I don’t have the answer, although David E. K. Hunter thinks he does. In the past few days, I’ve had several colleagues send me the link to his recently published article, with “MUST READ” and multiple exclamation points in the subject line. After reading the article, I couldn’t figure out if my colleagues were telling my that it was a “must read” because they thought it was brilliant, or if it was because they knew that it would raise my blood pressure.
Earlier this month, I had already responded to a Wings for Kids blog posting by Paula Schwed about Dr. Hunter’s recent visit to Charleston, South Carolina (home of our Pluff Mud Connect service) where he advised “influential leaders” about “halting ’sentimental giving’ to ineffective nonprofits and diverting investments to high-performing nonprofits instead.” My response was in part, “Donors can fund high-performing organizations and at the same time work to build the capacity of those who just aren’t ‘there’ yet” by providing them “with coaching, training and capacity building instead of pulling out completely.”
In this new article, published in the October issue of the Philadelphia Social Innovations Journal, Dr. Hunter argues among other things that, “Social investing, if widely adopted, will help channel funding streams that are directed by measurable performance rather than feel-good stories, habits of giving and rank sentimentality.” He says this on the heels of putting forth three “unpleasant truths,” including that “there is virtually no credible evidence that most nonprofit organizations actually produce any social value.”
Although I had to struggle through the early assertions and the one-sided examples at the article’s outset, I was grateful to see that Dr. Hunter acknowledged that there might be times where social investors might choose to channel resources toward nonprofits that “need additional time and resources” to build their capacity to create sustainable value. I also completely agree with Dr. Hunter’s focus on creating social value through measurable outcomes, not just by counting the numbers of people served (outputs). I was fortunate enough to be involved in the United Way of America’s pilot testing of agency training on outcomes measurement in 1996, and have seen the amazing results that can come from creating real and measurable changes in knowledge, attitudes, behaviors, skills and ultimately condition (for instance, from being unemployed to being employed) of service recipients. That’s why I simply don’t agree that the nonprofit sector is as broken as he asserts. For every example of ineffective programs, there are others that can demonstrate real impact.
Nonprofit Local Co-Founder, Mark Deaton also took issue with several of Dr. Hunter’s assertions and conclusions, and here’s what Mark wrote in a letter to the editors at the Philadelphia Social Innovations Journal sent earlier today:
Regarding David Hunter’s “End of Charity: How to Fix the Nonprofit Sector Through Effective Social Investing,” published in the October issue of Philadelphia Social Innovations Journal, I have a different perspective that I am writing to share with your readers. I’ll start with common ground. Dr. Hunter advocates for “clear thinking about what one is doing, why one is doing it and what one really is accomplishing” when deciding how to allocate resources in the nonprofit sector. He is also obviously a strong advocate for an outcome-focused approach, as am I. With those important agreements in mind, I differ with several of Dr. Hunter’s assertions, as well as some of his conclusions, two of which are the topic of this letter.Quoting Dr. Hunter’s first “unpleasant truth,” he says that “there is virtually no credible evidence that most nonprofit organizations actually produce any social value.” There are three problems with this statement. First, lack of evidence does not necessarily mean lack of value. (I’ll set aside for the moment that I disagree with the premise from the outset, and grant that it might be true that credible evidence is lacking. However, by itself, that supposed lack says nothing about the level of social value being produced or not being produced. All it does is tell us that the author believes there is a lack of evidence. If Dr. Hunter has actual evidence that “most nonprofit organizations actually produce [no] social value,” I would be quite interested in seeing it).Second, the definition of social value is subjective, and the reader learns later that Dr. Hunter’s definition of social value heavily discounts activities such as feeding the homeless, providing shelter for children who don’t have it, and helping uneducated felons get educated. While the complexities of societal problems, such as homelessness, poverty, and poor education, require more than a meal, a roof, and a text book, to say that “very limited social value” is provided by these activities is not an “unpleasant truth,” it is an opinion; and one that I disagree with. Positing an opinion as fact is misleading, and it would have been (in my opinion) better if Dr. Hunter had started with “Unpleasant Opinion number 1.” While this approach to supporting the article’s conclusions runs throughout, I will avoid the temptation to focus on it further and move on.
The second area of disagreement is more important because it gets to the heart of what the Community Benefit Sector is all about – meeting public needs. While I appreciate the distinction Dr. Hunter makes between “low-risk” and “high-risk” social investing, and while I agree that nonprofit organizations should be held accountable for demonstrating positive societal impacts, he suggests that funding poorly performing nonprofits is a “high-risk” activity, without fully taking into consideration the area of need that the poorly performing nonprofit is targeting. For example, if a community has three well-funded, well-run nonprofits focused on reducing teen pregnancy and only one underfunded, poorly-run nonprofit focused on reducing drug addiction in an area with a disproportionate drug problem, which choice represents the greater risk? Investing in one of the well-run teen pregnancy organizations might arguably represent the larger risk, when considering how best to allocate one’s social investments. I applaud Dr. Hunter’s focus on steering social investing towards high-performing organizations, but not at the expense of meeting public needs. The need comes first, and we must all be careful not to let the perfect get in the way of the good.
Our mission at Third Sector Connector is helping nonprofits thrive, regardless of where they find themselves on any given performance measure. We believe that there is creativity to be harvested by sharing ideas across the sector, and that innovation can come both from market forces and from dialogue and change within the sector itself. What do you think?
