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.' "

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.

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."

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.)

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 her talk justice (you can watch the livestream here), but here's the gist of what she said:

'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).

 

[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?

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.

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.

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.

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.