Philanthropedia Blog

Archive for December, 2009

Happy Holidays from Philanthropedia!

December 22nd, 2009

Happy Holidays from Philanthropedia!

As we reflect on 2009, we are certainly excited about the progress we’ve made, but we are particularly grateful for the colleagues who have helped us along the way.

After about two years of thinking and planning, we were able to take the Philanthropedia idea and turn it into a full-time organization. We were legally incorporated in June and received our official nonprofit status in September. Thanks to our colleagues at the Hewlett Foundation and the support from the Philanthropy program, we were able to continue our research and complete three new social causes this year: climate change, microfinance, and homelessness in the Bay Area.

We offer a warm thank you to the 392 experts who participated in this research and shared their candid opinions about some of the strongest nonprofits in their sector. We’d like to particularly applaud this group for embracing the Philanthropedia mission and for the first time, sharing their professional opinions with the public in this manner. We really value the perspective our experts offer and look forward to continuing engaging professionals in many more sectors in 2010.

With the help of an extraordinary web development and graphic design team, we were able to launch our website on November 1 and make publicly available high quality information about top nonprofits, for free. We now highlight 48 top-nonprofits in 4 social causes on our website. Thank you to our donors who, in just a few weeks, not only donated thousands of dollars to these outstanding organizations, but also gave us feedback on how to improve Philanthropedia to better serve their needs. And thank you to the outstanding people who work at these great nonprofits, doing such important work for our communities.

One of the most exciting moments this year was certainly the joint press release on December 1 with GuideStar, Charity Navigator, GiveWell, GreatNonprofits, Philanthropy Action, and the Hewlett Foundation. That moment marked a turning point in the charitable giving sector for two main reasons. (1) Major charitable information and rating sites publicly denounced the overhead ratio as a useful stand-alone metric for measuring nonprofit success, and (2) these online philanthropy websites showed they are really willing to collaborate to improve online charitable giving and to push the sector forward. While there is still a lot of work to be done, we were honored to be part of that movement and look forward to continue developing these relationships and ideas in 2010.

As we look forward to 2010, in addition to continuing our research and continuing to develop our website for donors, we especially look forward to building on the relationships we’ve begun over these last few months. Thank you to Sean Stannard-Stockton, the Chronicle of Philanthropy, Richard Marker, Phil Cubeta, Jeff Raderstrong, SSIR, FLiP, Jennifer Q. Chen, and the many others who gave us feedback and engaged us in discussion about these important topics.

In order to improve the nonprofit sector, we believe in the importance of sharing ideas, giving feedback, and self-improvement. This can only truly be accomplished if we can create effective feedback cycles. Whether we are attempting to accomplish this via our expert reviews or trying to engage experts in philanthropy and online giving in general to improve our own organizational practice, we believe change is possible and necessary to move the sector forward.

And of course, we remain focused on our mission of presenting donors with good information about top nonprofits in an actionable way so it’s easy for individuals to make a bigger impact with their giving.

We wish you a very happy holiday season and look forward to collaborating more in the New Year!

–The Philanthropedia Team

Erinn, Deyan, and Dawn

The Missing Piece: Expert Perspective about Nonprofit Effectiveness

December 16th, 2009

I have been reading a lot of interesting posts lately discussing how to appeal to donors. Sean Stannard-Stockton kicked off the discussion with “Using Your Head & Your Heart in Philanthropy,” saying that emotional giving is not necessarily “bad” giving – an important message, which often gets lost. Bob Ottenhoff continued the conversation over on his blog as well. And a number of others have made valuable contributions to the debate. In this blog post, I want to offer another opinion.

Philanthropy is an incredibly important sector, tackling some of our society’s most significant problems. Unsurprisingly, for any one issue there are multiple organizations led by passionate leaders trying to solve or at least alleviate the problem. Therefore, our goal as people working in philanthropy should be to find and support these initiatives, which are making the most use of sparse resources and solving important societal issues.

So what’s the catch? There are at least two complications. First, the nonprofit sector is unique in that its main outcome is social good, which can take many shapes, is hard to define, and even harder to measure. Second, as we think about supporting the best nonprofits, we have to take into account the fact that the vast majority of donations is coming from individuals, to the tune of $250B per year.

These two basic observations form the foundation upon which GiveWell, GreatNonprofits, Philanthropedia and others are built, namely: how to create, package, and market information that can help influence individual donors, directing donations to the most effective nonprofits out there.