–LD
(photo credit: Flickr:CarbonNYC)
October 20, 2009 @ 9:14 am
Just a quick update that we made the blog roundup at the Chronicle of Philanthropy yesterday! http://tinyurl.com/yhdefhb
October 20, 2009 @ 2:03 pm
Another thoughtful blog post on this issue by Saabira Chaudhuri at livemint.com (which also references Laura and Mark’s posts). Thank you! http://tinyurl.com/yj8rt7t
October 21, 2009 @ 4:55 pm
The dialogue continues on this topic, with Laura Deaton, our Co-Founder, still weighing in. http://tinyurl.com/yjjof82
October 25, 2009 @ 9:01 pm
We’ve had this conversation, Laura, in the comment section of several other blogs (Wings for Kids, Tactical Philanthropy, Hildy Gottlieb’s blog), but I thought I’d also respond directly to this post. Based on the conversation so far, I wonder if our opinions are closer than we both initially thought. If I understand correctly, we both believe it is important to fund high performing organizations (including output producing organizations, which can also manage performance) AND the organizations that are on their way to becoming high performing.
In my opinion, however, it is critical to ensure that ALL organizations become high performing (and, as mentioned above, I believe output programs that provide food and shelter in the short term can also be high performing by managing the quality of their services). If organizations struggle to become high performing, we should help them get there. If organizations refuse to acknowledge the need to manage performance in order to ensure that clients actually benefit – and prefer to stick their heads in the sand, pleading ignorance about whether clients truly benefit because it is “too hard” to measure it – I believe they should no longer be in business.
I believe advocating for “diversity” in the sense of allowing poorly operated programs that have no intention of improving quality to continue their “work” is simply irresponsible. How can we justify the poor life prospects of teen mothers and their children receiving services from an ineffective program when they could have received services from one that works? Even worse, how can we justify that we allow such ineffective services to continue because we didn’t insist on performance management and consequently didn’t even know they were ineffective in the first place?
October 27, 2009 @ 10:36 am
Hi, Ingvild - Our recent tweets lead me to believe that we are closer than we initially thought. I absolutely agree that it is important to fund and support both high performing organizations and the organizations that are on their way. I also believe that there are many situations where it is important to fund and support organizations that aren’t even on their way yet.
Why? Many small, local nonprofits (and likely some larger ones, too) haven’t been given the toolkit yet to help them become high-performing. Does that mean that they aren’t providing value or making an impact? No. It simply means that we do not yet have proof that they are.
I’m not talking about the extreme example above of a poorly operated program whose leaders refuse to improve their quality. I’m talking about the amazing community-based nonprofits who really are making a difference and who don’t have, and may never have, the capacity to measure with the rigor that others would like to see.
In your example with teen mothers, you ask how we can justify having them receive services from an ineffective program when they could have received services from one that works. My answer is that “we can’t” justify it, but also that this simply isn’t the reality in most communities. So, I’m also talking about the nonprofits who have a terrific mission that could meet a great need in communities where there are no other resources, and who aren’t ever going to be high performing or high impact without the support to become so.
What makes me uncomfortable about most folks in the “effective social investment” sector is the top-down “stick-instead-of-a-carrot” approach. Instead of withholding funds from nonprofits who aren’t high performing or who can’t demonstrate high impact, why not instead put funding toward making them so?
Why not fund leadership training for organizations that aren’t high performing?
Why not provide executive development and coaching for leaders that don’t understand or practice outcomes-based measurement?
Why not fund local and regional support centers that will create opportunities for networking and connections that will allow high-performing organizations to mentor those that aren’t?
None of these involve a “stick.” None of these involve “withholding funds.” None of these adopt the “only-whoever-measures-best-wins” approach. In fact, they all involve lifting the whole sector up at the same time. That’s a win/win approach to philanthropy.
October 27, 2009 @ 10:50 am
You’re right, Laura, we are closer than it initally appeared. I believe very strongly that we must help organizations BECOME high performing. In fact, that is what I have been doing for several years, and it is what David Hunter does every day.
Funding to build performance management capacity should be more easily available - and if social investors choose to fund organizations to become high performing, that would be great progress. That is the kind of change we need from the funder/donor community.
My point is, though, that ALL organizations - even small ones - can manage performance at some level, and if they do not make progress with funding and resources to build performance management capacity, well, then it’s time to direct the money to organizations that will make good use of it.
I’ve worked in, and now with, nonprofits for many years, and I know very well that not all organizations are willing to change - we need to support change where there is drive to make it happen. There is so much at stake.
October 27, 2009 @ 1:27 pm
Ingvild - Thanks again for your reply. We’ve found ourselves at a good place for common ground. We certainly didn’t start there, but I much prefer being in a place where we’re talking about helping all organizations become high performing and providing them with the tools to do so. Had David Hunter started his article from that premise instead of disparaging the sector and advocating the withdrawal of funds from struggling nonprofits, we’d likely have gotten there much more quickly, but we also wouldn’t have had such an important dialogue. Thanks for engaging!
October 28, 2009 @ 7:33 pm
Laura,
3 years ago David Hunter visited WINGS and helped us develop our Theory of Change and 5 year plan. I sat there and became very nervous thinking “How are we going to do all of this??? We don’t have the time!!” Now, we are able to manage our performance on a daily basis and the best part is that it is easy. I now go to sleep easier knowing we are dong the best job possible for our kids. I hope all non-profits can get the tools to do and feel the same.
October 28, 2009 @ 8:27 pm
Bridget - I’m with you! What can you and I both do to make sure that ALL nonprofits have the same tools?