No stranger to raising the issue of accountability and nonprofits, Senator Chuck Grassley (R-IA) is taking on the higher ups.  The higher ed ups, that it is.  The Senate Finance Committee is asking for wealthy colleges and universities, those with significant endowments in their back pocket, to show a bit more transparency and explain rising education costs.  Why’s that?  Well, a recent report that declared a record 76 colleges and universities achieved endowments of $1 billion or more in the last fiscal year probably had something to do with it.  Similar to restrictions imposed on nonprofits, the committee is asking for universities to spend 5% of their endowment, preferably on tuition assistance programs to assist rising tuition costs, or face losing their nonprofit tax status.  Voices in response are showing up all over the place—like here, here, and even here.   One reason, among many, why university officials and critics disagree with the call from the Senate Committee, is that donations to endowments are often earmarked for particular areas or issues.  Sounds familiar.  Maybe because New York Times reporter Stephanie Strom recently wrote about the problems the Red Cross and others face donations are earmarked as a way of assuring donors that their money is going to exactly where they want it to go.  The accountability bug is popping up all over the place.  This week, its endowments who are facing the music.

With the drop in the market last week and the rising cost of expenses putting a strain on most budgets in the last year, it looked like 2008 was off to a rocky start in the nonprofit world.  But a few recent, giant steps in the right direction certainly shine through and keep our spirits lifted; these just might be some of the best advances yet! 

First off, and what we’ve clamored for in an earlier post, nonprofit sector staff salaries are up – in fact they’ve seen an increase of almost 4 percent since 2006, in a study released by Total Compensation Solutions (TCS), a human resources consulting firm. Hallelujah, we’ve finally learned how important it is to reward and retain the talented staff that works so hard to better society.

Secondly, as reported by the Chronicle of Philanthropy, members of the House Oversight and Government Reform committee suggested that all charities should be required by law to tell donors how much of their contribution would be spent on programs related to the group’s mission. Just what we want to hear.  Holding organizations accountable is the right idea, and if we want donors to investigate before they give, we might as well make it easy for them to do so.  The more an organization puts out there, the more success they are likely to see in the long run. We are all for it.

And lastly, the IRS released new tax forms for nonprofits to determine whether they are exhibiting sound management practices. Guiding these new forms were the values of enhancing transparency, promoting compliance and minimizing the burden to nonprofit filers. The forms will be phased in as early as next year. Way to go government, promoting better run organizations!  Surely this is a step in the right direction. Although some might deem it a little “big brother-esq”, this might be what it takes to steer nonprofits in the right direction and eliminate the those who just can’t get their act together.

All in all, January is looking like a good month for the accountability report card.

nonprofit, accountability, Chronicle of Philanthropy, charities, Total Compensation Solutions, IRS,

A lot of talk this week on the future--both immediate and long-term.

On the New Voices of Philanthropy blog, author Trista Harris asks other bloggers for their predictions on what foundations will look like in the future-10, 25, even 50 years down the line.  Some of the predictions?  Foundations will be better equipped to handle turns in the market (given today’s economy, we are wishing for this one to develop early).  Foundations will be more strategic and concentrate on multi-year giving.  Sean at Tactical Philanthropy even predicts a “social stock exchange” that, apart from traditional financial markets with the same model, would actually lead to a better sense of community and camaraderie.

Speaking of a looking ahead, as talk of an unstable econom heats up as evidence points to a looming recession, we can’t help but wonder what this will mean for foundations and the nonprofit sector.  Michael Seltzer, who authored a book for foundations following the economic downturn in the 80’s, talks about how the economic outlook affects the nonprofit sector and sees a handful of immediate ways in which the industry can really feel the burden.  A downturn in the economy can lead to a decline in corporate giving.  Individuals, who are faced with unemployment and rising economic insecurity, tend to cut back on their contributions.  A declining market can mean a decline in returns on endowments.  And local governments also feel the pains, leading to cuts in social services programming.  

It's often that those who are must likely to feel the hit are hit the hardest.  It's times like these when the nonprofit sector needs to show its true colors-- a willingness to fight for others all with a tireless spirit.  Talk about change.  Be effective.  Show your results.  Prove your worth.  Make everyone know that what little dollars they have left in their pocket can work for good.  And let us all hope the bounceback is strong and swift.

