PhilanTopic

Weekend Link Roundup (September 29-30, 2012)

Our weekly roundup of noteworthy posts from and about the nonprofit sector....

Impact/Effectiveness

In the Your Money section of the New York Times, Paul Sullivan takes a closer look at the burgeoning field of impact investing and, despite his skepticism, finds some things to applaud.

Beth Kanter highlights what she calls "a terrific round up of posts about 'big data for small nonprofits'" from Web-based software vendor Wild Apricot. At the same time, Kanter warns that jumping into the process of gathering, analyzing, and acting on data can be a waste of time for small nonprofits if they don't first take the time to define success.

On the Philanthropy Potluck blog, Kaitlin Ostlie of the Minnesota Council on Foundations shares a list compiled by Lauren Gilbert of BELL (Building Educated Leaders for Life) that details the "five hurdles beyond cost that nonprofits must address when going through a rigorous, independent research assessment."

Leadership

How to Become a Nonprofit Rockstar co-author Rosetta Thurman announces the release of her newest manifesto, which, according to Thurman, provides "a simple, accessible framework for thinking more deeply about 'new leadership for a new nonprofit sector.'"

Philanthropy

In the Huffington Post, Global Philanthropy Forum president and CEO Jane Wales considers the rise of strategic philanthropy in Asia.

Writing on the Philanthropic Initiative blog, Peter Karoff argues that "the first rule of all philanthropy is to do no harm." Writes Karoff:

One of TPI's most thoughtful donors likes to say: "The best way to ruin a good idea is to try to improve it!" Donors risk doing damage when they try to insert their opinion and will into a situation instead of deeply listening to those they want to help. Alan Broadbent, chair of Maytree in Toronto puts it this way: "If the gift isn't what the community wants, it isn't worth doing." Melinda Marble, deputy director at Barr Foundation, has long echoed this sentiment and advocated that "those at the center of the problem need be at the center of the solution...."

So what are the takeaways for donors?

• Listen carefully and sublimate your own opinion and ego;
• Ensure that the voice and needs of the community are being heard and served;
• Make sure there is a good plan in place for the use of the funds; and
• Consider the unexpected consequences of your actions.

In a guest post on the Patterson Foundation blog, consultant Veronica Taylor shares "promising practices for investing in disaster response and recovery," including "forgotten" emergencies that receive little attention.

What keeps nonprofit leaders awake at night? The Chronicle of Philanthropy shares findings from a recent Twitter survey which asked that question. Top concerns include financial matters, mission-related anxiety, staff and employee compensation issues, weak or ineffective boards, and evaluation and reporting.

Social Good

Writing in Fast Company, Ben Hecht, president and CEO of Living Cities, argues that while the future is already here for the mainstream global economy, the "social sector...continu[es] to operate in an increasingly outdated paradigm that places a premium on control; a reliance on experts and one-way communication flows; and exists purely in the physical world." He then looks at five trends that the sector needs to embrace if it truly hopes to be "transformational": mobile, social newtorks/media, Big Data, "frugal" innovation, and collaboration.

Social Media

In a guest post on the Communications Network blog, Jenn Whinnem, a communications officer at the Connecticut Health Foundation, writes about her and the Knight Foundation's Elizabeth Miller's efforts to launch a monthly " virtual tweet-up" -- a conference call of their social media peers in philanthropy. "We are more effective in our work when we have the opportunity to share our knowledge and experiences and think through challenges," Whinnem writes. To that end, the two also came up with a few ground rules for the monthly call:

• It's a safe space.
• The only requirement for participation is a spirit of generosity and regular engagement with social media as part of your work.
• The engagement with others continues after the call.
• The structure of each call is flexible enough to fit the needs of participants.

The Social Media Managers in Philanthropy Virtual Tweet-up is now looking to expand. To learn more about the group and how it can help you in your work, be sure to show up for the in-person tweet-up at the Communication Network's annual conference, October 10-12, in Seattle. And if you won't be in Seattle for the conference, feel free to reach out to Jenn (@jennwhinnem) or Elizabeth (@ElzbthMllr) on Twitter.

Transparency

Last but not least, on the Foundation Center's Transparency Talk blog, RWJF senior communications officer Susan Promislo explains how social media has changed her day-to-day work at the foundation, and how the foundation engages its online community to advance Forward Promise, a $9.5 million initiative that seeks to "improve the health, education, and employment outcomes for boys and young men of color."

That's it for now. What did we miss? Drop us a line atrnm@foundationcenter.org. And have a great week!

-- The Editors

5 Ways to Engage Finance Professionals in Pro Bono Service

(The following post by Aaron Hurst, president of the Taproot Foundation, was adapted from Powered by Pro Bono: The Nonprofits Step-by-Step Guide to Scoping, Securing, Managing, and Scaling Pro Bono Resources. In his previous post, Hurst weighed in on the value of "pre-mortems.")

Nonprofit economics differ pretty significantly from the for-profit kind. For one thing, tools like a balance sheet or a profit-and-loss statement don't carry nearly as much weight in a not-for-profit setting as they do in the business world. Nonprofit organizations also have to follow specific rules and regulations related to their tax-exempt status. Despite these differences, nonprofits are learning how to boost their capacity and effectiveness by engaging accounting and finance professionals in their work. The fact that there are some 1.8 million accounting and finance professionals in the U.S., and that many of them are looking for ways to make an impact in their communities, is a huge plus for the sector.

