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Bad data, or none?

November 21, 2007

At a phone-in press conference last Thursday, Clara Miller of the Nonprofit Finance Fund and Robert Otterhoff of Guidestar cautioned donors against using a charity’s Form 990 to determine whether it’s worthy of support.  By way of commenting on proposed revisions to the 990, Miller suggested that the IRS and everyone else:

  • Eliminate the emphasis on overhead expenses: focus on a charity’s outcomes, not its inputs.  Because administrative and fundraising expenses are assigned differently by different charities (not to say completely randomly), they’re neither revealing nor a good basis for comparison.
  • Eliminate the requirement to report salaries about $100,000, which suggests that paying a charity executive that much is per-se profligate
  • Acknowledge that larger organizations tend to have lower administrative costs, but that growing organizations should have high expenses because they’€™re investing.

Miller urged donors to stop treating the 990 as gospel, noting that it "penalizes nonprofits for having reserves, paying people adequately, and investing in systems."  And Ottenhoff, whose agency posts 990s online, nonetheless suggested that donors begin their investigations not with the 990 but with an  agency’s mission and programs.

No dispute here that the 990s offer a distorted and distorting picture of nonprofit operations.  But nature abhors a vacuum, and donors are a force of nature.  They’re not
going to stop using the "wrong" information until we’re willing to give
them a replacement.  And neither Miller nor Ottenhoff had one to suggest. 

It won’t do just to ridicule donors’ "obsession" with overhead
expenses, and to compare it unfavorably to the forms of evaluation used
in the for-profit world: "A businessperson would ask, ‘What do you
care what the overhead is if we’re delivering to our customers?’"  But donors mostly have no way of knowing whether, or what, nonprofits are
delivering to their customers.  We ask about cost because if the whole thing is a waste, we want it at least not to be much of one. 

How should donors secure information about outcomes to replace the 990 data about inputs?  Miller was vague: it would be useful to have data on "what did organizations actually do, capacity metrics or production metrics"–but those don’t belong in the 990.

Where can donors could go for information about a charity’s effectiveness?  Ottenhoff mentioned Guidestar, of course, and the Better Business Bureau, but ended up recommending a charity’s own Website–not because of what’s likely to be there, but because of what ought to be there:

An organization should be able to say how many people have we served, what was the benefit we provided–did they learn to read, did they get fed?–let’s quantify the benefits we’ve provided to the world.  Organizations should be able to connect the dots between mission and money with good numbers.  Let’s look at the bigger picture of what they’re trying to accomplish.  Let’s say they have a $1 million budget and employ 12 people, what is the output of that investment and what are you as a donor enabling them to do?

That’s the question, all right.  But don’t tell people to ask it if you can’t help them answer it.

——————–

The Nonprofiteer will take the long weekend to celebrate Thanksgiving.  Publication resumes Monday, November 26.  Happy holidays!

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Posted in Coverage of nonprofits, Current Affairs, Evaluation, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Relations with funders | 6 Comments »

Dear Nonprofiteer, How can I know which consultants are any good?

October 19, 2007

Dear Nonprofiteer,

 
I have been in the
racket here for coming up on 20 years, the vast majority as a grantmaker. 
(I once commented on a Foundation Hall of Shame feature–btw my favorite feature of your site–as "Grantmaker Concerned
with Grantmaking.")
 
I would love to hear your reaction to an idea that I
have been kicking around, but have pretty much abandoned. You seem like a good
source of opinions generally, and given your consulting experience I am
especially interested in your thoughts.
 
A few months ago I started noticing how often I was being asked by grantees
and other acquaintances to recommend a consultant to do this or that –
development, strategic planning, etc. (It was kind of like the
phenomenon of thinking that you might want to buy a Prius, and and suddenly seeing a Prius every time you turned your head.) The question "Do you
know anybody who could help with….?" seemed to be on everyone’s
lips. 
 
It occurred to me that there was not really much of an organized
information marketplace to help people find the answer to this question. (I have
checked the ACN site, but their consulting reference section really just lays
there — blah.)
 
At which point my analogy-addled mind thought about my (very good)
experiences with Angie’s List. So why not create a site that would allow both marketing opportunities for consultants AND
client feedback?
 
I talked about the idea with several colleagues, and the reviews were
mixed. Some saw virtue in the concept, others focused on the potential for
abuse, and still others — mainly current or former consultants –
HATED the idea.  Much of this seemed to be motivated by fear of what a
bad review (justified or not) could do to their reputations, but the larger
and better point was that a client/consultant interaction is much more like a
relationship than a transaction. As a result, it would be very hard to capture
its nuances in a web review — unlike perhaps the services of an
electrician or the quality of a hotel room.
 
