Results Based Philanthropy

I have been an advocate of evaluation for nonprofit organizations—even within the most difficult sector to evaluate, human service—since working on a action research project to develop an evaluation model for community based corrections programs in the first year of my involvement in the sector.

It is crucial to know if programs that claim to help others, actually do so.

Because of this need, and because so few nonprofits have been able to prove they’re effective, a strong movement is developing for evaluative strategy (and even examining the concept of seeking results-based social solutions outside of the nonprofit sector) connected to funding.

This interview with a foundation executive, from the Nonprofit Quarterly examines that.

An excerpt.

“Nonprofit Quarterly: Over the past 10 years, what has changed in the relationship between foundation philanthropy and nonprofits?

“Ralph Smith: Foundation philanthropy is increasingly sector agnostic. Many of us believe that foundation philanthropy is at its best when its resources are directed toward pursuing, finding, testing, demonstrating, and promoting solutions for the most pervasive and urgent social problems. In other words, foundation philanthropy is in the solutions business and can succeed only if and to the extent it is willing to pursue solutions wherever it finds them, regardless of whether they are in the public, private, or social sector. As a consequence, the assumed exclusive relationship between foundations and nonprofits has become much less so. Foundations are going to support and invest with a much wider range of partners than in the past.

“At the same time, it is important to acknowledge that foundation philanthropy has yet to take up its special responsibility to create a capital market for the people and organizations doing the important work in the social sector. As things stand now, organizations that are effective and have a real track record are often as financially frail and vulnerable as organizations that are doing far less and far less effectively. The absence of a capital market makes it difficult to reward good performance. And this continuing failure to reward performance undergirds a compact of mutually low expectations. Organizations should know that performance matters and that superior performance matters in terms of the ability to raise capital. At present, the social-capital market is at best chaotic and, in certain respects, nonexistent.

“NPQ: Under the new framework that you have described, what would happen to the run-of-the mill but nonetheless challenging tasks in which so many nonprofits are involved: that is, the tasks of maintaining and reweaving the social fabric?

“RS: Nonprofits have an important, though not exclusive, role to play in maintaining the social fabric. But underperformance is consequential regardless of role or aspiration. Whether defined as maintaining the social fabric, protecting the safety net, nurturing the democratic impulse or just, on a very mundane level, providing services and support, underperformance matters, and it matters a lot.”