With that in mind, here are five things finance and accounting professionals often are willing to do for nonprofits on a pro-bono basis:

1. Program-cost analysis. A program-cost-analysis project identifies the cost initiatives a nonprofit must define in order to answer a pressing strategic question. The first phase of any such project involves an in-depth examination of an organization's current finances to tease out cost factors relevant to those initiatives. After that, a comprehensive report which clearly lays out the full costs of taking on a particular initiative is prepared.

2. Internal financial controls assessment. Rigorous assessment of an organization's financial controls ensures that it is consistently recording financial transactions in an accurate fashion. These controls also help to minimize risk, including employee theft. The first step in developing an effective internal controls system is to identify areas where abuses or errors are likely to occur. Many accountants can provide you with a checklist of these areas, as well as questions to consider when you are planning your system.

3. Budgeting. A well-designed budget process can help an organization and its management zero in on key financial issues and potential problems before they have major consequences, enabling the organization to move from reactive to proactive resource management. The end result of such a process should be a budget that allows key stakeholders to track the status of the organization's finances in real-time; enables managers to track actual performance against plan; and allows for quick adjustments to meet changing economic conditions.

4. Pricing strategy. Pricing strategy projects look at the value of a specific product or service. Since price directly affects revenues (price x quantity sold = revenue) and, therefore, profitability (total revenue - total costs = profit), a good place to start when developing a pricing strategy is to determine unit costs. While nonprofits rarely are driven by the bottom line, net income is crucial to organizational sustainability. Therefore, any pricing strategy project should incorporate a method to calculate the real costs associated with the product or service delivered so as to ensure a sufficient level of net income.

5. Supply chain audit. The planning, purchasing, manufacturing, marketing, and distribution functions embedded in a supply chain often operate independently of one another and have their own objectives. With an eye to identifying opportunities for increasing efficiencies and better integrating these different functions, a supply chain audit looks at every step in the chain, from the procurement of the materials needed to create a product, to the process by which those materials are turned into a finished product, to the distribution of the product to customers/beneficiaries. The result, quite often, is better performance and lower costs for the nonprofit.

The nonprofit executive often has to act as CEO, CFO, COO, talent manager, and marketing director at the same time. Juggling these roles is tricky at best, but when the organization reaches a certain scale or ambition, taking a closer look at its financial health becomes critical. Identifying key financial needs is the first step to scoping projects and developing specific "asks." Accounting and finance professionals do these things everyday, and many are looking for ways to make an impact. The most effective leaders will do what they can to take advantage of this pro bono resource.  

-- Aaron Hurst

Librarians Reach Out to Spanish-Speakers on ‘Tell Me More’

(Kathryn Pyle recently marked her fourth anniversary as a PhilanTopic contributor. In her last post, she wrote about "Reportero," a documentary that tells the story of embattled investigative journalists assigned to cover the drug wars in Mexico.)

"Tell Me More," the National Public Radio news and chat program hosted by Michel Martin, had a segment this week about the Joint Conference of Librarians of Color, which met earlier this month in Kansas City. As I've periodically blogged here on PhilanTopic about a small-town library's efforts to meet the needs of a growing Latino population, the story caught my attention.

In the segment ("Librarians Reach Out to Spanish-Speakers"), guest host Celeste Headlee talked with international librarian consultant Loida Garcia-Febo about the conference and the challenges libraries face in a time of huge cultural change. As I listened to the discussion, I thought about the Adams County Library in south-central Pennsylvania and what it has figured out -- and is still trying to figure out -- in terms of serving the needs of Latino migrant workers in the area. The main takeaway for me: libraries must go beyond their traditional services to really understand who their new constituencies are, what those constituencies need, and what they can do to help meet those needs.

Consider, for instance, the fact that Latinos in the U.S. hail from many different countries, with different literary traditions. In that light, it suddenly becomes obvious that even expanding the traditional library product -- books – to these audiences is not as simple as it might seem.

"But libraries are much more than books," said Garcia-Febo. "We are also celebrating the cultures of our Latinos by presenting cultural programs and programs celebrating their music, their cuisine, and other programs that are more social. And those programs help our Spanish-speakers to understand public school systems in the United States and how to access health care."

It's a great segment, and I commend it to anyone who cares about libraries, cares about our increasingly diverse society, and cares about how information is accessed in a democratic society.

-- Kaye Pyle

On Putting Your Data to Work: A 'Flip' Chat With Jake Porway, Founder/Executive Director, DataKind

(This video was recorded as part of our "Flip" chat series of conversations with thought leaders in the nonprofit and philanthropic sectors. You can check out other videos in the series here, including our previous chat with Paull Young, director of digital at charity: water.)

There's no shortage of data in the nonprofit/philanthropic sector. Indeed, a growing number of nonprofits are filling virtual filing cabinets with data on their constituents, donors, outputs, and outcomes, while more and more foundations are creating digital records of their program activities and grantees' performance. But what are nonprofits and foundations doing with that data once it has been collected? In most cases, not a whole lot.

At the same time, computer programmers have elevated so-called "hackathons"  and "codefests" into an art form. In rare cases, these events even enable hackers to contribute to the greater good by developing software or a mobile app that can be used to address a social problem. Too often, however, as Jake Porway, founder of DataKind, noted at a recent 501 Tech NYC event, they're just "a bunch of white dudes looking to solve their own problems, like where to find parking or farmers markets." Which is why his organization focuses on connecting programmers and data scientists interested in doing some social good with nonprofit leaders working to address some of the world's most urgent problems.

Formerly known as Data Without Borders, DataKind accomplishes its mission through weekend-long "DataDive" events; a DataCorps (i.e., a group of volunteers and/or contract employees who focus on a single project for up to six months at a time); and by providing on-demand/in-house data services.

