In order to expand their reach and effectively make change, some nonprofits are turning for-profit.  With the help of investors, capital, larger staffs (which they can afford to grow), and budgets for marketing and development, nonprofits turned businesses are finding themselves better able to fulfill their vision.  Is this a means of selling yourself to the devil or merely a way to support your vision and rather than struggle, see it fulfilled?

The New York Times reported today on one such business. Former AOL executive, Miles Guilburne, and his wife, lawyer Nina Zolt, had supported In2Books, a program that used books and the Internet as learning tools for inner city kids. The program was only ever grew slowly. And although the organization was not sustainable, the idea and the mission were.  Together with angel investors, Guilburne purchased a for-profit company, ePals Inc., in 2006 and the mission has boomed. The growth of the company spurred the interest of now partners, National Geographic and Intel.  Now the learning tools are reaching 13 million kids worldwide.  They surely didn’t sell out.

Taking from this example, we need to add that we think some of the greatest ideas for a business come out of a nonprofit venture. Our own Steve Butz is a former case manager who felt the need to really know how much change he was making, so he took a chance and founded Social Solutions.  He didn't cross over to the dark side, he just thought he could make a more significant difference through a business endeavor. Not exactly a mirror image to ePals, but our business allows us the ability - the assets, the funding, the smart people who work for us - to continue to carry out a philanthropic vision and our mission at that. Steve might have been working to better the life of one child at a time as a social worker, but through Social Solutions, he is able to better the lives of hundreds at a time by changing the way the larger organization is run.  Maybe he can take the credit for the trend?

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D.C. area funders, representatives of nonprofits and those generally interested in accountability and evaluation of organizations met this morning at the National Press Club for an inspiring discussion by Washington’s Latin American Youth Center (LAYC) titled, “Lessons Learned from the Latin American Youth Center’s New Strategic Direction and Tracking Progress with Efforts-to-Outcomes Software”. 

The Latin American Youth Center, a long-time client of Social Solutions, showcased their strategic planning initiatives and the role ETO software has played in their planning and goal setting for the success of the organization.  We heard from Lori Kaplan, Executive Director of LAYC; Isaac Castillo, Director of Learning and Evaluation at LAYC; John Kalafatas, portfolio manager at Edna McConnell Clark Foundation; Kate Robinson, Director of Strategic Initiatives at Social Solutions; and a memorable group of young people willing to share LAYC testimonials.

How inspiring it was to sit in a room full of people charged for the same cause, helping to make our nonprofit organizations more effective in an effort to help our young people.  It was a comfort to know that the LAYC, a leading multi-service nonprofit, was willing to take a leap of faith, use a tool like ETO to learn how to better serve the community and marry their organizational vision with the evaluation of their work. Our own Steve Butz commented, “Working with LAYC has been a remarkable experience. They are a truly commendable service organization whose work to tie their efforts to outcomes can serve as an example to all nonprofits who seek to make a larger impact.”  LAYC is doing everything right. Their commitment to bettering their organization, over time and through evaluation, shows their intent at a lasting relationship with the community and a desire to positively make a difference in the lives of those who most need it.

Latin American Youth Center, Edna McConnell Clark Foundation, ETO, Steve Butz, efforts to outcomes, evaluation, nonprofit

An organization that earned an A grade on the American Institute of Philanthropy has been in the news as of late. The William J. Clinton Foundation is getting some flack, donations to the foundation have skyrocketed since Hillary announced her campaign. For a foundation who has earned such a high grade for putting 75% or more towards program cost while generally spending $25 or less to raise $100, it seems to be storing away the full accountability it was praised for in light of the current election.  Check out another report card here. 

Former President Clinton’s foundation aims to strengthen the capacity of people in the United States and throughout the world to meet the challenges of global interdependence. Quite lofty. But he is earning credit for it.  His work to raise money to end poverty and create economic opportunity in poor countries has been highly regarded. But like any high profile organization, we should keep an eye on it. 

News as of late suggests that donations have skyrocketed since Hillary’s announcement to run because there are a lot of people trying to win the potential woman president over. For example, why are the Clinton’s offering to disclose the list of donors to the foundation if and only if Hillary wins?  Read the news for yourself: here and here. 

