported that COP had been approached by the Gates Foundation and awarded a grant to continue research on giving. On the other hand, however, he noted that the overall support from the philanthropic community for research had “plummeted.”

Moderator Stacy Palmer, Editor of the Chronicle of Philanthropy, posed the question, “If cost were no object, what more would we want to know?” Rooney underscored the challenges of attempting to measure performance, and to understand the implications of organizations’ spending more on overhead, including fundraising.

When Ted Turner made his billion-dollar commitment to establish the UN Foundation, he proudly asserted that “not one penny for overhead” would be allocated from his contribution. In some ways, stipulations like that are punitive, for an organization that is accountable will still need to do all those things that constitute “overhead” so the question is how they will be able to pay for them.

A panelist in a subsequent session, Ruth McCambridge, had written in a recent issue of Nonprofit Quarterly that, although these highly regarded sources were reporting a modest decline in giving, most nonprofit practitioners were experiencing a far more difficult environment:

…the numbers just felt wrong to many who had experienced and saw peers experience a much more precipitous drop in philanthropic support.

McCambridge further pointed out that philanthropic dollars are not equitably distributed among various sectors or geographic areas of the country, with giving to human services down 13.5 percent.

Focusing for a moment on the human-service field, we also know that many human-service organizations were slammed with higher levels of need so that the revenue-against need equation was even more radically changed than the revenue decline alone would suggest.

 For those of us who are frustrated that the best efforts to track philanthropy still don’t tell the full story, there may be some hope in the coming reports that will be based on a collaborative survey effort among GuideStar, the Foundation Center, AFP, NCCS, Blackbaud and COP. Whether the answers are reassuring or not, the better we understand what’s happening in the sector, the better equipped we will be to make strategic decisions for a challenging future.

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  • Great summary of both the Giving Institute meeting and a very weighty topic. A couple comments…

    First, there is no shortage of data about things in the nonprofit sector. But making sense of it and meaning from it can be a challenge. Each set of data covers a very particular set of nonprofits under specific circumstances. We try to extrapolate that to a trend or an insight into what’s happen on a larger scale. There are some efforts to pull all these data providers together to give a better view on things. But we all have a long way to go. It’s not that different than economists reporting on what they think is happening. Each has their own data but the interpretations can often be all over the map.

    Second, we are rapidly moving towards a philanthropic culture where outcomes are everything. All donors are now from Missouri – the “Show Me” state. Some nonprofits are going to thrive in this environment. Others are going to need to adapt or put themselves at significant risk. The good news is that there are a lot of great examples of organizations that are outcome oriented from top to bottom – Room to Read, Operation Smile, Doctors Without Borders, Feeding America, etc. This is going to require drawing a clear line from fundraising to outcomes and reporting frequently on what’s happening.

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