After the event, I had a chance to chat with Porway about the nonprofit sector's relationship to and use of data and what nonprofits could be doing to make better use of their data. Porway also offered advice for nonprofit leaders who are worried about the steepness of the data learning curve.

(If you're reading this in an e-mail, click here.)

   

(Running time: 5 minutes, 51 seconds)

Is all data created equal? And if not, what types of data should nonprofits look to collect, manage, and analyze -- and to what end should they use it? Share your thoughts and feedback in the comments section below.

-- Regina Mahone

Clinton Announces Revisions to Tax Regulations to Support Civil Society Worldwide

Small but interesting announcement timed to coincide with the annual meeting of the Clinton Global Initiative and the opening of the 67th session of the UN general assembly:

In conjunction with a meeting of the State Department's new Global Philanthropy Working Group -- the sixth and newest pillar of the department's Strategic Dialogue with Civil Society initiative -- Secretary of State Hillary Rodham Clinton has announced Treasury Department and IRS guidance "aimed at lowering the legal barriers and administrative costs associated with cross-border philanthropy in support of civil society worldwide."

According to a statement issued by State, the proposed revisions to "equivalency determinations" -- i.e., the process by which a U.S. grantmaker evaluates whether an intended foreign grantee is the equivalent of a U.S. public charity -- allows foundations to rely on a broader range of professional tax advisors when making such determinations. It's hoped that "this will make professional tax advice in this area easier to obtain, significantly reduce the administrative costs of foundation grantmaking to foreign civil society groups, and ensure that accurate determinations regarding foreign grantees are made."

For the last year or so, Tech Soup Global, in partnership with the Council on Foundations, has been working on an equivalency determination information repository (EDIR) service called NGOsource. To learn more, click here.

 

Clinton Global Initiative 2012 - Monday a.m.

PhilanTopic is at the Sheraton in midtown Manhattan this morning to cover the eighth annual meeting of the Clinton Global Initiative. (Watch the livestream here.) The theme of this year's meeting is "Designing for Impact" -- how can we design our world to create more opportunity and more equality? And how might we design our lives, our environments, and global systems in order to impact the many enormous challenges at hand.

The meeting opened yesterday with a session moderated by CGI founding chair and former President Bill Clinton that featured Michael Duke, president/CEO of Wal-Mart Stores; Her Majesty Queen Rania Al Abdullah of Jordan; Ban Ki-Moon, secretary-general of the United Nations; and Jim Yong Kim, president of the World Bank Group. (Watch the video here.)

Things really got rolling this morning, however, with a powerful speech ("Designing Diplomacy for the 21st Century") by Secretary of State Hillary Rodham Clinton -- who was welcomed by CGI attendees as if she were a rockstar (or once-and-future presidential candidate). In it, Secretary Clinton shared a three-part framework for U.S. diplomacy and development assistance in "a time of great change." My scribbled notes don't do it justice (you can watch the livestream here), but here's the gist of what she said:

-- In a time of enormous technological, demographic, political, and geopolitical change, the goal of U.S. development assistance is "to help solve problems and support opportunities around the world."

-- In the 1960s, official development aid from donor countries to developing countries represented 70% of capital flows into those countries; today, it's 13% -- relatively insignificant compared to trade, business investment, and remitttances.

-- The U.S. aid budget has increased in real-dollar terms over that period -- but represents a much smaller share of aid to developing countries overall.

Against this backdrop, the U.S. State Department has three objectives going forward with respect to development assistance. As Clinton put it:

1) We want to move from direct aid to investment. The political and geopolitical landscape has changed, needs have changed, assistance needs to be rethought. We need to be intentional and strategic. We need to focus on and promote public-private partnerships ("You cannot do development in today's world without partnering with the private sector"). We need to recognize that many of yesterday's laggards are today's rising stars (in the last decade, six of the ten fastest-growing economies in the world have been in Africa). We need to be rigorous and demonstrate results.

2) We need to encourage "country ownership." That means building capacity within developing countries so they are able to set their own priorities, develop plans to achieve those priorities, execute on those plans, and, increasingly, fund those plans. And it means ownership by "the whole country" -- men and women. The surest path out of poverty for developing countries is educating and empowering women and girls.

3) We need to put ourselves out of business. The State Department looks forward to the day when public-sector assistance is replaced by private-sector investment. ("I'm always surprised when people are surprised to hear that.") Before we get there, however, State (and others) need to expand the number of partners with which it works; the days of government working through large international NGOs only are over. Elites around the world also have to recognize that they need to pay their fair share of taxes and support critical investments in public education and infrastructure. And donor governments around the world need to step up their efforts to combat corruption, which as much as anything is responsible for stifling innovation and smothering human aspiration in too many countries.

In closing, Clinton reminded those in attendance that "freedom and dinity are more important than food and water." And she urged everyone in the room "to stand together to resist the forces of extremism and violence and stand firm for peaceful transitions to democracy in North Africa and the Middle East." (Watch her complete remarks here.)

Back with more in a bit...

-- Mitch Nauffts

'A Rose Is a Rose Is a Rose...'