Just as a teacher keeps pushing his or her students to reach their potential, we must push this organization to continue to perform at its best.  If we push – it we ask for details and we hold them accountable – they will run as an effective organization.  No one wants to see an A student fail.  Despite the news and despite possible “bumps” in the road, we are responsible for seeing that this organization, continues down the right path. 

accountability, Hillary, Willliam J. Clinton Foundation, charity, American Institute of Philanthropy, donations, president,

Some of the biggest donors in America aren’t names the average person is familiar with.  Andrew S. Grove, Adrienne Arsht, Lorry I. Lokey.  But the ones who make waves, are often those who make music, TV, or movies.  Think Bono.  Oprah.  Brangelina.  

Endorsements are nothing new to the word of nonprofits, much like how they are nothing new to the political world.  John Edwards had Tim Robbins, Barack Obama has Oprah, Mike Huckabee has Chuck Norris and Rudy Giuliani had John Voight.  All of whom are or were visible in the candidates' campaigns, speaking out on their behalf, raising money and attending rallies.  

According to most Americans, celebrity endorsements in the 2008 race doesn't affect them.  A recent study by the Pew Center for People and the Press found that around 70% of those surveyed said that endorsements from Oprah, Bill Gates, Angelina Jolie, Jay Leno or other celebrities make no difference in who they would vote for.

Regardless of whether voters take endorsements with them to the voting booth, celebrities continue to be an active part of presidential campaigns.  And just like politics, the nonprofit world receives much attention over celebrity endorsements by the media and public.  So, when it comes to nonprofits, do donors take endorsements to heart?

From charity golf matches to star-studded galas Hollywood is abuzz with raising money.  Hollywood Reporter even has a list of organizations and the celebrities who are involved with them.  But does a Madonna-endorsed event, an auction of a celebrity-worn item of clothing, or a Bono-designed shirt for sale, really benefit nonprofits?

Writer Greg Beato talks about celebrity endorsements and the nonprofit world, saying that critics should treat celebrities’ involvement in nonprofits for what it is—a sales role.   His point is valid.  Is it the escalating situations in affecting the people of Africa that is raising awareness of Americans?  Or is it the public outcry from the Madonnas and George Clooneys of the world.  Or look at Bono’s (Product) Red organization, that, yes, faces some scrutiny and , uses celebrity appeal to tug at the consumer’s heartstrings, much like a retail giant attempts to appeal to a consumer’s wants.

We’d like to think that Americans, similar in the way they think about politics, go beyond the media and pop culture attention celebrities can bring to charities and giving and really think about where their dollars should go.  Research an organization you are thinking about giving to as you would Senator Clinton’s healthcare plan or Senator McCain’s Iraq plan.  Ask for accountability when it comes to where your dollars will be spent, as you would of a candidate who accepts money from public interest groups.  If not, whether you walk into the voting booth uninformed or give away your hard-earned dollars uninformed, there isn’t anyone to blame, except, well, yourself.

As previously posted, younger generations are getting more involved in the world of nonprofits, both working for them and giving to them. As nonprofit organizations seek to make giving more simplified for this group, they must not forget that transparency and accountability remain equally as important, if not more so. It seems this “new” idea of online giving or micolending takes it a little too far. Yes, those seeking to make a charitable contribution can do so, but this quick, “cool”, un-researched giving appears to totally and completely leave accountability behind. Check out this example of an online game where nonprofits compete for donations on Facebook. Doesn’t look very transparent.

Take for example, Kiva. Kiva is all over the place lately. And although you can do your own research before you donate, most people probably don’t. Kiva gives you the opportunity to donate a very minimal sum, in the form of a loan to a needy entrepreneur in a developing country, who will write you updates and eventually pay the loan back. Although this way of giving is very appealing to those who want to make a difference and have the means to do so, it sort of glosses over the whole idea of holding the organization accountable for the donation you provide.  And because it is deemed “cool”, it sometimes forces the donor to choose between cool and responsible. Why are we making it harder?

RealityCharity even takes it further. Not only can you give online, but you can give to those people with whom you may find a personal connection.  Real people post photos and messages about what they want/need in the form of charity. Donors can then select to help them out. RealityCharity uses this platform while criticizing nonprofits who aren’t transparent enough or who aren’t able to get the money to the people who really need it.  But their way of connecting the donor to the cause seems a little out of whack. There isn’t any structure. They don’t have the vision of a real, true nonprofit. Check out this evaluation of RealityCharity, it rings all too true.

So even though the opportunities to donate have grown as has the simplicity to do so, we must remember what’s most important.  Don’t get caught in the new, appealing fad. Remain true to your roots. Continuing to hold those organizations which we seek to support accountable will help that organization outlast the internet donation phase and continue to benefit those in need long into the future.

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,