I have, with some regret, come to accept the latter argument as
persuasive, but I was reading the Nonprofiteer and thought it
might be worthwhile to ask you to either help start a conversation (if you
think there is a gap that needs filling) or nail down the coffin lid, so I
can go back to focusing on other things with a clear conscience.
 
Signed, Grantmaker Concerned With Quality
Dear Grantmaker:

Obviously I’m not a pure-bred consultant, because I don’t quite see what the problem is with the idea you suggest.  Of course, obviously you’re not a pure-bred grantmaker, because you’re asking for opinions and feedback instead of merely imposing your will!

My analogy-riddled brain goes in a slightly different direction: consulting is a profession, therefore it should emulate the self-regulation, self-discipline and reporting mechanisms of other professions.  The distinction between those and the discipline-of-the-marketplace imposed by Angie’s List may be more apparent than real; but bear with me for a moment. 

Both law and medicine have figured out that the only way to minimize state regulation is to take responsibility themselves for assuring a minimum level of quality in the services provided by their practitioners.  They use a pair of mechanisms to achieve this: the certifying entrance exam and the complaint registry.

At least when I was coming up in nonprofit consulting, there was serious resistance (including by me!) to entrance exams, certification and other barriers to entry.  But if you don’t barricade entry, you’d better have systems for ejecting–or at least identifying–problem entrants.  And if consultants’ stated preference is "neither," we need to stop calling ourselves a profession.  Perhaps more important, if our stated preference is "neither"–if no form of self-regulation is considered acceptable–then we can look forward to regulation by 50 state Attorneys General.

So let’s face the fact that we have to establish some sort of complaint database system.  But let’s further recognize the difficulties of designing that system.  Should we enable complaints but then only permit prospective clients to ask "Have
any complaints been recorded?" (as some of the medical societies do)?   Or should we make the full complaint available publicly?  Should we permit consultant responses?  Should the whole thing end with the cyber-debate, or should there be some further system of adjudication?  Count on it: if consultants don’t answer these questions, someone else will answer them for us, whether that’s a government body or merely a disgruntled client.  If
you doubt me, consider the proliferation of "COMPANYNAMEsucks" gripe-logs on
the Web.

Even if consulting is "a relationship not a
transaction," that doesn’t mean the interaction can’t be
evaluated–rather, it suggests a higher standard should be applied.  Fear of abusive evaluation is certainly justified–what consultant hasn’t had a client simultaneously expect the moon and fail to pay, and then subsequently blame it on us?  But there’s a recognizable difference between "I brought my terminally ill mother to Dr. X and she died anyway" and "I brought my terminally ill mother to Dr. X and he mis-diagnosed her condition, sent her home with an aspirin, refused to take any subsequent calls from us and THEN she died anyway."  Doesn’t that indicate that having more, rather than less, information available to prospective clients would protect consultants from abusive ex-clients?  Once they can actually read the complaints, prospects should be able to tell the difference between legitimate disappointment and unreasonable expectation.

Just in case that’s not true, perhaps consultants should be permitted to respond: "Yes, I gave Mrs. Y an aspirin and refused to see her again.  That’s because I’m a dentist, and I told Mrs. Y’s daughter that I was a dentist and that she needed to go see an MD but she refused and spent her time stalking me and calling me at 3 o’clock in the morning instead of seeking out an actual doctor."

The Association of Consultants to Nonprofits (of which, full disclosure, I was a founding member and am a proud member to this day) could probably never have gotten off the ground–and certainly could never have gotten its Website with referral function off the ground–without a sort of gentlemen’s agreement not to look too closely at the skills of its members.  That’s the nature of a nascent professional society.  But now that the Association (and the profession, for that matter) are a couple of decades old, it may be time to consider adding a feedback function to the referral database–again, because someone’s going to, and our interests are more likely to be protected if we do it ourselves. 

A simple feedback format is best: member consultant notifies professional society when a project is complete; society sends a brief survey to the client: "Was the project a success?  Would you be willing to recommend this consultant?  If not, why not?"  The survey should also include a question about whether there was a written contract, because whether or not the consultant did what s/he promised depends so thoroughly on what s/he actually promised.  Sweeten the deal for consultants by including a "Kudos Korner" that’s as easy to access as the forum for complaint.