Timely reminder from CauseWired founder Tom Watson:

[T]he nonprofit world -- indeed the universe of philanthropy -- will always be different from capital markets. Some reasons are fairly obvious: social capital is not as easy to measure as dollars and cents. The impact of giving (or social investing) is much more difficult to assess than sales figures, stock prices, and capital appreciation. The return on investment will always have some haze beyond the spreadsheets. And the human instinct to give -- or invest in social change -- is different than the drive to make money and conquer markets. It is often (though not always) tied to personal feelings, social standing, and the desire to do something that doesn't require the usual accounting. There's another difference as well. Capital markets tolerate failure at a much higher rate than would be acceptable to nonprofit donors. Most business ventures fail. Most nonprofits do not -- or rather, more accurately, they do not close their doors, merge with other organizations, or write down lost venture funding. In the worst cases, they tend to soldier on, withering slowly as their appeal to private donors and other funders diminishes -- and their impact falters. That's because there is no market for philanthropic stock, almost no liquidity for social capital....

Read the full post ("With Charity for All: Big Philanthropy and the Challenge of Democracy") here....

[Infographic] The Water-Rich vs. the Water-Poor

Our infographic of the week illustrates the disparity in water consumption between "water-rich" countries with plentiful access to clean water and "water-poor" countries with little or limited access to clean water. It was created by Seametrics, a manufacturer of water flow meter technology. (H/t WASHfunders.org)

 

Source: Seametrics

[Review] 'Charity Case: How the Nonprofit Community Can Stand Up for Itself and Change the World'

(Chuck Bartelt is electronic grant information liaison at the Foundation Center. You can read some of her other reviews here, here, here, and here.)

I'm about to shock you. Twice.

First, did you know that telemarketing firms that solicit donations for charitable causes typically keep 90 percent of the money they raise? That's right: for every ten dollars you donate to a cause through one of these firms, only one dollar actually makes it to the charity in question. And did you know that a substantial percentage of the remaining dollar can be eaten up by executive salaries, advertising, and other overhead, leaving only pennies for the cause you thought you were supporting?

These are just a few of the facts revealed in Dan Pallotta's new book, Charity Case: How the Nonprofit Community Can Stand Up for Itself and Change the World. And if you're like me, you're probably feeling a little cheated right now.

But here's the second shock: according to Pallotta, there's nothing wrong with that.

How can that be? Pallotta argues that executive compensation and overhead expenses cannot be considered in isolation when gauging an organization's effectiveness or efficiency. On the contrary, embracing the tools of capitalism (competitive salaries, advertising, lobbying, etc.) may be the best way for charities to maximize their donations and ultimately deliver superior services and programs.

It's an ends-justifies-the-means approach that many will find at odds with the spirit of the social — or, as Pallotta calls it, humanitarian — sector, and it's one Pallotta embraces unapologetically in his book.

Not surprisingly, Pallotta has had personal experience with these issues. As a younger man, he was an admirer of Werner Erhard, whose Hunger Project was criticized for being self-promotion disguised as philanthropy. Then, in 1994, he founded Pallotta TeamWorks, a for-profit organizer of fundraisers for breast cancer and AIDS charities that eventually closed its doors after a dispute with the Avon Products Foundation. He has since founded Advertising for Humanity, which offers business strategy and branding services to nonprofits, and writes a blog for the Harvard Business Review that, like his earlier book, Uncharitable, champions the view that the tactics and methods of capitalism are not incompatible with social sector work; in fact, adopting them is best thing that could happen to it.

But is a mashup of capitalism and do-gooding really possible?

Take the case of executive compensation. Pallotta persuasively argues that cost-benefit analysis must be used when analyzing executive salaries within the nonprofit sector. Regarding the much-criticized salary of Roxanne Spillett, president emeritus of the Boys and Girls Clubs of America, he says, "How can you judge if a $510,744 salary and bonus are worth it if you don't inquire into what the person receiving the salary achieved? A first-year business school student would be kicked out of class for such egregious non-analysis."

Similarly, in the case of overhead, Pallotta argues that there is a tendency to define a charity's "cause" too narrowly. As he puts it: "[I]f hunger, then soup — but not the spoon, the bowl, the stove, the fundraiser that got the money for the stove, or the postage on the thank-you note sent to the donor who donated the money for the stove. Just the soup molecules themselves."

As for the whopping 90 percent of your donated dollar claimed by many fundraising firms, Pallotta argues that for little-known causes with few resources, telemarketing may be the only realistic way of generating any revenue at all. "In many cases," he writes, "the telemarketing firm will essentially advance the upfront costs: it will take the financial risk associated with the possibility of zero donations and accept payment on the basis of only those people who do contribute, eliminating the need for the charity to invest in staff, space, telephony, and technology."

It all makes sense — although it doesn't necessarily make it more palatable to potential donors interested in supporting a cause rather than funding infrastructure.

Which begs the question: Should the general public be informed or shielded from this kind of information? Here Pallotta seems to be of two minds. On the one hand, he embraces the concept of transparency, arguing that if the public were better educated about the economics of charity work, it would be less offended by competitive salaries and high overhead. On the other hand, too much information can create a false image of greed or waste that can drastically stem the flow of donations to a charity or limit them to specific projects or activities.

Indeed, Pallotta argues, unfair media coverage of these kinds of fundraising practices as "extravagant" and "wasteful" has caused charities in general to be held in low esteem by the American public. And one response to this unfavorable coverage — legislation requiring greater transparency on the part of charities through the filing of more detailed financial reports — has had the unfortunate consequence of increasing the very overhead that charities are encouraged (and expected) to minimize.

Pallotta's solution to this conundrum? The establishment of an anti-defamation organization for the nonprofit sector that works to rebut these charges through promotional efforts similar to the "Got Milk?" campaign; the creation of a legal defense fund for the sector; and the creation of an organization that would develop and lobby for a "national civil rights act" for charities. In addition to defending the sector's "rights," the latter would serve as a repository of information for its use, including a "comprehensive national charity database that includes every operating tax-exempt organization in the country and is accessible to everyone and easy to use."

