Tris Lumley

The strange case of how it’s spent vs. what it achieves

I’ve read a lot of annual reports in my time at New Philanthropy Capital (NPC). Big charities, small charities and the ones in between. And one thing always leaps out at me –charities are missing an opportunity to tell donors what they need to know. How so? By focusing on outputs and efficiency (telling donors what their money’s spent on), rather than outcomes and effectiveness (what their money has achieved).

It’s nice as a donor to hear that your money has provided 20 training programmes or built a new centre. But why do charities think this is all donors want to hear? If I was to talk to my son’s teacher and she said ‘I’ve run 30 one-to-one literacy classes with your son’, the question I would really want to ask is, ‘yes, but how well can he read?’

Charities are missing a beat by not telling donors about results. We know donors care about them; research in the UK and the US both show the top two factors influencing donors’ trust in charities are efficiency and effectiveness. So why the disparity between what donors want to know and what charities are telling them?

At NPC we’ve been researching how charities communicate their impact. Using a methodology developed through the merger of Intelligent Giving and NPC, we’ve pored over the public reporting of 20 of the top 100 fundraising charities in the UK. The resulting paper, Talking about results, gives us a snapshot of how charities are doing – not of how effective they are, but of how well they communicate their effectiveness.

One thing we found is that charities love a good case study when it comes to communicating impact. Nothing wrong or surprising there – people respond to human stories, and case studies are great for fundraising. But what is surprising is that most of the charities we reviewed (and these are multi-million pound organizations, not small local charities) believed that case studies were enough to demonstrate the impact of their whole organization.

Very few reports told us about high-quality evidence backing up the charity’s results. You might say that most donors are not interested in this stuff – they don’t want to hear about the randomized control trial that shows a microfinance model is really lifting people out of poverty. But even if this is the case, donors still want to know that this control trial has happened, and that the charity is measuring its impact. A single case study is simply not enough to demonstrate this, unless we also know how beneficiaries of the organization fared overall. Imagine if charities communicated their finances and efficiency in this way. Would donors feel a case study of how £1,500 was spent providing Steve with 52 hours of mentoring was adequate in communicating the efficiency of a £100 million charity?

Charities can vastly improve the way they communicate results by answering five questions: What’s the problem we’re trying to address?; What do we do to address it?; What are we achieving?; How do we know what we’re achieving?; and What are we learning, and how can we improve? By answering these, they will get more transparency about the two things that really matter: efficiency and effectiveness.  

Tris Lumley is Head of Strategy at NPC. The report, Talking about results, is published in September and will be available on NPC’s website, www.philanthropycapital.org

GuideStar Israel launched

GuideStar Israel was launched at the beginning of this month. Part of the growing family of national GuideStar portals, under the auspices of GuideStar International, the new online database has content in Hebrew, Arabic and English and lists information on the country’s 29,000 non-profit organizations registered with the National Registrar of Non-profit Organizations. GuideStar Israel is a joint project of the Israeli Ministry of Justice, Yad Hanadiv and JDC Israel, and is operated by NPTech. As with other national GuideStars, the new portal combines official information held by the National Registrar with information provided by the NPOs themselves. It will also offer an internet presence for a number of smaller registered NPOs that have not previously benefited from such a facility.

For more information
www.guidestar.org.il

Sean Stannard-Stockton

Social Innovation Fund Announces Grantees

I’m thrilled with the Social Innovation Fund’s newly announced list of grantees. In many ways, the results read like my personal wish list for how I thought they should approach their decision.

The Fund has announced 11 intermediary grantees, who will select subgrantees to receive the final funding. The full list is here.

In the official comment that I submitted to the Fund back in January, I offered a number of recommendations including:

• The Fund was overestimating the availability of conclusive evidence in the nonprofit sector and should not restrict funding to organizations that already have such evidence.
• The goal of the fund should be to fund and build the evidence base of the next Nurse Family Partnership (a nonprofit widely seen as being a model of an organization that has conclusive evidence of effectiveness).
• That the debate over whether the Fund should support “innovation” or “effectiveness” was a false dichotomy because an approach to philanthropy which focuses on providing growth capital and funds for building a nonprofit’s evidence base is itself a little used and innovative approach.

So I was thrilled to see that in the press release announcing the grants that while most of the subgrantees have yet to be selected by the intermediaries, the Fund says that the eight pre-selected grantees “have evidence of effectiveness along a continuum of preliminary, to moderate, to strong.”

In addition, the largest grant, fully 20% of the total funding, went to the Edna McConnell Clark Foundation, the funder which is most closely associated with providing the support to help grow Nurse Family Partnership. If any funder is going to focus on funding and building the evidence base of the next Nurse Family Partnership, it is Edna McConnell Clark.

