Establishing the Value of Your Cause in the Market Place

Wouldn’t it be nice if we had something to sell that the market wanted instead of dreams of a utopia where everyone is healthy, wealthy, educated and happy? What if our causes spoke to the foundations in such a way that they were compelled to give support? Indeed, what if there were some way to make them come to us , seeking our assistance and advice on dispensing their money? A fantasy, I know, but a recent story in the New York Times gave me hope.

Holden Karnofsky and Elie Hassenfeld, former hedge-fund analysts, have formed a non-profit called GiveWell that provides funders with hard data on the performance of non-profits they may be considering for support. GiveWell chooses a category of organization, such as African Relief, then solicits information from all of the organizations in that category. A percentage of non-profits will respond with data on their work, its cost and its outcomes. Although many organizations find GiveWell’s questions intrusive, and even beside the point, and even though some resent the implication that their mission can be summarized in how many people were served, a high percentage see the value of transparency, and cooperate with GiveWell’s in-depth analysis.

The result, displayed on GiveWell’s website, is a look at many organizations and a rating of their performance. This is a return on investment model, something few organizations study themselves, although many foundations now require metrics on outcome as a necessary part of reporting and a prerequisite for funding.

I’m interested in GiveWell mostly because they may help some of us establish our value in the marketplace. If you can prove that your return on the dollar is significantly better than mine, then you will probably get the funding we're competing for. And if GiveWell works the way the founders wish it to, foundations will come to this new resource to get the information they need to make their decisions more rational and thus more palatable to their boards of directors, who more and more frequently require numbers to demonstrate success.

Ignorance of Outcomes Leads to Missed Opportunities

In a New York Times Sunday Magazine feature story, five experts on educational philanthropy were brought together to discuss the way education is funded in America today. At one point the dialog between a head of philanthropy and the administrator of charter schools addressed the subject of measuring outcomes.

“Historically, when philanthropists would give money to a nonprofit or a school system, they would say, ‘I want to fund this many kids.’ And the next year they could ask the organization they had funded, ‘Well, did you reach that number?’ And if you funded that many kids, the grant was considered a success.”

The charter school administrator said that “in fact, a lot of the money that goes into education still goes into inputs. I recently had a discussion with a major philanthropy that wanted to invest in some programs in the city, and I asked them, ‘What are the results you expect this to produce for your investment?’ And they had no clue. But increasingly, that’s a rarity. There’s been a shift. If you don't produce results, even though everybody loves you, your funders are not going to continue to fund you.”

I find that most non-profits don’t know how to measure outcomes. There is ignorance about evaluation tools, almost a fear of the challenge to collect and analyze data, and as a result, there are many funding opportunities that are lost.