Actually, though, what Pallotta is presenting here is not so much a proposal as a fait accompli. The organization he describes already exists in nascent form, named and incorporated by Pallotta himself. As a result, Charity Case reads more like an advertisement for his own Charity Defense Council than a disinterested defense of the social sector. And that, ultimately, is the book's greatest weakness. By so heavily promoting his new organization (to the point of soliciting donations, recruiting volunteers to perform daily tasks, and hawking merchandise such as t-shirts, flags, and bumper stickers), Pallotta dilutes the persuasiveness of his case.

What's more, that case, when all is said and done, isn't that persuasive. Speaking for myself, I simply don't want to give ten dollars to any charity where almost every dollar goes to fundraising infrastructure or executive salaries, no matter how worthy the cause or how rational the economic justification. We all draw different lines in the sand, and while we may not be able to articulate the difference between acceptable and excessive overhead, most of us, as Supreme Court justice Potter Stewart famously said about pornography, know it when we see it.

Shock me once, shame on you...

-- Chuck Bartelt

Are Chinese Foundations More Transparent Than American Foundations?

(Bradford K. Smith is the president of the Foundation Center. In his last post, he offered advice to grantseekers confronted by a foundation transition. A version of this post originally appeared on the Foundation Center's Transparency Talk blog.)

On August 29, the China Foundation Center launched its online Foundation Transparency Index, a "proactive solution to set a new standard for the ethical conduct of foundations in China." Many people are surprised to learn there are foundations in China, let alone that they might be held to higher standards of transparency than their American counterparts. Could that really be the case?

First of all, there are foundations in China -- more than twenty-seven hundred of them, according to the China Foundation Center. Launched in 2010, the CFC was created as a public information service at a time when China's economic growth, increasing wealth concentration, and strained social safety net were catalyzing a surge in the number of new foundations. The vision of its founders is not unlike the vision of John Gardner and others who, in 1956, created the (U.S.) Foundation Center to provide greater transparency to a rapidly expanding foundation sector in this country. In 1956, that meant stuffing the paper records of seven thousand foundations into filing cabinets. Today it means online databases, data visualization, video, social media, and digitized research reports covering some ninety thousand U.S. grantmakers and millions of their grants, research reports, news stories, and tweets. In contrast, the China Foundation Center was born digital and in just two short years has created online databases, interactive graphics, and research reports that take into account every grantmaker in China. Moreover, the CFC's Foundation Transparency Index is comprehensive, having already rated close to 70 percent of Chinese foundations.

Second, the CFC's Foundation Transparency Index is an elaborate one, carefully crafted with technical assistance from an advisory group of experts from some of China's leading universities with backgrounds in public policy, "anti-corruption studies," law, and nonprofit studies. The index comprises a checklist of sixty transparency indicators grouped into four categories: basic information, financial information, projects information, and donor information. An elaborate algorithm produces a weighted composite score, with a maximum score of 129.4. Foundations' positions change in the rankings as their scores are adjusted weekly depending on the information they publicly disclose. Just to be sure one doesn't miss the dynamic nature of the rankings, the tables for each foundation show their previous rankings, whether they are moving up or down, and their twelve-week range. For the 1,831 foundations currently included in the index, only two (this week) get a perfect score of 129.4, while the average for all foundations (this week) is 52.98.

Third, foundations in China are regulated by the Chinese government, making the index a kind of complementary mechanism designed to further enhance voluntary transparency among Chinese foundations. If a foundation chooses not to publicly disclose the information via its own Web site, it will end up with a lower ranking. That's where a crucial difference between the Chinese and American contexts comes into play. In China, the term "foundation" is applied to both "public" foundations, which are more like what we would call public charities, and "private" foundations, which are akin to private operating foundations in the U.S. The former have every motivation to earn a high score in the Foundation Transparency Index because they solicit and depend on contributions from the public to carry out their work. The latter, though not technically endowed, are established with "registration capital" provided by an individual donor or corporation. Both, however, are concerned about the negative impact of scandal on the sector and know they can benefit from a positive image and general societal appreciation of their role. Thus, the CFC's Foundation Transparency Index is part Charity Navigator and part "Who Has Glasspockets?" -- a cross between a rating system and a transparency framework.

Fourth, American foundations, like their Chinese counterparts, are required to comply with government disclosure requirements by filing Form 990 or 990-PF. That information is made publicly available by the Internal Revenue Service in the form of unwieldy image files. Organizations like the Foundation Center take millions of those forms and make them searchable in their entirety or, cleaned and coded, in tools like Foundation Directory Online. The cleaning and coding compensates for the missing, inconsistent, and limited information often found on those forms, but no one has ever had the temerity to actually score and rate American foundations on the information provided in the forms. Conventional wisdom has always assumed that, as endowed institutions, American foundations would be relatively impervious to any pressure a rating system might generate and, perhaps more importantly, unlikely to provide grants to whoever created and maintained such a system.

So getting back to the question that inspired this post, the answer is "maybe." The CFC's Transparency Index is geared more toward measuring to what degree Chinese foundations are disclosing compliance information, a good portion of which (43 of the 60 indicators) they are supposed to be providing to the government anyway. In addition to other types of information the CFC has deemed conducive to transparency (e.g., social media profiles, bios of board members, the foundation president's resume), a Chinese foundation wishing to attain a higher index score needs to go the extra mile by making the information available on its own Web site.