Finally, the Fund seems to have rejected calls for them to fund truly early stage “innovation” and recognized that effective organizations that are building their evidence base are themselves innovative. The Fund’s grants also do not seem to reflect a traditional, government bureaucracy driven effort to “earmark” funds for preferred contractors, as some pessimists have worried. And the grants did not go to “business as usual” grantmakers and nonprofits.

While the list of intermediaries may be familiar to philanthropy insiders, grantees like Edna McConnell Clark, New Profit and Venture Philanthropy Partners (who collectively were awarded almost 40% of the total funds!) each appeared on a very short list of of organizations I wrote about early last year who “invest in nonprofits” and see their role as funder as identifying great and potentially great organizations and providing them the funds they need to grow and thrive. So I was thrilled once again to see the Fund describe their grantees as funders who, “share a track record of success at identifying and growing high-performing nonprofit organizations.”

Since the grants are only going to intermediaries (funders) at this point and the final grantees will only be announced later, we can only use the eight pre-selected grantees to get a glimpse at the sort of organizations who will eventually get the money and represent what the Fund must see as their “model subgrantee”.

Those pre-selected grantees include College Summit, Year Up, Latin American Youth Center and KIPP. While these subgrantees will be familiar to philanthropy insiders, they are in fact disruptive innovators who are seeking to apply innovative solutions to solve social problems while focusing heavily on building their evidence base around what works and what does not.

In my comment to the Fund, I wrote that while the nonprofit field today lacks a large number of organizations who have conclusive evidence of impact, the Fund could help set an example of evidence-base building that other funders may replicate. I argued that this process could help create a nonprofit sector teaming with organizations deploying proven effective solutions.

While philanthropy insiders may debate the relative conclusiveness of the evidence base of the subgrantees I list above, they represent the vanguard of organizations who believe that measuring their effectiveness and deploying their resources into the programs that they know work is the best approach to achieving impact. If the social sector was teaming with organizations like these subgrantees, we would live in a significantly different and better world.

No single project, least of all the Social Innovation Fund, will single handedly change the world. But if the Fund’s approach leads to more funders following the approaches of groups like Edna McConnell Clark, New Profit and Venture Philanthropy Partners, I do believe that philanthropy will change for the better. Their tactical approach to investing in nonprofits is by no means the only way that philanthropy should approach social change. But it is currently a deeply underappreciated key to the development of a far more robust and effective nonprofit field.

(On a more personal note, I’d also like to congratulate the group REDF, led by my friend Carla Javits, for receiving one of the 11 grants. Like all of the intermediaries, REDF clearly believes that their role is to identify and invest in effective nonprofits.)

Ultra-rich Americans sign up to Gates-Buffett pledge

Six weeks after Bill Gates and Warren Buffett launched their campaign to persuade US billionaires to donate at least half of their fortunes to charity, 40 have already agreed to do so. The two have been contacting the US super-rich individually, a tactic which has apparently paid off. The pledgers include the likes of Ted Turner, Michael Bloomberg, Barron Hilton and Star Wars director George Lucas.

Though it might seem churlish to pick holes in such a potentially spectacular outpouring of private generosity for public good – Gates and Buffett estimate their efforts could generate $600 billion dollars in charitable giving – scepticism has focused on two areas. The pledge does not extend to specifying particular causes. Pablo Eisenberg of the Georgetown Public Policy Institute remarks that ultra-wealthy donors tend to give to causes such as higher education, the arts and established healthcare institutions, with relatively little going towards poverty reduction or disadvantage. ‘I’m not sure tax receipts haven’t done a better job, over time, of meeting the needs of our neediest people,’ he is quoted as saying in the UK’s Guardian newspaper.

Second, many of the names on the list, such as Eli and Edythe Broad, Michael Bloomberg, Pierre and Pam Omidyar, and Paul Allen are already well-known givers, and some have wondered if the sums involved are as spectacular as they seem at first sight, questioning how much of that pledged is new money, as opposed to money already committed to foundations, etc.

Still, as Warren Buffett remarked, ‘we’re off to a terrific start.’ He said that he and Bill Gates will also be meeting groups of wealthy people in China and India within the next six months to talk about philanthropy. They hope the idea of generosity will spread, but have no plans to lead a global campaign, he added.

For more information
The Guardian, 5 August 2010
http://profit.ndtv.com/news/show/40-billionaires-pledge-half-wealth-to-c...
http://cliftonchadwick.wordpress.com/2010/08/04/more-billionaires-sign-t...

Meg Lassar

Shaping the philanthropy of the future

Last month, I had the opportunity to hear David La Piana, founder of La Piana Consulting (a US-based firm dedicated to strengthening non-profits and foundations), speak to our regional association of grantmakers about the five inter-related trends shaping the non-profit sector: demographic and generational shifts in leadership, advances in technology and social media, the growth of networks, a rise in civic engagement, and the blurring of sector lines. He documents these trends in his November 2009 monograph Convergence, which not only sets the stage for the new realities facing non-profits but also advises funders on how they can support non-profits’ efforts to adapt to them. On this point, La Piana emphatically states, ‘funders must depart from traditional funding models’.

