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Exploring our Resources: The Nonprofit Marketplace Bridging the Information Gap in Philanthropy

March 6, 2009

teacher-point1 The Hewlett Foundation Philanthropy Program is working to increase high quality information about the performance and impact of non-profit organizations for funding stakeholders.  They hypothesize that increased outcomes information from non-profits will: 1) help donors allocate funds strategically to effective organizations, 2) increase effectiveness within organizations, and 3) assist non-profit stakeholders to engage in constructive conversations about organization performance and social impact.

Currently $300 billion in philanthropic giving is distributed over one million nonprofit organizations in the U.S. However, the authors of the report feel that the nonprofit marketplace is lagging in relation to more high-performing markets such as stock exchanges, commodity markets, or eBay.  This article is primarily arguing that nonprofits are lagging behind other marketplaces because there is currently no assessment of whether funding is going to the best performing organizations.  They feel that if higher performing organizations received more funding, the actual service provision would be more efficient and cost effective. However, they recognize the very real limitations in measuring non-profit outcomes such as: lack of uniformity in measuring social impact and nonprofit activities.  The article largely pushes for nonprofits to adopt more of a business model in encouraging them to create logic models, set long-term goals, and create service provision standards.  They also recommend constant progress evaluation, reminders of overarching goals, and rewards for staff who are excelling.  On the flip side, there are ample intermediary nonprofits and for-profit groups that assist in the philanthropic process for the donors.  They also advise donors on what types of information to gather from NGO’s before they donate or invest.  For more information check out The Nonprofit Marketplace: Bridging the Information Gap in Philanthropy under resources

Discussion:

I found this article to be an accurate depiction of how philanthropists and non-profits are currently negotiating funding.  It seems logical to channel money to non-profits with the greatest social impact, as most donors want their money to make a difference. In acknowledging this, the issue of program evaluation and measurement of outcomes for non-profits becomes important.

As a mental health provider at a nonprofit organization I experience first-hand the funding pressures my organization faces.  My organization has taken a significant step to measure our work through documentation and the process has increased accountability among staff.  There, however, are often services provided that are difficult to document.  For example, the impact of the social and emotional support that we provide for clients can be difficult to capture in writing.  In addition, many clients are dealing with severe and chronic mental illness, which requires ongoing, life-long, therapeutic services.  Therefore, a service termination point may not be realistic for those clients.  Lastly, our service is only one facet of the client’s larger network, so we cannot control for extraneous life events that often set clients back in their rehabilitation process.  Therefore, I question whether it is fair to compare non-profit efficiency and effectiveness to that of large for-profit companies.

Many non-profits assist individuals with basic needs, and the results of those services are often unpredictable, especially within a given time frame.  If program evaluation tools are informed by service providers and have realistic expectations, they may be able to effectively measure outcomes for the nonprofits.

As potential philanthropists what types of questions would you want answered by nonprofits? Or as nonprofit service providers, what sorts of roadblocks are you facing in accessing funding?

-Ramya

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