In short (too late for that!), while there are knotty issues to be resolved the notion is a good one.  The alternative is for nonprofits to operate blindly (which they do in lots of areas but which never leads to anything good) or for nonprofits to rely on recommendations from funders–who are, as you’ve so graciously acknowledged, not likely to know much more about the subject than their grantees, and whose disproportionate power leads to truckling by consultants, favoritism by funders and poor service to nonprofits.

Other thoughts, anybody?

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Posted in Evaluation, Personnel Issues | 4 Comments »

Gertrude Stein in Oakland

October 16, 2007

The Nonprofiteer may not be able to tell if a charity is worth her/your support, but she’s pretty sure she can tell when it’s not.  Consider the following e-mail, and her advice to its author:

**********
GIVING PEOPLE WHO HAVE NOTHING A STEADY INCOME FOR THE REST OF THEIR LIFE – FOR FREE!

  • [The Nonprofiteer:] If something isn’t a scam, you should make sure it doesn’t sound like one.  In fact, even if it is a scam, you should make sure it doesn’t sound like one.

==================================================================

PRESS RELEASE : PROJECT CHERUBIA LAUNCHED

Project Cherubia is a charity organization which aims to help the less fortunate people of this world by providing them with an income for the rest of their life. . . .

  • [The Nonprofiteer:] How?

Poverty and hunger leads to many desperate choices. Project Cherubia will put an end to these desperate choices through social entrepreneurship based on simple ideas and a vision for how the world can be healed. 

  • [The Nonprofiteer:] Again, how?

- PROJECT CHERUBIA WAS ESTABLISHED BY ONE PERSON.
- PROJECT CHERUBIA IS RUN BY ONE PERSON.

  • [The Nonprofiteer:] So this isn’t a charity, then.  Charities require Boards of Directors to assure accountability for the funds they raise and provide roots in the community they serve.

- PROJECT CHERUBIA IS ABOUT ONE THING ONLY:

GIVING THE LESS FORTUNATE OF THIS WORLD AN OPPORTUNITY TO CHANGE THE DESTINY OF THEIR LIFE

READ MORE ABOUT THIS UNIQUE PROJECT AT WWW.CHERUBIA.COM
YouTube: http://www.youtube.com/profile?user=cherubianow
MySpace: www.myspace.com/cherubianow

**********

The Website explains that Cherubia’s founder will collect your money through the site and then give it to someone who needs it.  There’s no definition of "need," no explanation of the process for identifying recipients and no account of the system for distributing funds.  For all we learn from the site, this could be the famous charity for which one of the Nonprofiteer’s childhood acquaintances canvassed door to door: MMFM, "More Money For Me."  The Website fails to make the very basic case that there’s some benefit to transmitting your money to it rather than to someone you identify yourself–the guy on the street asking for a bus transfer, say. 

Cherubia seems almost like a parody of all those people whose assumption is that poverty hasn’t been cured yet because the people now working in charities are stupid; but the Nonprofiteer suspects it’s merely a self-parody.  And, she trusts, an abject failure.

If not, it won’t be because she didn’t warn you: there’s no there there.

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Posted in Charity scandals, Evaluation, Fundraising, International, Poverty, Private Philanthropy, Relations with funders, Social Service Agencies | 3 Comments »

Dear Nonprofiteer, What am I getting for my money?

October 11, 2007

A pair of inquiries today that seem oddly related:

Dear Nonprofiteer,

I care about the arts more than any other aspect of the nonprofit world, and about funding individual artists more than any other aspect of the arts.  But if I give my money to individual artists, how can I be sure they use it constructively?  I don’t want to fund wild parties in New York lofts. 

Signed, Strict Constructionist

Dear Strict,

You can’t be sure that individual artists use your money constructively.  Even if they act in good faith–and the overwhelming number of them will, just as the overwhelming number of ordinary citizens abide by the law–you can’t control whether they’re visited by inspiration, or whether they’ve already passed their creative peak, or whether they get struck by glaucoma or arthritis or Parkinson’s. 

What you can do is recognize that art is important to you, and to society; that art is made largely by individuals; and that individual artists have access to very few other resources since the government decided that funding them was too risky–the risk presumably being wild parties in New York lofts.  Given these facts, artists are hard-pressed: as this article from yesterday’s Times shows, many of them lack health insurance, let alone access to travel for education or inspiration.  Who can say what impact those deficits have on their ability to create?

The passion for metrics that currently infects our society, from "No Child Left Behind" ("Johnny can’t read?  Off with the principal’s head!") to philanthropy ("How many addicts have you cured–permanently?  We’ll dock your funding for every relapse!") is bad enough when applied to education and social services.  When applied to the arts, it’s ludicrous.  Your gifts to artists are charity, a word that’s in bad odor for no obvious reason.  The generosity you express by giving is repaid by knowing that you’ve conferred a benefit on someone.  If they’re able to confer a benefit on you in return–in the form of artwork that might not otherwise have come into being–that’s a bonus.