Does this mean that we want people to stop being emotional about their giving? Of course not – this doesn’t make any sense in a sector motivated by people wanting to do good! As a matter of fact, the founding premise of Philanthropedia is to help people pick a social cause with one’s heart and then choose organizations with one’s mind.

What the creation of social ventures like ours does signal though is what the missing piece is: information about nonprofit effectiveness. And to add Philanthropedia’s take: not just any type of information, but actionable, high-quality information at scale. To feel the magnitude of the problem, all you have to do is browse the amazing GiveMN.org portal (2271 nonprofits in education in Minnesota alone!) or do the same on a national level at GuideStar (1.1M+ nonprofits). How is an individual to decide which organization to support given the thousands of charities and hundreds of pieces of information about them – and do all of that in the 10 minutes that they have free? This would simply be asking too much.

So how do we provide a “donation guide” for individuals to help them give better? Ideally, we would have a standardized set of metrics and good reporting, accountability, and transparency. And I certainly hope we get there one day.

But in the mean time, we at Philanthropedia have turned to the next best alternative: people, who already have deep knowledge about nonprofit effectiveness. Foundation professionals, nonprofit senior staff, and academics all have a good understanding of the issues as well as the pros and cons of the different solutions. As Lucy Bernholz from p2173 recently said on NPR, there are 5000 foundations with professional staff, who vet nonprofits on a daily basis. So the knowledge exists, but it isn’t shared very well. That is exactly the problem we’re solving—capturing the knowledge of these experts to share with the rest of the world. With our experts’ help, we have covered 4 social causes to date, creating an Expert Mutual Fund for each one. I have no illusions that this is a perfect solution – we clearly have a lot more work to do. However, I believe that expert mutual funds are a great starting point, helping donors give better in just a couple of clicks to causes they deeply, emotionally care about. And as we look to cover more national and social causes in the future, more experts will have an opportunity to share their advice with the general public and help individuals make more informed decisions.

What do you think? How can we bring all of these pieces together to help realize the promised “golden age” of philanthropy and take the sector to the next level?

Microfinance Results are in!

December 11th, 2009

According to the World Bank 2008 report, almost half of the world’s population- over 3 billion people- lives on less than $2.50 a day. The poorest 40 percent of the world’s population accounts for 5 percent of global income, while the richest 20 percent accounts for three-quarters of world income (Human Development Report 2007). Microfinance offers those who were previously considered “un-bankable” because of their lack of collateral, an opportunity to expand their businesses, increase their incomes, and transform their lives.

We are excited to announce that we just concluded our research on the topic of microfinance where we looked at microfinance nonprofits working at the international level. In the end, our 131 experts identified 12 top microfinance-related nonprofits. These organizations include loan providers, information research organizations, online platforms, consulting practices, and more. You can check out the list here.

What’s particularly interesting about these results is that the experts allocated almost 20% of the entire microfinance Expert Mutual Fund to ACCION International! Next was Grameen Foundation receiving 11%, and then four organizations receiving 9%. This is the first time we’ve seen such a jump in allocation levels between the top two organizations in a social cause.

We’re still in the process of collecting the expert biographies to add to the website, but in the meantime, you can get a sample of a few folks who participated with their names, titles, and organizations here. You’ll also find some more of the expert network statistics such as: the experts had a total of 1414 years of experience which is an average of 10 years of experience.

We invite you to learn more about these great nonprofits and consider supporting microfinance through the Expert Mutual Fund!

Meeting the Donor Half-Way

December 9th, 2009

Sean Stannard-Stockton’s great post on Tactical Philanthropy this morning got me thinking about how we’ve been looking at this tension between using one’s heart or head in philanthropy. A main part of our mission is to help donors make more strategic donations—the thinking with one’s head part rather than one’s heart. Because we think it’s more strategic, we encourage donors to support entire social causes rather than just one child in Mali (to use Sean’s example). But are we being unrealistic and possibly even naïve to think that donors might actually change their behavior and give this way?

Well, kind of.

So how can we present enough analytical, good information to donors so we can fulfill our mission without making it seem too much like the site is focused only on the thinking part? Could we meet the donor half-way by providing high quality information that admittedly only begins to scratch the surface of things one might consider when making decisions about charitable giving? We think so. Therefore, we provide some information in each organization’s profile, but not an overwhelming amount. That was deliberate. And, through our expert mutual fund, we present a recommended allocation, so the donor can easily take action.

In Jeff Raderstrong’s interesting blog on Change Charity, he said of Philanthropedia: “the concept of a mutual fund might cause people to just take the advice and not think critically about their donations.” That’s a great way to look at this tension we’re talking about! Yes, we do want donors to take the advice of these experts, but Jeff’s right that that makes this kind of giving a little more passive than one might ideally like. But is this more involved giving realistic for all donors out there?