The Foundation Center's "Who Has Glasspockets?" transparency profile mixes a few compliance elements with governance indicators and features -- things like grants databases, knowledge centers, and performance assessments -- that help to illustrate a foundation's efforts to openly promote deeper understanding of the nature, impact, and quality of its work. At the same time, the FC transparency profile presumes that transparency in the digital age starts with a Web presence, thereby excluding the 74 percent of U.S. foundations that have no Web site at all. Foundations that are online can work voluntarily with Foundation Center staff to develop their individual "Who Has Glasspockets?" profiles. There is no scoring or ranking.

As noted above, the CFC's Foundation Transparency Index is comprehensive, having already rated close to 70 percent of Chinese foundations, while the Foundation Center has painstakingly convinced forty-three foundations to voluntarily post transparency profiles on Glasspockets.

Philanthropy has long been a global phenomenon. But today technology gives us near real-time information by which to understand ourselves through comparison with others. American foundations may be different than Chinese foundations in some ways, but in facing growing demands for transparency from government, media, and the public we are more alike than we realize.

-- Brad Smith

Multiyear Giving: What We’re Learning From Our Mistake

(Steven Lawrence is director of research at the Foundation Center.)

No one likes to make mistakes, especially when those mistakes have been presented to the public as fact. Recently, the National Committee for Responsive Philanthropy (NCRP) released a research brief on the level of foundation support for multiyear grants. The conclusions reached belong to NCRP, and they can defend their interpretations of the data. The problem, however, was that the underlying Foundation Center data from which NCRP drew its conclusions were "incorrect" (i.e., wrong).

Did the Foundation Center miss the boat with respect to capturing data on multiyear commitments? No. For the small number of grantmakers that indicate the duration of their grants, we captured their information correctly. Where we erred was in the programming we used to tally these statistics. A simple programming error caused public embarrassment for two organizations and the need for NCRP to start from scratch with their analysis.

Interestingly, the corrected data show the same direction of change for multiyear support. That is, there was less of it among consistent multiyear funders as a result of the 2008 financial meltdown. But that's beside the point. In an age of ever-greater scrutiny of the work of foundations, we at the Foundation Center did not go far enough to ensure that our numbers, our "facts," were as accurate as the sector expects them to be. We are walking the talk of transparency by acknowledging this error and publicly pledging to do better.

In having to scrutinize these data more closely, we also had the opportunity to think more deeply about multiyear support. The Foundation Center does not have a position on whether there should be more or less of it. That's up to grantmakers to decide based on their individual strategies. But because there is so little information available on grant durations -- roughly 90 percent of the foundations we track each year do not provide specific information about the duration of their grants -- it will continue to be a challenge for foundations on either side of the issue to use knowledge from the field to make decisions about how, when, or whether to award multiyear grants.

The silver lining in this episode for the Foundation Center would be if, by having unintentionally drawn attention to the topic, it ultimately leads more grantmakers to provide comprehensive information on their grant durations.

-- Steven Lawrence

Weekend Link Roundup (September 15-16, 2012)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

Looking to create or strengthen a tagline for your organization? Nonprofit marketing expert Nancy Schwartz has selected sixty-three nonprofit taglines from fourteen hundred submitted to her Getting Attention blog over the summer and is asking readers to help choose the 2012 Nonprofit Tagline Award winners. Voting is open through midnight on October 5, and if you subscribe to the Getting Attention e-update while you're on the site, you'll get a free copy of the 2013 Getting Attention Nonprofit Tagline Report (due in late fall).

In a post on the Communications Network blog, Louis Herr says that "limiting Web evaluation to a clickstream product like Google Analytics starves you of critical information." In his post, Herr highlights the argument made by Avinash Kaushik in Web Analytics: An Hour a Day -- to wit, that to be truly actionable, Web analytics should focus on measures of behavior, outcome, and experience, not just page views and click counts.

Fundraising

On the Philanthropy Potluck blog, Lissa Jones, director of diversity, equity, and inclusion at the Minnesota Council on Foundations, discusses the implications of the Millennium Communications Group's Donors of the Future Scan, which identified twelve key trends in giving. Those trends include a giving population that is growing more diverse, increasing pressure on endowed giving, and the growing popularity of "flash" and Internet giving portals.

Impact/Effectiveness

The Knowledge@Wharton blog has a good post on the potential, and obstacles to broader adoption, of social impact bonds (SIBs), which generate a return for outside investors only if the program is successful. 

Philanthropy

Writing on the Re: Phlanthropy blog, new Council On Foundations president Vikki Spruill lays out her vision for a re-energized CoF, one that is focused "on the future and what philanthropy can make possible," that supports its members with tools and ideas, that works to increase the understanding of the impact of philanthropy and enhances members' ability to effect positive change.

In a post on the Philanthrocapitalism blog, Matthew Bishop and Michael Green discuss #givingtuesday, a new grassroots campaign spearheaded by the 92 Street Y in New York City that seeks to get "everyone -- individuals and organizations alike -- to make a fresh commitment to give" on November 27. "The hope is that #givingtuesday will be a sort of 'opening day' for the giving season, the launch pad for a more productive than ever period of giving in the weeks and months ahead," write Bishop and Green. "It aims to build on the existing National Philanthropy Day (November 15th), which is a time to reflect on and celebrate past acts of philanthropy, with a day of action devoted to new giving, when everyone can make their personal giving pledge for the giving season and year to come."

Writing on his White Courtesy telephone blog, Greater New Orleans Foundation president and CEO Albert Ruesga urges young professionals working in the philanthropy field who may by "haunted...by the memory of some infelicitous essay on Plato’s Republic to "Let it go! Let it go...! Our first inklings of a world beyond that described to us by our parents have extraordinary value. The exhilaration we felt at being invited to question authority can still save our field from grave errors."