By definition, accountability means the state of being explainable or answerable.  Or even better, a willingness to be.  Talk of accountability is everywhere.  Newspapers, websites, consultants, executives ... heck, scroll through this blog and you’re bound to find the word pop-up all over.  Google “accountability” and hundreds of stories appear--Major League Baseball, the 2008 presidential campaign, the recent GAO report on Iraq, Nebraska’s football team —always pointing to holes where accountability is lacking.  In fact, you’d be hard-pressed to find a story about someone or something being praised for being accountable.  The nonprofit world included.

So why is it that we tend to associate accountability with negativity?  

Maybe its because we tend to think transparency equals accountability.  If they show it, it will come.  Organizations displays financial records—showing flaws in how they distribute funds to programs, discrepancies in accounting, or that large sums of money was spent on a program that failed.  We are left asking questions.  Why?  Because we want more, we need more.  Instead, we are left disappointed.  We don’t want a show, we want a dialogue.  The willingness is there, but the answers are not.

What makes an organization accountable is their ability to see beyond simply realizing such flaws exist and doing something to counter them.   It’s their willingness to step up and provide the answers, the explanations, the promise for change, and to turn around.  The road long, tough, and often very bleak.  Some argue that while governments have elections and corporations have boards, nonprofits lack the “who” to be accountable to.  Yet, their “who” is bigger than a process, bigger than a board.  Their “who” is the people, the reason, the cause for which they exist.  When it comes to accountability, it’s not the “who” nonprofits need to figure out.

Maybe we associate accountability with negativity because that it is all we see.  Or even worse, all we know.  Maybe we need to go beyond the definition of accountability to demand more and ask the really important question—how?  

We talked about Gen Y making waves in the nonprofit world but Gen X plays an equally large role.  A national study done by The Falconer Group, a family wealth advisory firm in Michigan, recently added to the philosophy that Generation Xers are the new face of philanthropy today.  One thing to add, the focus is on women.  The study outlines the likes and differences of Baby Boomer women born between 1945 and 1960 and Gen X women born between 1961 and 1980 and their philanthropic giving. Check out the article.

Although both groups of women gave because they felt compassionate for the cause, Gen Xers are the ones truly defining what it means to be a donor.  Well-educated and ready to give, they are demanding new methods of support and participating in venture philanthropy partnerships. They are concerned with global perspectives and won’t settle for traditional methods of solicitation.  These women are looking to change their communities and change the world by getting involved and rubbing off on others. 

Gen Xers in general are at the point in their lives where they are financially able to give and civic-minded enough to want to do so. The Chronicle of Philanthropy wrote about it here. Interestingly enough, and important to our philosophy, the Chronicle states that the United Way of America reported in 2001, that Generation Xers are “demanding more information about groups before they make a gift, tend to distrust large organizations, and are more likely than their predecessors to choose volunteer activities that provide challenges and social connections”.  Gen X wants to hold organizations accountable, and they are.

Good to hear. We like where this is going. And we like that charities are going to have to change the way they do business to attract those Gen X givers.

charities, accountable, volunteer, Chronicle of Philanthropy, donor, venture philanthropy, giving,

For those people who HAVEN'T been following events over at GiveWell, here is philanthropy.com's reporting -- which followed the NYT coverage of the same issue. We aren't going to re-hash the story in all its details, because it has been done. But, what is interesting is that a space that is so focused on caring, and serving, is also so fraught with nastiness. A young upstart decides to go it alone -- shake it up -- sneer at his seniors -- and makes very public mistakes along the way. And, his subsequent public flogging has been painful.

As more non-profits emerge, as donors wake up to the power of their investments, as individuals look for a way to make a difference, we risk becoming so zealous that we're blind to anything that doesn't fit our particular storylines. And, young would be social innovators are eager to start fresh. Disenfranchised by what is there, they want to start anew. (Think young voter affection for Obama) They want to make a difference, on their terms.  Who can blame them? The establishment isn't always an open place.

Philanthropy.com asked leaders what they saw on the horizon in 2008. Issues ranged from application of technology, to transparency, to particular problems/opportunities plaguing one sector or another (ie arts, environmental, etc.). We'd like to chime in with our predictions -- measuring effectiveness will become increasingly important.

But we'd like to add this -- for the sector.

