11/100 Things about Nonprofits: Measure the right thing

“Beware of geeks bearing formulas.” Warren Buffet’s quote in Wired Magazine on the formula that led to the downfall of Wall Street was aptly quoted by Phil Buchanan, the Executive Director of the Center for Effective Philanthropy in an exchange on the Tactical Philanthropy blog.

This reminds me of a quote in Boards that Make A Difference by governance guru John Carver that has always stuck in my head. “A crude measure of the right thing beats a precise measure of the wrong thing.”

All this was stirred up for me by the recent buzz within the world of philanthropy for measures to better direct donor giving to “what works.”

There is a real danger in oversimplifying what works.

While I’m completely in favor of focusing the attention of our sector toward processes that produce real community results, I’m wary of reliance on simplistic nonprofit rating systems (e.g. GiveWell) that attempt to duplicate for mission effectiveness the same style of rating formulas that Charity Navigator and others use to rank nonprofits by their financial metrics. We already know that judging a nonprofit solely upon the percentage of program expenses tells us nothing about community results and, in many cases, not even a terribly lot about nonprofit financial effectiveness.

How can we better use the indicators that do exist to influence whole systems change and not just randomized philanthropic endeavors?

There are already some pretty powerful indicators out there. Hats off to the Annie E. Casey Foundation for its funding of KIDS COUNT data nationwide and in every state. (We are very fortunate to count the superb Rhode Island KIDS COUNT among our clients). Or thanks to UNICEF for the State of the World’s Children.

Having data such as this helps us understand where we are starting and helps focus our attention on the progress that we’d like to see made.

Throughout RI, we heard that publishing credible and sophisticated data sets on current conditions has led to significant changes in the way that RI government and nonprofits think about policy for kids.

But in addition to its data, Rhode Island KIDS COUNT is known for researching and bringing forward examples of practices that have been shown to make real progress for children. By bringing all parties to the table, they help entire systems develop legislation, policies and practices that better serve children.

UNICEF articulated GOBI-FFF, now considered the basic elements of child survival, to reduce infant mortality worldwide. (Growth monitoring, Oral rehydration therapy, Breast feeding, Immunizations with  supports from Female literacy, Family spacing, and Food supplements).

Yes, we can and should hold many individual organizations accountable for where they spend their dollars and the quality of their investments. But if we get distracted and only focus our attention on what nonprofits donors should invest in, as a community we distort the massive, interlocking systems changes needed to dramatically move the needle for all.

Funding the best of charter schools won’t change public education as long as charters enroll miniscule numbers of kids. Funding a few individual organizations that adopt child survival isn’t enough to eliminate communicable disease when 100% of kids need to be immunized.

We must hold accountable whole communities, states and countries for the investments they make in the outcomes we profess to desire. Our society must invest in practices at the scale needed to reach every kid or every adult and not just the fortunate few who may win the nonprofit assistance lottery.

While I believe in the power of nonprofits to change lives, I also know that our institutions are a small part of the picture.  The easily measured usually serve as band aids or incubators. It’s a lot harder to measure the efforts of the advocates or catalysts for widescale change.

I’d hate to see philanthropy distracted from enabling big system societal changes. Let’s not invest excessive amounts of energy in measuring and evaluating individual nonprofits in isolation, and miss the bigger systems that need our attention.