So write the check or don’t, as you’re moved.  This is not a transaction, so much money for so much art; it’s a donation. 

Dear Nonprofiteer,

During the last years of my mother’s life, a truly amazing home health aide took care of her.  We became close and have stayed in touch even after Mom’s death three years ago.  But every time Gigi calls me now it’s to ask for money, and it’s always on some emergency basis that I can’t refuse: her car insurance is about to be cancelled, or something equally dire.  I’m grateful to her–and right after Mom died, I demonstrated that by sending a note cancelling the $5000-plus in debts to me she’d accumulated–but I didn’t intend to adopt her, and I hate feeling like a bank.  I especially hate feeling that Gigi’s only continuing interest in me is as a source of dollars.  On the other hand, I have the money and she doesn’t and it seems chintzy, not to say churlish, to refuse to give it to her.  What can I do?

Signed, In Touch or Just Having the Touch Put On Me?

Dear Touch,

If you didn’t want to feel like a bank, you probably shouldn’t have gotten into the business of lending money.  And while canceling those debts was a lovely gesture, you probably shouldn’t be surprised if your "borrower" interpreted it to mean you’d rather feel like an ATM, dispensing cash on command.

This, too, is charity: giving that is its own reward, except when it isn’t.  You’re not trying to accomplish anything with Gigi except to relieve her need and express your gratitude–whatever service was to be rendered was completed long ago.  So what you have to ask yourself is, "Do I feel generous?"  Well, do ya, punk?

Recognize (as Strict Constructionist has to) that the giving world is divided into two parts: the things you can control and the things you can’t.  You can’t control whether Gigi asks you for money, or whether she only stays in contact with you for the sake of the money you might give her.  (The latter is unlikely, by the way: people are rarely that one-dimensional.)  You can control whether you give.  Do it because it makes you feel good, or because not doing it makes you feel bad, or because the sum means little to you and a great deal to her (which is why we expect rich people to give to the poor and not the other way around, and why we support progressive taxation: the last dollar is worth comparatively less to the person who has millions of them than to the one who has only a few).  Or don’t do it at all. 

Now, you may have to practice saying, "No," because it’s as hard to break the habit of generosity as it is to break the habit of selfishness; but you can do it.  If you decide that enough is enough, the Nonprofiteer suggests you emulate HAL: slowly and calmly say, "I’m afraid I can’t do that . . .". 

Seriously: you’ve made a series of free-will offerings (as they say in the religion biz).  That doesn’t entitle you to have Gigi do anything–love you or pay you back or even stop asking for more–but it also doesn’t require you to do anything.  It’s not philanthropy, with its measurements and obligations and reliance: you can come and go as you please.

Or, as Robert Towne’s policeman might have said, "Forget it, Jake.  It’s just charity."

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Posted in Arts Organizations, Evaluation, Poverty, Private Philanthropy, Relations with funders | 3 Comments »

Dear Nonprofiteer, How can I know which charities are any good?

October 4, 2007

Dear Nonprofiteer,

It’s that time of year again, when I
wish to make charitable contributions.  I have the goal amount I wish to give
away, I have the causes I wish to support.  But the problem is finding the
charities to give the money to.  In the past I have usually wound up giving to
charities that I had some sort of direct contact with as I knew what they were
about, and how in general they did business.  The problem this year is that I’ve
made a major move and don’t have much experience with the charitable scene here
in Chicago. 

My causes really are education but not for some fluffy program to
get kids interested in learning.  I’m sure I’m jaded but I’ve seen too much money
thrown at disinterested kids and they just think it’s fun and games and come to
expect it.  I want my money to go towards helping kids who really want to
learn.  That desire is intrinsic and developed in kids in a much more holistic
manner than money thrown at the problem can achieve.

I’ve
looked on line at some of the giving guides (justgive.org, charitynavigator.org)
but I’m not finding any matches and the way things look I’ll probably forgo
giving much of my goal just because I can’t find a connection with a charity I
wish to support.  All of which is really sad considering I’m sure some
organization out there could use the money. 

Why can’t charities find a way of
making themselves known and foster making that connection with potential donors
as I’m sure my problem is not unique even for long time residents of
Chicago?

