June 18, 2008
Darwinism for Charities: Only the Strong Shall Survive
If charities can’t show results, they should shut their doors, says “Tom Belford,” the veteran fund raiser and author of The Agitator.
Too many charities are competing to solve the same problems, he writes. And too many of the under-performers are sucking resources away from the others to achieve any good.
His solution? The Internal Revenue Service should force organizations to prove every five years that it has has expanded its financial and other resources; otherwise, it will lose its nonprofit status.
“I’m not pushing the ‘all nonprofits should be more business-like’ line,” Mr. Belford writes. “What I am pushing is ‘perform or die’ … and figure out a way — your way — to establish that your nonprofit actually is performing … performing in the sense of achieving substantive goals, not just processing stuff.”
Do you agree? Should charities have to prove results to maintain their tax-exempt status? Click on the comments link below this post to share your thoughts.
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I too have come from the school of nonprofits should be more business-like. I think, however, that is a dangerous measurement to take.
Nonprofits do not exist to grow in size but to serve a cause. A social-service nonprofit is going to have different funding needs than a health-care or education.
I think that funding/resource growth can be a good indicator for the fundraising staff but not for the organization as a whole.
— Jason Dick Jun 19, 12:34 AM #
While the words “Perform or Die” may seem harsh, the point has validity. However, I am stymied at the concept that the measure of such “performance” would be the expansion of the organization’s own resources.
Mission? Vision for a better community? Aren’t those the measures of performance that matter most?
Hildy Gottlieb
www.HildyGottlieb.com
— Hildy Gottlieb Jun 19, 09:00 AM #
I believe that the for-profit sector has deliberately developed practices and supporting organizations that help it operate efficiently and effectively in achieving its goals. The social sector certainly still lacks the appropriate baseline standards and a supporting cast of organizations to support a sustainable and growing sector.
For many, the ultimate question for these organizations becomes: How will we be able to continue to do what we do for a very, very long time? Naturally, the first place to look would be the for-profit sector.
I work at Root Cause, a non-profit seeking to advance innovation for social impact. Our recent publication, Business Planning for Enduring Social Impact, provides on strong example of a useful for-profit parallel for social impact organizations. The authors of this book argue that non-profits can utilize business planning processes (much like the for-profit sector) to help solicit funding to take dramatic steps towards scalability and sustainability-as opposed to the endless year-after-year fundraising frenzy.
This serves as one example, but I would venture to guess there are many, many more examples.
Behrad
www.rootcause.org/bizplanning
— Behrad Jun 19, 11:47 AM #
Expanded financial (or other) resources does not necessarity equate to the achievement of “substantive goals.” One facet of success can be measured along these lines, yet actual outcomes should be the gauge of legitimacy, not financial or programmatic output.
I would push for seeing much more in the way of mergers by organizations similar in mission and scope. Not only will duplication of effort be mitigated but so too the increasing pressure currently placed upon the donor community.
— Casey Jun 19, 02:43 PM #
Over the years, I’ve seen too many nonprofit organizations that got comfortable and complacent about actually making a difference. They are content to collect their government contract revenue, raise a little through fundraising and say: “Aren’t we doing great!” Organizations should be required to show they are making a difference—actually creating a change in the world—and how they are mvoing toward accomplishing their mission. And in concrete terms, not just the usual “blah-blah”.
— Philanthro Joe Jun 19, 03:04 PM #
Perhaps the focus should be on combining efforts of nonprofits serving the same cause. In my experience, few nonprofits are the ONLY ONE serving that particular need for that particular group. Rather than being egotistical (“Our nonprofit is better than that one”), why not combine two nonprofits into one, thus sharing resources and more efficiently accomplishing a mission?
clover frederick
nonprofit marketing network
www.nmn-online.org
— Clover Frederick, nonprofit marketing network Jun 19, 03:05 PM #
Pushing charities to expand financial and other resources to maintain their nonprofit status sounds like a sure fire way to make sure that charities lose track of their mission and vision.
Worse yet is to suggest having the IRS regulate the nonprofits. Giving the government another task is a mistake. Our government has allowed our infrastructure to deteriorate, has shown an inability to respond efficiently to disasters, and has not addressed a looming energy shortage that has been known for at least 50 years.
— Frank K. Simon, Jr. Jun 19, 03:22 PM #
While I couldn’t agree more that ineffectual nonprofits ought to fade away, having the government serve as arbiter of which ones are deserving would be lunacy.
However, one invaluable service the government could provide is to impose strict and uniform transparency guidelines, enabling thoughtful donors to carefully examine a nonprofit’s operations to determine for themselves whether it merits their support.
