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November 09, 2008

Independent Sector
What's Needed: a Dow Jones Index for the Nonprofit World

With the whole world watching the indices that follow financial markets second-by-second, Alan J. Abramson, a scholar of the nonprofit world, wonders why there’s not a similar index tracking the nonprofit world.

At a meeting of the Independent Sector here, Mr. Abramson suggested that charity leaders consider building what he called a ”Dow Jones index for nonprofits.”

“With the nonprofit sector, we get analysis one, two, three years after the fact, looking at the 990s or waiting for some survey or another,” said Mr. Abramson, professor of public and international affairs at George Mason University and a senior fellow in the nonprofit sector and philanthropy program at the Aspen Institute. “We need the same solid, immediate information to track performance in the nonprofit sector as you get with the Dow in the financial markets.”

Mr. Abramson said that much of the data that could go into such a charity index is already available and would just need to be identified and extracted. For example, he said, labor-department statistics on employment could be boiled down to examine nonprofit employers only.

“We could get a real-time look at whether nonprofits are hiring or firing,” he said.

Sacha Litman, founder of Measuring Success, a Cambridge consulting company, said that a real-time indicator of the health of the nonprofit world could help charity leaders make critical managerial and fiscal decisions.

“Indexes would have to be designed in a way that would influence day-to-day decisions,” Mr. Litman says. “The nonprofit sector deserves much better data than is now available.”

— Debra E. Blum

Sunday November 9, 2008 | Permalink

Comments

1. If I recall correctly, the United Way created a giving index back in the late 1990s with that goal in mind. Do they still have it?

   — Matt    Nov 11, 02:05 PM    #

2. The threshold question is, What would such an index “measure”?
   Indeed, is the suggestion that, unlike the for-profit sector, a single index alone would be meaningful for and about non-profits?
   Seems unlikely, but further explanation may be convincing.

   — Ron Wormser    Nov 11, 02:43 PM    #

3. Interesting concept, but isn’t ownership the primary basis of the stock market? Stock price is the primary outlet for shareholders to value their stake in the company, but the nonprofit sector lacks this essential component. Could the answer lie in marketing tax incentives?

   — Alan    Nov 11, 03:14 PM    #

Commenting is closed for this article.

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