Signed, Ready to Give

Dear Ready:

Well, if it’s any consolation to you, what you’ve described is the hot dilemma under discussion in the nonprofit world right now.  The Hewlett Foundation’s annual report contains a meditation on the need for, and absence of, information for potential donors about charities and their results–and that from an institution with access to grant applications and site visits!

The Nonprofiteer finds it difficult to believe that there’s less information on the subject available now than previously.  Rather, awareness of our lack of awareness seems to be a by-product of Google: we expect to be able to learn things readily because so much information is easy to hand, so whatever’s hidden seems more mysterious (and suspect) than ever.

Be that as it may, the need for data is real; and you’re right that charity "evaluation" sites are of very limited utility.  They try to establish a single metric for charitable effectiveness–generally, percentage of total budget spent on administration, with low numbers automatically presumed better than higher ones.  In fact, though, that ratio reflects only efficiency (and poorly, suggesting e.g. that use of volunteers is always more efficient than use of staff) and tells us virtually nothing about impact on the problems being addressed. 

Fortunately, Google is still there, and though it’s not a solution it can be a place to start.  I searched "Chicago+education+nonprofit" and found volunteermatch.org, which sorts agencies by the type of service they provide and the geographic area.  Though the site’s focus is on volunteer opportunities, as you know volunteering and donating go hand-in-hand, so the volunteermatch list (and similar lists published by the US Department of Housing and Urban Development and 1-800-volunteering) will give you some ideas.

Then what?  Then begin with last week’s advice to Withering on the Vine: after examining the agencies’ Websites and narrowing down your choices to 3 or 5 that look particularly interesting, call their Executive Directors and tell them what you’ve told the Nonprofiteer: that you’re new to the area, that your main interest is in helping children to learn, and that you’d like to learn more about their agencies.  Go over to each place, talk to the Exec and some staff members and see whether there might be a match between you and the organization–whether as a volunteer or as a donor or both.  If you’re willing and able to allocate fewer than 10 hours of your time for this purpose between now and the end of the year, you’ll learn a lot and find at least one organization worthy of your support.

You might also call the local United Way or community foundation (in your area, that’s the Chicago Community Trust) and ask for their guidance.  At the community foundations, you’ll want to speak to "Donor Services;" you may or may not want to establish a donor-advised fund but they’ll be happy to talk to you as long as there’s a chance that you do.  At the United Way try asking for Program Services–the people who review grant applications from nonprofits.  They’ll at least be able to tell you which United Way agencies provide the type of services in which you’re interested, and you’ll have the reassurance of knowing that some outside group is overseeing the charity and making sure the ED isn’t taking her lover to Bimini on your donations.  Past scandals at the United Way itself (not in Chicago but elsewhere in the nation) make this reassurance slightly less valuable than one might like; but hey, you’ve got to start somewhere.

If you’re unable to unearth satisfactory recipients in the course of the next few months, don’t give up on your idea of giving away money.  Go ahead and establish a donor-advised fund at the community foundation or at one of the many brokerage houses that offers such a service.  You make your charitable gift to the fund and get the appropriate tax deduction, and then in the course of the following year (there’s no timetable but the sooner the better) you can learn more about your new home and identify charities to which you can then direct money out of the fund.

Finally, consider the advice of our esteemed colleague Phil Cubeta at Gift Hub: that you ask your lawyer or accountant (if you have one in Chicago) for his/her advice about worthy charities.  As Phil would be the first to note, relatively few professional financial advisors have this kind of information, but you might get lucky.  In any case, you’ll be talking with fellow citizens who may be able to refer you to other fellow citizens with expertise in the subject of worthy educational causes.

Kudos to you for your generosity.  It is hard to know how to give money away–harder than is generally acknowledged–and it’s frustrating that agencies don’t make a greater effort to make themselves known to potential donors.  Unfortunately, when they do make that kind of effort, they’re often condemned for spending too much money on "administration" or "overhead," and not enough on services.  Talk about a double bind!

One other note: you may want to think less about causes you support and more about the specific kind of change you want to make in the world.  If it’s "bringing kids to first grade prepared to learn," you may want to fund Head Start programs; if it’s "teaching kids how to handle the inevitable frustrations of learning," you may be interested in tutoring programs; if it’s "levelling the playing field so that poor kids are able to get as much out of school as rich ones," you may be best off with community-sponsored home interventions or with local charter schools directed at specific populations, and so on.  Often we back into recognizing what’s most important to us, as the Nonprofiteer is constantly learning with her own charity.  But the important thing isn’t getting charity "right" on the first go but starting somewhere and learning as you go along.

Keep us posted on what you discover!

