Thursday, June 21, 2012

The Challenge of Measuring What Matters Most

(This brief article, by Ken Berger, was originally published in Philanthrofiles - the Association of Small Foundations' blog.)

Four years ago when I began working at Charity Navigator, I went on a “listening tour” to see what concerned experts in the field about our rating system. The fundamental concern expressed by many was that we were not factoring in what matters most: the results (especially outcomes) of the work of the charities we analyze. That feedback, among other things, led us to make a commitment to upgrade our rating system over time in the direction they had counseled.

After a few years of research, funded by one large and a number of small foundations, we came to the conclusion that there is a fundamental problem with the experts’ suggestion. Essentially, for the vast majority of charitable causes, there is no publically available information on results. In other words, most charities either do not currently compile such information or if they do, they are unwilling to share it publicly.

The traditional nonprofit culture is to not make waves (unless you are an advocacy organization) and keep a low profile. Nonprofits don’t want to give stakeholders any reason to weaken their trust in them. Nor do they want to give competitors any leg up by learning sensitive information about the vulnerabilities of internal operations. Therefore, the increasing emphasis on transparency about performance is resisted by many.

So what can be done? We believe that we all must reward those courageous early adopters who understand that the excuses are unacceptable. That is why Charity Navigator is currently adding a new dimension to its rating system that will reward those charities that provide the best results reporting. In other words, we realize that it will probably be quite a few years from now before there will be adequate comparable and standardized data on charity performance to benchmark the results of one organization against another. However, we believe the first step to take to get there is to encourage and incentivize public sharing of results data by charities.

The fundamental reason that charities exist is to provide a public benefit. If they do not measure and manage their performance to assure they are getting the job done, how can anyone be certain they are using precious resources as efficiently and effectively as possible? Furthermore, how can they truly be held accountable by their stakeholders including funders like you? Finally, how can those being served get the best possible assistance?

We hope you will join with us in helping to transform the nonprofit sector from “duck and cover” to a transparent and performance-driven orientation focused on results. We believe that in doing so, many more people and communities will be helped in a meaningful way and the world will be a much better place.

Friday, June 1, 2012

President & CEO's Report for June 2012

We occasionally hear from critics of Charity Navigator who claim we are biased politically. Some claim we are leaning to the right and others to the left. However, we have always endeavored to be neither of the above and instead as objective and unbiased as possible. We believe a string of recent media appearances (MSNBC, FOX and then twice on CNN) as well as recent endorsements from both sides of the political spectrum; bolster our belief that we are maintaining our desired impartiality. Specifically, within the past few weeks we were mentioned on both Anderson Cooper 360 and The O’Reilly Factor. In both cases we received very positive endorsements:

We are humbled by the praise and only further encouraged that we are maintaining our independent role by providing objective charity ratings for whatever cause your heart and then head (!) leads you to support.

Another humbling experience occurred at our office door in follow-up to my appearance on Anderson Cooper (full segment can be found here). A couple came to the office and indicated they had seen the interview segment and, once they realized how close our office was to where they live, decided to come by and seek our advice face-to-face. The couple was particularly interested in supporting the best homeless service charities throughout the nation. After we gave them the advice they were looking for, I concluded the discussion by saying, “You know Charity Navigator is also a charity and largely relies on the voluntary contributions of our users. By supporting Charity Navigator, you would help millions of people in making their selection among homeless charities. As a result, you would be leveraging your charitable dollars and moving even more money to some of the best homeless organizations around the country.” To our amazement, they pulled out their checkbook and gave us a sizable donation! We have talked before about what we call the “connect the dots problem” (see second to last paragraph in the recent article I wrote with Craig Newmark here). In this case, the dots were connected on the spot!

We are working on something we call CN 2+ that will be fully implemented even before CN 3.0. For CN 2+ we are taking a look back at our original rating dimension of financial health (you could call it CN 1.0) and seeing what, if anything could be improved within it. We have organized a task force of financial experts to help us in this regard and you can find a list of them here. We have held four meetings so far and are getting some tremendous ideas that we hope to implement in the not-too-distant future. Stay tuned!

We want to thank the Hewlett Foundation for a renewal grant (for the third year in a row!) and a first time grant from the Bodman Foundation to help us continue our efforts to develop CN 3.0. Also, thanks to all of you who have contributed thus far through our spring appeal and celebration of our 10th Anniversary. Onward!

Finally, please join me in welcoming our newest Board member, Marie Wieck. Having worked at IBM for many years, she brings a wealth of ‘techie know how’ and management experience to our Board

All the best,

P.S. Last month I mentioned my recent interview on the Ted Hart Radio show here. We have just been informed that this has become the #1 most popular radio interview in the entire history of the show! Thanks for listening!