Philanthropedia Blog

The Missing Piece: Expert Perspective about Nonprofit Effectiveness

December 16th, 2009 by Deyan Leave a reply »

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?

2 comments

  1. Joy Hoster says:

    Hello there – just a brief note to say thanks for this article. Very great.

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