And on our sister Glasspockets blog, Foundation Center president Brad Smith takes a look at the Chinese Foundation Center's recently launched Foundation Transparency Index and asks, "[A]re Chinese foundations more transparent than American foundations?” His answer? Maybe. But while "American foundations may be different than Chinese foundations in some ways," Smith writes, "in facing growing demands for transparency from government, media, and the public [they] are more alike than we realize."

Social Media

In the most recent installment of her Social Good podcast series on the Chronicle of Philanthropy site, Allison Fine chats with network-weaving expert June Holley about how network weaving can help steer nonprofit organizations in the right direction with respect to their social media activity. "Network weaving...is the intentional activation of networks to do something together," adds Fine, "but it isn’t intuitive for people coming with a command and control mindset."

Beth Kanter explains why she had to reschedule a trip to Tunisia following a wave of anti-American protests there and in other Arab countries fueled by anger over an anti-Muslim video created by a Muslim-hating provocateur in California. Recent events in Libya, where the American ambassador and three others were killed by angry mobs, and Egypt, writes Kanter, raise a number of questions about censorship on the Internet and the need for "nonviolent approaches to resolving conflict."

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!

-- The Editors

 

Conducting a Pre-Mortem

(The following post by Taproot Foundation president Aaron Hurst was adapted from Taproot's new book, Powered by Pro Bono: a Nonprofit's Step-by-Step Guide to Scoping, Securing, Managing and Scaling Pro Bono Resources, published by Jossey-Bass. In his last post, Aaron shared three tips to help prepare your team to be a great client for a pro bono engagement.)

A post-mortem is done by doctors after a patient dies to uncover the cause of the patient's demise. It's also a great way for doctors to learn and hold themselves accountable (although it doesn't do much good for the recently deceased on the table).

A pre-mortem, a process that increasingly is being adopted by project teams, takes the idea of the post-mortem and tries to apply it before a patient has died -- in other words, before it's too late to help. But of course in this case I'm not talking about an actual patient, but rather any project (internal or external) that involves a significant commitment of resources (monetary and/or human).

The pre-mortem process can be as simple as asking your team a few questions at the start of the project. For example: Assume that, six months down the road, everything that could go wrong on this project has gone wrong. What went wrong? And why?

Focus on the three to five most likely reasons that the project could fail or go off the rails. Then map back how you could have prevented these meltdowns. Finally, incorporate those changes into your project plan before you actually get to work. Might the patient still show up DOA? Sure. But the chances of that happening are much less likely than if you skip the pre-mortem altogether.

-- Aaron Hurst

'Alliance' Magazine: What Can Data Do for Philanthropy?

Last week, UK-based Alliance magazine published its September issue, which includes a special section on "What data can do for philanthropy" that was guest-edited by the Foundation Center's Larry McGill and Mitch Nauffts and data wonk extraordinaire Lucy Bernholz. As we've done in the past with other special features dedicated to giving and philanthropy (here and here), we've put together a brief overview of the special feature for your convenience. Enjoy.

"Data for Good" (Larry McGill, Vice President for Research, Foundation Center) -- Outlines some of "the payoffs of having data" (e.g., in support of advocacy efforts, market intelligence, monitoring and learning) and issues a call for "philanthropy to develop its own charter, laying out in clear terms the 'vision, principles, enablers, and resulting value' that underlie a commitment to establishing common data standards for the field." 

"A Conversation Between Rosa Gallego (Donors and Foundations Networks in Europe) and Bradford Smith (Foundation Center)" -- Discusses the state of data on philanthropy in both Europe and the United States, weaknesses in data collection, and the opportunities for growth and collaboration. 

"Data for What?" (Maria Chertok, Director, Charities Aid Foundation) -- Pushes back on the idea of complex data measures for social good, suggesting that organizations instead recognize the limitations present in data presentation and lean toward "simple data that can help [people] to understand what our sector is really about." 

"Three Cautions About Data" (Luc Tayart de Borms, Managing Director, King Baudouin Foundation) -- Seeks to "counterbalance some of what [has been said affirming data as the new asset class]...with three warning flags, each under the heading of a quote [by] Einstein." 

"Data-First Philanthropy" (Lucy Bernholz, Managing Director, Arabella Advisors) -- Suggests a future in which "data become the GPS of philanthropy."

"It's Not Just What You Know, It's How You Use It" (Andrew Milner, Associate Editor, Alliance magazine) -- Recaps a virtual roundtable discussion on what philanthropy knows, what it doesn't know, and what could it do better in terms of data collection featuring panelists from philanthropy associations and support groups around the world.

"Data Shadows: Challenges of a Data-Rich World" (Stephanie Hankey, Executive Director, Tactical Tech) -- Advises foundations to not only support groups working to address digital security challenges, "but also those who help users understand and control their digital shadows...."

"Visualizing Philanthropy: Storytelling With Data" (Cole Nussbaumer, Storytelling With Data) -- Offers a number of tips for those seeking to create effective data visualizations.

"The Narrative of Impact: It's Not Just the Numbers" (Kelly Notcutt, Strategic Communications, and Tamzin Ractliffe, Founder and CEO, Nexii) -- Reminds readers that when using data to report on impact, qualitative information matters as well -- often as much, if not more, than the numbers. 

"Supporting Data Collection by the Poor" (Sheela Patel, Director, Society for the Promotion of Area Resource Centers) -- Discusses how SPARC has "been able to demonstrate that communities often collect better data about themselves and use it more effectively than professionals can."