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Posted in Education, Evaluation, Nonprofits--General, Private Philanthropy, Volunteers/Volunteerism | 7 Comments »

Efficiency, innovation and the battle of the sectors

September 26, 2007

The Nonprofiteer feels compelled to dip her nose, toe or other appropriate appendage (watch it, buster!) into the discussion swirling around Stephanie Strom’s recent New York Times piece about value received for tax breaks to philanthropy.  In his letter to the Times, Maxwell King of the Heinz Endowments (current chair of the Council on Foundations) decides to trot out the Right’s favorite straw man, inefficient government that squelches innovation, to support his argument that foundations accountable to no one and responsible for nothing in particular are entitled to exemption from the taxes paid by us mere mortals who work for a living.

Whatever the merits of the familiar role-of-government-vs.-role-of-philanthropy debate, that claim can’t be permitted to go unchallenged.  Governments, in fact, are quite efficient; that’s why Medicare and Medicaid have less than half the overhead expenses of private health insurers.   To manage significant responsibilities, government officials accept compensation significantly lower than their counterparts in the corporate sector–or in the philanthropic sector, for that matter.  So which group is providing greater return on investment?

More important, let’s be clear about what "efficient" means.  If government has a record of failure in grappling with our most intractable social problems–and it does, alongside its considerable successes–that’s not only because it’s bothering to grapple with the tough stuff. It’s also because government is being innovative in its grappling.

How do we know?  Because failure is the hallmark of innovation.  Any research scientist or inventor will tell you that the only way to find something that works is to eliminate the infinite number of things that don’t–in many cases, by trying them.

That’s something to remember the next time a foundation with a record of win after win after win claims it’s more innovative than the
government.  If a philanthropy experiences nothing but success, that’s not a recommendation–it’s a warning sign, one that should make us wonder whether it’s doing
anything creative at all.  It’s not hard to bat 1000 if
you’re funding Carnegie Hall and Harvard; what counts is whether, and
how, you’re funding efforts to correct real problems.

And by the way, which is it?  That governments fail to innovate because they’re stodgy, or that they innovate and fail because they’re inefficient?  It’s time we stopped letting the Right–and the philanthropic establishment–have it both ways.

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Posted in Coverage of nonprofits, Evaluation, Foundation Hall of Shame/Stupid Foundation Tricks, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy | 1 Comment »

Accumulating Goodwill

August 29, 2007

Interesting piece in yesterday’s New York Times about a Wisconsin Goodwill‘s venture into the payday loan business.  Through a program called GoodMoney, the charity offers consolidated loans to people who’ve gotten themselves into serious debt using those incredibly expensive short-term loans that are  both necessary and dangerous to the financial health of poor people.  GoodMoney loans come as part of a package that includes credit counseling and mandatory savings, in an effort to help erstwhile borrowers accumulate capital for long-term needs rather than having to go into debt to pay this month’s rent. 

There’s been a certain amount of hullabaloo about the interest Goodwill charges on GoodMoney loans, which strikes the Nonprofiteer as fundamentally misguided.  The charity is, after all, paying off loans at roughly double that rate, and even this can’t be sustainable endlessly.  What would be the virtue in reducing the interest rate still further, at the cost of serving fewer people and/or bankrupting the program? 

But it’s important to have statistics, and not merely anecdotes, about how many payday debtors manage to dig themselves out using GoodMoney.  If it’s 50% of those entering the program, is that a good result?  Or should it be 75%, or 90%?  And what constitutes digging themselves out?  Is it $1000 in savings by the end of the first year, or simple freedom from debt?  As with all nonprofit efforts–and all business efforts, come to that–first we need to determine what constitutes success; then, given that metric, we need to discover whether this particular program is one.

[One does have to wonder about a possible conflict of interest in the GoodMoney program, a joint venture of Goodwill and Prospera Bank:

"Our goal is to change behavior, to interrupt the cycle of debt," said
Ken Eiden, president of Prospera, who is also a director at Goodwill.]

Be that as it may, too few programs help people with financial literacy, let alone actual payday-to-payday financial management.  Goodwill is to be congratulated on its efforts to do so, while at the same time being monitored and evaluated on the success of those efforts.

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Posted in Coverage of nonprofits, Current Affairs, Education, Evaluation, Nonprofits--General, Poverty, Social Service Agencies | 2 Comments »

Foundation Friday: At the roots or out on a limb?