Right now, I just don’t think it is. I really believe that meeting the donor half-way, if you will, is a great alternative. Just by coming to Philanthropedia’s website indicates one’s interest in giving more strategically—a win for those of us encouraging smarter giving! In the six weeks that our website has been live, we’ve seen thousands of these people come to our site. It is encouraging to see that donors do want this kind of good information. Right now, we see the mutual fund as the best way to reach a broad audience of folks who care to give this way. If we can engage younger, newer donors to think more strategically by providing them with some resources and tools, as they earn more money throughout their lives, perhaps they will “graduate” to more involved giving through a community foundation or something of the sort later on. That could be a pretty good outcome.

So what can we do now to make giving through Philanthropedia more personal and emotional for the donor? At the founding of Philanthropedia, co-founder Howard Bornstein talked about Philanthropedia’s philosophy as “choosing a social cause with one’s heart, but choosing an organization with one’s mind.” We think this is a nice way to think about giving. But are there other things we can do to engage the donor on a more personal level? Through videos? Pictures? Testimonials? We’re only starting to explore the best ways to marry these two elements, head and heart, through our site. But, with good information to point donors in the right direction for the “head” piece, and interest from the community of donors out there, I’m sure we can find a way to serve donors’ interest in being personally connected with the cause. And while Philanthropedia can’t serve every donor’s needs, we really hope we can engage an audience of new donors who want an easy and smart way to make a difference.

Texas Social Innovation Initiative: Ways to Participate

December 8th, 2009

Tomorrow, Andrew Wolk from Root Cause and Roger Egger of DC Central Kitchen will be the keynote speakers at the Governor’s National Leadership Conference hosted by OneStar Foundation and the Office of the Governor in Texas. This is the largest nonprofit conference held in Texas. This is an exciting event because OneStar will be announcing the names of seven outstanding nonprofits who will receive $25,000 each to help stimulate social innovation in the north Texas region as part of the new Texas Social Innovation Initiative.

In Wolk’s blog about the event he mentions that after the keynote address, starting at 10:30am CST there will be a streaming video conversation so that others can join the conversation. Here’s how you can participate:

More information can be found in the press release here.

As a relatively new organization trying to bring a new model of giving to the online philanthropy community, we understand the value in supporting these innovative nonprofits in Texas similarly trying to spark social innovation in their communities. We also really believe in the work Andrew Wolk and his colleagues are doing at Root Cause. It’s so important that strong thought-leaders in the space, like Andrew, share their high quality work and find ways to apply best practices across sectors. This should be a fantastic event and a great way to learn more about some exciting nonprofits in Texas. We encourage you to check it out!

The Worst Way to Pick a Charity (and Best) This Year

December 1st, 2009

Friends of Philanthropedia,

I am sure that you all know the dangers of making bad donation decisions. This holiday season, several leading organizations – Guidestar (www.Guidestar.org), Hewlett Foundation (www.Hewlett.org), GiveWell (www.GiveWell.net), Great Nonprofits (www.GreatNonprofits.org), Charity Navigator (www.CharityNavigator.org), and Philanthropedia (www.MyPhilanthropedia.org) — have gathered to help educate donors about how not to give.

For example, picking a charity based on overhead ratio alone is like super-sizing your combo — you’re choosing the cheapest way to get more food while ignoring that the extra-large French fries are doing more harm than good to your health. One of the most common fallacies is that uneducated donors too often mistake this ratio for a measure of impact. The reality is that managing to a low overhead ratio discourages charities from investing in tools that would make them more effective. Also, since accounting experts estimate that 75% of charities calculate their overhead ratio incorrectly, the ratio for any given charity may hold little meaning even to an educated donor who understands the severe limitations of this metric.

Don’t fall victim to some of the perverse incentives that have been shared for years. Learn what not to do and which websites can help you make better decisions at http://bit.ly/6kjV9d

Please share this post so that your friends and family do not make the mistake that so many people do.

If you want to tweet about it, feel free to use, “The Worst Way to Pick a Charity… Don’t be fooled this holiday season! http://bit.ly/6kjV9dwith #Philanthropedia

I hope you have the most information possible when you make your donations this giving season.  Happy holidays,

Howard

Howard Bornstein

Chairman, Philanthropedia


Philanthropedia is a registered 501(c)3 organization. All of your donations are 100% tax-deductible.