"Six Degrees of Capitalization" (James Leaton, Project Director, and Mark Campanale, Director, Carbon Tracker) -- Explains how Carbon Tracker turned a theory about capital markets financing "more coal and oil than could safely be burned" into robust data.

"Encouraging Sustainable Land Investments" (Alejandro Litovsky, Founder, Earth Security Initiative) -- Discusses how ESI intends to use data to develop the Land Security Index, an analysis of disparate environmental trends such as water limits, land degradation, food security, governance, and climate change. 

"Moving the Tanker" (Caroline Fiennes, Director of Giving Evidence, and Jeff Mosenkis, Global Outreach Coordinator of Innovations for Poverty Action) -- Calls attention to the need for more testing of programs before they are fully implemented and/or scaled. 

"Putting Family Foundations on the Map" (Cathy Pharoah, Director of the Centre for Charitable Giving and Philanthropy, and Charles Keidan, Director of the Pears Foundation) -- Shares findings from a recent report on family foundation giving trends that "helped establish family foundations as a distinct field of philanthropy in Europe, as it is in the U.S."

Glossary -- Eight terms frequently used when describing data in a philanthropic context. 

Data resources -- Lists tools that "are intended to help you think about your data in new and more interactive ways."

-- The Editors

8 Trends That Will Shape Fundraising

(Derrick Feldmann is CEO of Achieve, an Indianapolis-based consulting firm that works with nonprofits.)

When I was working in development for a nonprofit, I was expected to provide my executive director with annual fundraising goals for my department -- goals that were based on donor history, prior-year results, and the likelihood that a certain number of prospects would give for the first time.

In addition to our baseline goal, we always established a stretch goal or modeled a best-case scenario for our efforts. Early in my career we never seemed to hit the stretch goal, in part because I didn't know our donors that well and because we based our predictions on what the organization needed, rather than on our donors' willingness to give.

Over time I realized that to make our stretch goal, we had to alter our approach. And so, in addition to market research and data mining, we came up with three questions to help guide our efforts.

1. What is causing donors to engage with us now?
2. Which fundraising approaches are still relevant and why?
3. What forces will influence donor behavior in the future?

In my opinion, these three questions should be the starting point for anyone trying to determine the long-term impact of their fundraising efforts (not to mention the future of fundraising itself). Recently I had a chance to sit down and revisit the questions, and I came up with the following eight trends that I believe will shape the fundraising industry and the relationship between donors and nonprofit organizations in the future.

Technology Trifecta
Increasingly, nonprofits will look at communications and fundraising through the lens of the what I call the "technology trifecta": Web, mobile, and social media. And as they do, they will test concepts across all three channels to determine the right mix for their own constituencies. Mobile will continue to gain traction as technology and mobile marketing techniques improve. Social media will open the door to better donor communication and stewardship. And the Web will be the go-to place for transparency and donor-interaction tools. Testing and experimentation across all three channels will be key to implementation. Organizations also will need to manage expectations and develop effective donor delivery methods that don't simply ape other organizations' tactics. The fundraising "shop" that doesn't align its marketing efforts with all three channels will have a hard time maintaining its position in the nonprofit marketplace.

Communication Control
Donors will have the ability to control how they receive communications from your organization based on personal preference and interests. Improvements in communications technology also will make it easier for nonprofits to connect with donors who seek specific information about the impact of a gift and/or an organization's health. In addition, organizations will allocate communication and marketing resources according to donor preference, rather than making assumptions about what donors want based on their content consumption.

Smaller Gifts, More Often
Donors will provide smaller gifts but will give several times over the course of the year. Organizations that provide small, impulsive gifting opportunities will be better positioned to strengthen their relationships with donors. In addition, donors will continue to drive smaller gifts toward projects where tangible results can be demonstrated.

Improved Transaction Times
Organizations will reduce the time between the giving decision and the actual transaction. One-click giving and other impulse-gifting technologies will gain in popularity. Giving will become a quick-and-easy experience that meets individuals' impulsive need to serve the greater good.

Donors Will Rate Fundraising Appeals
Thanks to the growing popularity of consumer feedback platforms such as TripAdvisor and Yelp, we will see new platforms emerge that allow donors to rate their fund-solicitation experiences and share those ratings and experiences with their friends.

Donor Loyalty Will Reign
Organizations will focus on donor loyalty rather than the size of the gift. Hard to believe, I know, but organizations will spend less time worrying about the transactional donor and will focus more time and energy on the loyal donor who attends activities/events, reads their marketing and communications materials, engages with them on social media platforms, and regularly volunteers. This kind of loyalty also will drive ongoing peer engagement and support from donor networks and force organizations to develop loyalty stewardship programs.

Crowdfunding by Donor Networks
We will see more donor networks comprised of individuals who come together around specific causes, engage in volunteerism, and/or willingly promote the activities of the causes and organizations they support. Increasingly, fundraising staff will have the capability to track these networks as well as other peer groups and use that information to leverage their resources.

Visual Impact Reporting
Organizations will move from annual reports to real-time reporting of their impact in the community. Fundraisers will become more adept at using digital communications technologies and creative design to inform donors about the impact achieved by their dollars. For their part, donors will demand such reporting.

Of course, all these predictions are just that: predictions. And even if some (or all) gain traction over the next few years, they might not affect every organization. Still, I believe that at some point all nonprofit organizations will need to incorporate many of the practices outlined above or face the prospect of falling behind, in both their fundraising and impact. The future of fundraising is about donors wanting easy and accessible opportunities to support, learn, and serve. It's up to you to get your organization ready for that future.

-- Derrick Feldmann