Empower young people to make a difference within current organizations. Be willing to be self-critical and change (a hallmark of the young!) Recruit and PAY young people. Talent follows money. Mentor young people. This is hard work -- and it can be all consuming. Rosetta's New Year's post makes this all too clear.

Okay, and, we have to include it: measure the effectiveness of your programs, people.

Holden Karnofsky, GiveWell, nonprofit, donors, investment, philanthropy, social innovators, measure effectiveness

                                                         The New York Times recently ran an article arguing whether or not grantmakers should hold organizations accountable (the same way we argue donors should hold organizations accountable) in order for them to receive grant money.  What's more important, an organization successfully completing a single charitable task or effectively changing the face of an issue over time? Or is there a middle road? You choose.  Check out the article, it's bound to stir some things up.

A new year.  A time to reflect on the year past and look forward to the months ahead.  How can you sum up the nonprofit world in 2007?  Much like you would any other industry—a year full of ups and downs, triumphs and pitfalls.  Trends such as social entrepreneurship, voluntourism  online giving and watchdog-like sites dedicated to leading donors in the right direction (think CharityNavigator and GiveWell) accelerated, as did calls for accountability and measurement of programs.  So, what’s next as we look forward to 2008?  Writers from The Chronicle on Philanthropy compiled predictions from experts and leaders in the nonprofit world.  A rise in increased usage of new media such as YouTube, Flickr, social networking sites, etc, a continued focus on green causes, alternative decisions and ideas coming from young minds who rise to executive positions in organizations, and, of course, upcoming presidential election are a few ideas the experts expect or hope change the nonprofit landscape in the next year.  Forbes’ editor Richard C. Morais even entered the ‘08 predictions ring, suggesting there will be an increased focus from donors to ensure they are giving to effective organizations and even predicts a scandal of Enron-size proportions to force increased regulation.  The nonprofit sector can’t afford to lose momentum on the call for effectiveness and accountability, and measurement needs to be a the forefront of every organizations’ list of resolutions this year.  A fresh start is needed and a new year is just the time to do it.

giving, donors, nonprofit, Richard Morais, effectiveness, accountability, measurement, GiveWell,

Today Sally Beatty wrote a Wall Street Journal article on: effectiveness. Yes, on the ability of donors to track the effectiveness of the charities they give to. Annie E. Casey, Edna McConnell Clark and Latin American Youth Center were all included as was Youth Villages.  We don’t need to editorialize it—just go read it. Accountability, measurability and effectiveness are beginning to enter the national dialogue. SS of the NYT also wrote today — on GiveWell. And, philanthrophy.com reports that the exec director of Charity Navigator is leaving. We link to Trent’s site so you can hear it straight from him.

WEF is coming in January. And, direct from the horse’s mouth: “a closer examination of the international environment also reveals that leadership vacuums are beginning to emerge on a wide range of critical issues looming on the horizon. Moreover, a paradox has emerged in our networked world where knowledge is ubiquitous and change is rapid, but the absence of a common vision and agenda ensures that the status quo will be maintained with respect to major global challenges.” LINK There are five “pillars,” Business, Economics and Finance, Geopolitics, Science and Technology, Values and Society.

Leadership vacuums, ahem. We see a leadership vacuum of our own...as there is increasing debate about the delivery and value of “charity,” and the move to social investing, with all its baggage. We read articles EVERYWHERE that debate the status of foundations, evaluation, program effectiveness and more. From national articles calling for accountability, to regional articles that are basic tutorials on how not to get scammed, charity is in the news. The rise of volunteerism, charity watch groups and cynicism among potential donors is on the rise.

While we can’t host our own WEF, we can start to fight back. According to a recent post of Guy Kawasaki, it is word of mouth referrals that power decision makers, not necessarily “influencers.” Okay, this is related to online communications — and is advertising based.  However, there may be something to it for our space. How does the macro (WEF) trickle into the micro (our daily work). Think the Devil Wears Prada. (Miranda’s lecture on the evolution of the lumpy blue sweater). Or, for our community: how do we bubble UP.

Our community is head-down doing good work. Measuring it. Testing it. Changing its programs as needed. Take a moment to share your successes outside our community – tell a colleague. Tell a friend. Go viral. Why? Because we believe real anecdotes, successes and challenges are what will make a difference.