As a professional who works with both individual donors and family foundations to implement effective and meaningful giving strategies, I considered these words in the context of how they might shape the philanthropic advising profession and how they might inform our understanding of the best practices we impart to our clients.

For donor advisers, La Piana’s mandate means that we must help clients to move away from some of the more inefficient grantmaking procedures that have become standard industry practice over the years. For example, we as advisers can work with donors to shorten the time lags between grant application and approval, integrate the latest technology to facilitate client learning, engage multiple stakeholders in grant award decision-making, and help donors to participate in strategic thinking alongside grantees rather than in a ‘top down’ manner.

In addition, as donors increasingly experiment with non-traditional mission-related investments, advisers must be capable of assisting them in implementing the non-grant strategies (such as PRIs) that will advance non-profits’ ability to adjust to the demographic, technological, social and cultural transformations that will play out in the coming years. Going beyond the grant will allow clients the flexibility to be innovative in their responses to organizations’ greatest needs.

Making our services relevant to the younger generation of philanthropists will require us to take, in La Piana’s words, a ‘sector-agnostic’ approach, as lines between the corporate, government and non-profit sectors become increasingly blurred. Younger donors who are more focused on the end results of their giving, as opposed to the means by which they give, will want to leverage their charitable dollars by collaborating with the most knowledgeable and capable actors, regardless of the sectors in which they typically operate. We as advisers can help them to think creatively about partnerships they might form in order to find the most efficient means by which to address their philanthropic priorities.

Perhaps the greatest challenge that La Piana’s trends forecast poses to advisers − whose job it is to develop successful and effective donor giving strategies − is to encourage donors to become more tolerant of risk and more transparent about failure. We must become comfortable with the idea of mistake-making as progress; that is, as a necessary step in our clients’ development as strategic donors. Despite advisers’ inherent interest in protecting their clients’ bottom lines, stimulating donors’ appetites for calculated risk will ultimately generate greater returns in terms of lives changed and problems solved.

Meg Lassar is an analyst with Strategic Philanthropy, Ltd, a philanthropic advisory practice based in Chicago serving clients worldwide. Email meg@stratphilanthropy.com

Martin Brookes

1 per cent is not enough

Last month in the United States, Warren Buffet and Bill and Melinda Gates launched their ‘giving pledge’ calling on every US billionaire, and essentially every billionaire around the globe, to pledge to give 50 per cent of their fortune to charity. If successful, this could result in an extra $600 billion going to charitable causes in America alone.

In the UK, on a much, much smaller level, we’ve had our own charity minister Nick Hurd recently encouraging people to follow his own example and give 1 per cent of their income to charity. When making this call to action, he added, ‘I get my children to decide which charities I give to because I want to encourage them to start thinking about these things.’ Good intentions behind these actions I’m sure, Mr Hurd. But, a word of warning: the last time I left these decisions in the hands of my five-year-old daughter Alice, she chose to spend my cash on sponsoring a Cypriot donkey called Lorraine. Clearly she hadn’t been reading my thoughts on animal charities on NPC’s blog.

I think that 1 per cent is a small amount to give as a percentage of a very handsome income. But it could be worse: I recently bumped into an ex-colleague of mine who works in a senior position for a leading investment bank, where he has a very high salary. He admitted he was just considering making his first charitable donation of the year, of a few thousand quid. We need relatively wealthy people to realize what a decent-sized donation to charity actually looks like as well as understanding the principle of regular giving.

The fact is that people just don’t give enough to charity. And they don’t give intelligently enough. At a time when the charity sector is facing deep and damaging cuts – a third of the UK charity sector’s income comes from government and is at risk from spending cuts – people need to think harder about their giving. They need to focus more time and thought on where they give and the ways in which they give.

And they must place the results a charity achieves at the heart of their decision-making. A recent survey from polling company YouGov, asking people how interested they would be in an independent rating system measuring charities’ performance, found that while 68 per cent of people said they would switch their donations to another charity if they found the one they were supporting was performing badly, only 40 per cent are interested in a charity rating scheme providing independent assessments of organizations. A rather disappointing and confusing message as to the importance donors place on results in my opinion.

Whisper it gently, but it wouldn’t be terrible if some charities shut down as a result of the recession and future spending cuts. But it would be a tragedy if good charities disappeared because people weren’t giving enough money or weren’t thinking carefully enough about their donations. We should all look to Buffet and Gates for inspiration – they’ve set the bar high. I admire them for that.

