The convergence of business and the non profit sectors in recent years has sparked an interesting conversation around the use of business lingo and methods in the social sector. Regardless of your preferred term - venture philanthropy, philanthrocapitalism, social entrepreneurship - the involvement of business in the social sector has prompted good debate on 1) how to quantify the impact of programs and 2) determine the quality of social organizations.
GuideStar has been at the forefront of this endeavour - offering IRS 990 reports on public charities, for free and on-line. Among many in the sector, it is one of the first places to go to gain insight on an organization's current finances. However, the service is limited to the financial elements of an organization - which doesn't always speak to whether a particular program is producing desired results.
Steve Butz and a newly formed Alliance for Effective Social Investing (which includes a few of my favorite personalities from the world of philanthropy) are working on a social investment rating tool that will help non profits to better monitor their own progress and that will give donors a more holistic picture organizations they are supporting.
There are many questions to be answered on the usefulness of the tool - will this add burden to already understaffed non profits, how will social programs be trained in evaluation they may not be use to, what will be done with all of the collected information, what are ‘best case’ results, what if many organizations are failing, then what? These questions are exactly why the Alliance was formed - to determine the best use of the tool and evaluate its own potential rate of success.
I’d love to be a fly on the wall during the Alliance's meetings.
The jury is still out on the overall effects of the business world in the social sector, however if the tool allows programs to become more efficient, impact more transparent, and organizations more accountable - then perhaps the sector will have just taught business a thing or two.
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I would guess that any non-profit worth the attention of a donor will agree that measuring social impact is a critical compentent of service delivery. The concern about mandating a specific tool is that it does account for the fact that many organizations have data-collection methods in place; the interest of funder's may be served by asking if a donor has an evalution system in place and reviewing existing data before making a requirement that an altrenative method is warrented. A mandated tool supports the donors need for ease in reviewing current and potential grantees but may be an added and unfunded burden on the NGO that is not really needed.
Gerardine,
Many thanks for your comment. In trying to be thoughtful on this topic, I always end up going in circles. A mandated tool could very possibly be too burdensome and there is no one-size fits all approach. On the other side, without some metrics (quanitative and qualitative) its difficult to understand how a organization is doing - making donors a bit more unsettled in writing a big check.
Any tool will only provide a certain lens - a framework for viewing the organization. I’m skeptical that you can ever achieve full understanding.
I heard a great quote today “Anxiety is driven out of ambiguity.” Transparency really has to be at the top of the list - for both organizations and donors. Communication is key and I think actual engagement in an organization is even better.
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