July 13, 2007

At the risk of magnifying the blog echo-chamber effect, today’s post refers to a debate at Tactical Philanthropy concerning whether foundations should address "root causes" or be "merely charitable."  Even phrasing the question that way demonstrates that it’s a false choice; charity is important and so are efforts to make sure charity will someday be unnecessary to solve certain social problems. 

But the argument on the other blog (beginning with a podcast by Bill Schambra, apparently a well-known thinker on the subject) is less philanthropic-philosophical than political: Schambra, from the right-wing Hudson Institute, argues that foundations have wasted their time analyzing social problems instead of relieving them.  Though the Nonprofiteer is a great believer in the value of charity–she doesn’t talk politics with people whose bellies are empty–she could hardly disagree more, as her comment on his observations makes clear:

The not-so-hidden agenda of "philanthropy should stop bothering with
root causes" has two items prominently posted: first, that substantial
sums of money shouldn’t be spent to critique capitalism (though
substantial sums of money are spent to critique anything suggested to
ameliorate its ills); second, that philanthropy should take as its sole
business providing services to the needy, thereby relieving the
government of that obligation. The second item bears a strong family
resemblance to the neoconservatives’ idea of "starving the beast,"
depriving government of resources through huge tax cuts so that it can
no longer provide social services. Here, the recommendation is to
starve the beast of philanthropy (by throwing its relative pittance
into the bottomless hole of social need) so that it can no longer
provide an independent voice about the direction of our society.

Maybe only swine spend their time among roots but you need them to find truffles. 

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Posted in Advocacy, Evaluation, Poverty, Private Philanthropy, Relations with funders | 2 Comments »

Dear Nonprofiteer, Easy come, easy go?

July 12, 2007

Dear Nonprofiteer:

I’m sitting in my office composing a job description for our program director position–for the third time in as many years.  No matter how I tweak the description, I seem to bring in people who won’t stay around long enough to be useful.  Our work can be exhausting–we serve people with disabilities in residential and non-residential settings–but don’t you think people who aspire to direct programs at a disabilities agency would expect that?  And before you ask, I don’t yell and scream at my staff.  So why can’t I keep them? 

Signed, Seduced and Abandoned

Dear Seduced:

There’s nothing the matter with the job description–it’s working fine, or you wouldn’t have been able to attract three program directors in three years.  The thing to investigate is the job itself.

You don’t say what your errant program directors go on to do, or what they tell you about why they’re leaving.  (Are you doing exit interviews?  If not, you should start–it’s the easiest way to diagnose persistent employment problems.)  Here are a few possibilities, though:

If they’re leaving to take Executive Director positions at other agencies, mazel tov–you’re hiring good staff and developing them brilliantly.  The "problem" may simply be that you’re so well-established yourself: capable people who want a road to the top have to find it outside your door.  To combat this, probe your new Program Director’s ambitions and share with her your own career plans.  If you can give her some reasonable hope of succeeding you before she’s too old to care, you can certainly keep her; if not, you can offer to serve as her mentor as she tries to develop Executive Director skills.  This sounds altruistic but isn’t, really: people feel loyalty to mentors and are reluctant to leave them.  More important, the more people know about what it means to be an Executive Director, the more hesitant they are to take that leap.  Give your ambitious new Program Director a real taste of fundraising, Board management, government compliance and other administrative issues, and see how readily she returns to the trenches!

But if they’re making lateral moves, you need to do an unflinching comparison of labor conditions at your shop with those at your peer agencies. 