— Jeff Steele Jun 19, 04:33 PM #
I second Frank K. Simon’s thoughts. Also, the prospect of giving the IRS another regulatory hammer for nonprofits to beat up on one another strikes me as a good way to ensure that well established, bureaucratic nonprofits gain market control and force out smaller innovative organizations competing for the same donors. If one were designing a system to encourage consolidation of power in the hands of a few large NPs, one could hardly do better than Mr. Agitator’s regulations.
— Patrick Jun 19, 04:37 PM #
The problem with the “Show results or Die” approach is that it is impossible to prove a negative, which is true for the results of many non-profit programs. In the following essay, using “results” methodology I “prove” that the Good Samaritan was a failure.
The Good Samaritan & “Performance Measurement”
by Bill Huddleston
Currently, there’s a lot of hype in the world about being “results oriented” and the culture of “performance management” has seeped its way into almost every realm of American life, including business, government and now, the non-profit world as well.
Well, why shouldn’t it? Doesn’t it sound like it’s the only way to be, after all, who could be “against results” or against “performance measurement.” It sounds great, but like the question, “When did you stop beating your wife (or husband)?” it sets the stage in an extremely negative, and skewed fashion.
Let’s use a historical example, the story of the good Samaritan from the Bible is one that I believe is so widely known that it qualifies as a societal story, not just a religious one.
To recap, in the parable a traveler is robbed, beaten, stripped of his clothes and left for dead. Two different people walk by, leaving the robbery victim alone. Then a man from Samaria (the Good Samaritan) comes upon the man, and even though the two different groups hated each other, he stops to render aid. The Samaritan takes pity on the victim, bandages him, pours oil and wine on his wounds, then puts the victim on his donkey and takes him to an inn and takes care of him. The next day, the Good Samaritan gives the innkeeper two dineri (this was two days wages at the time) and tells the innkeeper, “Look after him, and when I return I will reimburse you for any extra expense you have.” (The story is from Luke 10:29-35).
Now let’s apply modern performance measurement and outcome techniques to this story. With 2000 years of history the story still resonates, how many people have been helped because someone remembered the story of the Good Samaritan and acted in a way that was not perhaps their first impulse? We will never know, and to the performance management crowd, this incident would be recorded today as “too expensive” and “ineffective” – after all, the Samaritan only helped one person. We don’t know if the Samaritan ever came back and paid those extra expenses, and it was two day’s earnings to help just this one person.
It would also received the rating of : “Results Not Demonstrated” – we don’t know if the victim ever recovered, was permanently injured, or had mental impairment due to his injuries. All we know is that he had the crap beat out of him, multiple people walked by, until the “unclean” Samaritan stopped to help.
According to the performance measurement tools, the Good Samaritan “program” was a failure and had no impact.
I think not.
Copyright Bill Huddleston, All rights reserved.
www.cfcfundraising.com
Blog: www.cfctreasures.wordpress.com
BillHuddleston@verizon.net
— Bill Huddleston Jun 19, 09:52 PM #
I agree with Tom that a cull of nonprofits and charities should be undertaken. Not all well intentioned individuals are entitled to the benefits of charitable status. However , financial growth should only be seen as a criteria for success if we are going to continue to manage issues and perpetuate problems through the nonprofit delivery model. Building empires ( I have worked for two) almost always leads to mediocrity and self preservation. Large organizations devote huge resources and energies sustaining the organizational monster while many grassroots otganizations actually solve problems – one meal, one home, one child at a time.
I won’t go so far to say that continuous finaincial growth should be considered a failure but we need better measuremnets that an organizations ability to spend other people’s money.
— Bob McInnis Jun 22, 12:01 PM #
I greatly appreciate the comments that have been posted thus far and agree that success mearures need to be taken – but with an eye toward improving individual’s lives and not the charities bottom line. Before any meaningful system of measures is developed, however, we have to stop lumping all non-profits together. My $350,000 a year charity can hardly be compared to multimillion dollar (multibillion??) non-profits out there and should not be viewed in the same light.
— Rene Morrissette Jun 30, 03:21 PM #
Although I do agree that there are many repetitous nonprofits that serve similar (if not identical) populations with similar programs, I can only imagine that such an oversight by the IRS would be a huge burden, perhaps near impossible. There has to be an easier way to “weed” out the bad from the good.
Funders have the opportunity to vote with their checkbooks. As a foundation program officer, I am constantly looking for overlapping missions and which organizations are succeeding or have the potential to succeed. The cream rises to the top and the lower-performing nonprofits never receive funding. To be honest, I am in wonder as to how some of these nonprofits continue to operate with the lack of public/private support.
— Michael Jul 1, 12:35 PM #