Martin Brookes is chief executive of New Philanthropy Capital, a charity think-tank and consultancy dedicated to helping charities and funders achieve a greater impact. You can read more of Martin’s views on NPC’s blog at www.newphilanthropycapital.wordpress.com

Big Society Bank welcomed but more doubts about the Big Society

News that, as part of Prime Minister David Cameron’s ‘Big Society’, the UK government is to set up a bank to finance voluntary groups and social enterprises out of the money held in dormant bank and building societies has been welcomed by observers in the sector. Cameron unveiled his plans for a ‘Big Society’ in a speech in Liverpool. Voluntary groups, he said, should be able to run post offices, libraries and transport services and shape housing projects; he spoke of the concept as a ‘big advance for people power’.

The Big Society Bank is likely to have assets of between £60 million and £100 million by its planned opening date next April, according to the government's advisers on the project. But the British Banking Association has estimated that dormant accounts contain £400 million, and some third sector finance specialists estimate the sum could be ten times that.

John Low, Chief Executive of the Charities Aid Foundation, described what is being called the ‘Big Society Bank’ as a ‘significant policy shift’ that would ‘go some way to making the Government’s vision … a reality’. Similarly, Malcolm Hayday of Charity Bank observed that ‘the social sector needs to scale up, and if funds are directed towards intermediary organizations like Charity Bank who are established players working towards the long term sustainability of the sector, this is a positive step.’ Recent results seem to underline both the demand for social finance and Charity Bank’s role in providing it. Its results for the first six months of 2010 have revealed that loans agreed to charities and social enterprises totalled £20,932,750 – compared to £22,902,216 during the whole of 2009.

However, not all aspects of the Prime Minister’s vision have received such a warm response from the sector. Rachael Maskell, National Officer for Community and Not for Profit Sector, said: ‘David Cameron’s “Big Society” is an intellectually flawed creed that harks back to a vision of 1950s Britain that never existed.’ Massive cuts and the drive for greater competition would force down costs even further, meaning that ‘quality is compromised for cheapness’. She concluded: ‘The “Big Society” is smoke and mirrors for an avalanche of privatization under the Tories.’

For more information
www.bbc.co.uk/news/uk-10680062
www.charitybank.org
www.thirdsector.co.uk/News/DailyBulletin/1017009/Big-Society-Bank-will-s...

Two London funders to merge

Two London funders that have always shared the same office and similar areas of operation have taken the next logical step and agreed to merge – a practice funders often urge on grantees but seldom adopt themselves. City Parochial Foundation and Trust for London have merged, taking the name of the latter. The new trust will distribute as much funding as the two former organizations combined, according to chief executive Bharat Mehta – around £6 million per year. ‘Trust for London will continue to focus on the most marginalized, through our grants programme, special initiatives such as the Living Wage campaign and innovative research such as London’s Poverty Profile,’ said Mehta. Current grantees of the previous organizations will not be affected by the merger, and the conditions of the grant and main contact person will remain the same.

Source
Third Sector Online, 8 July 2010

Vodafone waives fees on SMS donations

Vodafone has become the first UK mobile operator to pass on 100 per cent of all charitable donations made through SMS. UK charities will now receive the full amount donated by Vodafone customers when they give £1 or more through a five-digit 'short code' number which starts with 70. Donating through text messages has become increasingly popular, especially in response to high-profile emergencies (in the first few days after the January earthquake in Haiti, for example, $33 million was raised by text messaging).

Mobile networks and third-party service providers in the UK levy between 15 and 20 per cent on text donations, according to figures produced by Charities Aid Foundation in May (though Vodafone’s fees were apparently 10 per cent on donations of £1, £1.50, £3 and £5), but they have come under some pressure to reduce or waive this amount. Last June, UK SMS provider Win waived its fees on text donations and called on mobile operators to follow suit. Vodafone’s announcement is certain to increase this pressure. Its customers will still pay their standard rate for the SMS to make the donation.

Source
Vodafone press release, 6 July 2010

Rockefeller Philanthropy Advisors to get $3.7 million from Gates Foundation to develop effective giving

In a development that underlines growing recognition of the importance of philanthropic advice, Rockefeller Philanthropy Advisors (RPA) is to get a $3.7 million grant from the Gates Foundation to fund a campaign that will arm emerging donors with the knowledge to make thoughtful giving plans and make their giving more effective. The programme will run over three years and its basis will be the compilation of a core ‘curriculum’ of key issues for donors in the form of over two dozen guides. Topics will include giving motivations and interest areas; approaches and strategies; appropriate vehicles; and assessment of impact.

Much of the success of the initiative will depend on the availability of the materials produced. RPA will therefore ensure that interested parties, who will include financial advisers as well as organizations in the philanthropy field, have full access to those resources. The guides and all other resources developed over the course of the programme will be available for download free of charge through a new ‘Donor Resources’ section of RPA’s website.

For more information
www.rockpa.org