  • First, are you paying market rate?  If not, go to your Board and explain the costs of constant turnover: direct (advertising dollars and your time) and indirect (tasks not getting done).  Boards often find it hard to grasp that low salaries are a false economy because of the turnover they promote.  Start re-educating your Board now, before you hire another person who’s going to feel undervalued as soon as her first cable bill arrives.
  • Are you offering competitive benefits?  These don’t all have to cost cash–release time for professional development, for instance, is both cheap and highly valued by educated employees– but if you’re not paying health insurance and your competitors are, you’re going to lose senior staff.  Only the very young (a/k/a immortal) will go without health insurance for long.
  • What are the Program Director’s working conditions like?  The two greatest enemies of nonprofit job satisfaction are isolation and a sense of being out of control; so address them.  Isolation: (a) If your Program Director works a non-standard schedule, have you figured out a way to connect her regularly to the rest of the senior staff so she knows she’s not out there alone?  (b) Does she have access to a peer group–program directors at other
    agencies, say–for regular reality checks and venting?  Lack of control:  Are the Program Director’s hours utterly unpredictable, or does she feel/know/believe that she’s managing her time instead of its managing her?  Remember that any field dominated by women, like nursing or social services, must take into account their disproportionate family obligations; and as the hospitals have learned that means negotiated and predictable scheduling.  You may not be in a position to provide other family-friendly benefits such as child care, but you can at least offer advice about child care options.  Sometimes just recognizing an issue will defuse it in the employee’s mind.
  • Is there a problem employee in the Program Department, or is there something in the arrangement of program employees that makes them particularly hard to manage?  If every program employee has a primary loyalty to his residential facility or his supervisor, your Program Director will feel (and be) disempowered and her experience of management will be discouraging.  Make sure you haven’t set up mini-empires for her to deal with: the Program Director needs to be king, not ambassador.
  • Finally, make sure you’re not the one who’s seducing and abandoning.  Are you providing feedback on a regular basis to these here-today, gone-tomorrow Program Directors?  (Annual evaluations aren’t nearly enough–especially in nonprofits where it’s common to ask people to complete their own evaluations while making the size of their raise dependent on its contents.)  A common mistake by overwhelmed Executive Directors when they hire competent people is to say "Deal with it" and go back to their own worries.  Schedule a weekly meeting with your new Program Director (and every other one of your direct reports), and spend that hour every week reviewing what they’re doing, what they want to do, what they’re worried about and how you can help.  You’ll find that loyalty grows and turnover declines.  If such meetings feel like an interruption to your real job, then you haven’t yet grasped the essential difference between being part of the senior staff and being the chief executive. 

Good luck. 

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Posted in Evaluation, Nonprofits--General, Personnel Issues, Social Service Agencies, Women's Issues | 1 Comment »

Dear Nonprofiteer, Does the Board’s Personnel Committee control personnel?

June 28, 2007

Dear Nonprofiteer:

I’m the chair of the Board’s Personnel Committee at a small social-services agency.  We’ve routinely been involved in interviewing prospective staff members and in evaluating current ones, and have created a number of forms and procedures for doing so.  Now we have a new Executive Director, who says that interviewing and evaluating staff is his job.  How can we exercise our oversight function if we’re not allowed to oversee hiring? 

Signed, Personnel is Personal to Me

Dear Personal:

Your oversight function consists of hiring and evaluating the Executive Director.  All other personnel decisions are his, and if you don’t like them your remedy is to fire him.   

I realize this is a shock to agencies that evolved from kitchen-table operations where the Board had day-to-day management functions.  If the Board is managing the agency, it would have to be managing the agency’s personnel.  But now that you have an executive director, the Board’s function is no longer to manage but to govern–and governors do not evaluate personnel.  (If there was a previous executive director who permitted your committee to assess employees, s/he was either ignorant or unable to assert authority.) 

So what’s left for the Personnel Committee to do?  More of what you’ve already done: develop policies and procedures.  Go beyond staff evaluation issues to consider what benefit packages the agency could offer to increase staff retention and improve staff morale.  Create systems for abiding by the many laws affecting employment, including equal opportunity, overtime, labor organizing and workplace safety.  Or go even further: reinvent the Personnel Committee as the Human Resources Committee and concern yourselves with the best use of all the agency’s human resources.  Create volunteer programs.  Conduct Board recruitment.  There’s plenty to do.

What you mustn’t do is be a court of last (or first) resort for disgruntled employees.  If an employee comes crying to you or any member of your Committee, your job is to tell that person to go back and work it out with his/her boss. 

What if the Executive Director is a lousy personnel manager?  The Committee certainly has the right–indeed, the duty–to counsel the ED on ways he could better lead his staff; and, if he’s unresponsive or incurably inept, you have the right to recommend to the full Board that he be relieved of his position.  What you don’t have the right to do is tell him that Susie is discontent with the assignments he’s given her and that he should therefore alter those assignments; or that Bobby’s feelings were hurt by his tone of voice in a staff meeting.  A Personnel Committee which intervenes between Executive Director and staff is creating centrifugal force that will cause the agency to fly apart.

The democratic impulse is so strong in grassroots nonprofits that it seems counterintuitive to many people, but nonprofit agencies are not democracies: they’re hierarchies in which one person (answering to a full Board of Directors) makes the management decisions.  Key among these management decisions is who to manage–and that means personnel belongs to the ED. 

If you reconfigure your group as a Human Resources Committee, and direct its attention out into the community (as Boards are supposed to do), you will find resources for the agency that the Executive Director would never be able to secure–and leave the ED in peace to do his job. 

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Posted in Boards of Directors, Evaluation, Nonprofits--General, Personnel Issues, Social Service Agencies, Volunteers/Volunteerism | 11 Comments »

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