Do you know how to “fix” the nonprofit sector?
I don’t have the answer, although David E. K. Hunter thinks he does. In the past few days, I’ve had several colleagues send me the link to his recently published article, with “MUST READ” and multiple exclamation points in the subject line. After reading the article, I couldn’t figure out if my colleagues were telling my that it was a “must read” because they thought it was brilliant, or if it was because they knew that it would raise my blood pressure.
Earlier this month, I had already responded to a Wings for Kids blog posting by Paula Schwed about Dr. Hunter’s recent visit to Charleston, South Carolina (home of our Pluff Mud Connect service) where he advised “influential leaders” about “halting ‘sentimental giving’ to ineffective nonprofits and diverting investments to high-performing nonprofits instead.” My response was in part, “Donors can fund high-performing organizations and at the same time work to build the capacity of those who just aren’t ‘there’ yet” by providing them “with coaching, training and capacity building instead of pulling out completely.”
In this new article, published in the October issue of the Philadelphia Social Innovations Journal, Dr. Hunter argues among other things that, “Social investing, if widely adopted, will help channel funding streams that are directed by measurable performance rather than feel-good stories, habits of giving and rank sentimentality.” He says this on the heels of putting forth three “unpleasant truths,” including that “there is virtually no credible evidence that most nonprofit organizations actually produce any social value.”
Although I had to struggle through the early assertions and the one-sided examples at the article’s outset, I was grateful to see that Dr. Hunter acknowledged that there might be times where social investors might choose to channel resources toward nonprofits that “need additional time and resources” to build their capacity to create sustainable value. I also completely agree with Dr. Hunter’s focus on creating social value through measurable outcomes, not just by counting the numbers of people served (outputs). I was fortunate enough to be involved in the United Way of America’s pilot testing of agency training on outcomes measurement in 1996, and have seen the amazing results that can come from creating real and measurable changes in knowledge, attitudes, behaviors, skills and ultimately condition (for instance, from being unemployed to being employed) of service recipients. That’s why I simply don’t agree that the nonprofit sector is as broken as he asserts. For every example of ineffective programs, there are others that can demonstrate real impact.
Nonprofit Local Co-Founder, Mark Deaton also took issue with several of Dr. Hunter’s assertions and conclusions, and here’s what Mark wrote in a letter to the editors at the Philadelphia Social Innovations Journal sent earlier today:
Regarding David Hunter’s “End of Charity: How to Fix the Nonprofit Sector Through Effective Social Investing,” published in the October issue of Philadelphia Social Innovations Journal, I have a different perspective that I am writing to share with your readers. I’ll start with common ground. Dr. Hunter advocates for “clear thinking about what one is doing, why one is doing it and what one really is accomplishing” when deciding how to allocate resources in the nonprofit sector. He is also obviously a strong advocate for an outcome-focused approach, as am I. With those important agreements in mind, I differ with several of Dr. Hunter’s assertions, as well as some of his conclusions, two of which are the topic of this letter.
Quoting Dr. Hunter’s first “unpleasant truth,” he says that “there is virtually no credible evidence that most nonprofit organizations actually produce any social value.” There are three problems with this statement. First, lack of evidence does not necessarily mean lack of value. (I’ll set aside for the moment that I disagree with the premise from the outset, and grant that it might be true that credible evidence is lacking. However, by itself, that supposed lack says nothing about the level of social value being produced or not being produced. All it does is tell us that the author believes there is a lack of evidence. If Dr. Hunter has actual evidence that “most nonprofit organizations actually produce [no] social value,” I would be quite interested in seeing it).Second, the definition of social value is subjective, and the reader learns later that Dr. Hunter’s definition of social value heavily discounts activities such as feeding the homeless, providing shelter for children who don’t have it, and helping uneducated felons get educated. While the complexities of societal problems, such as homelessness, poverty, and poor education, require more than a meal, a roof, and a text book, to say that “very limited social value” is provided by these activities is not an “unpleasant truth,” it is an opinion; and one that I disagree with. Positing an opinion as fact is misleading, and it would have been (in my opinion) better if Dr. Hunter had started with “Unpleasant Opinion number 1.” While this approach to supporting the article’s conclusions runs throughout, I will avoid the temptation to focus on it further and move on.
The second area of disagreement is more important because it gets to the heart of what the Community Benefit Sector is all about – meeting public needs. While I appreciate the distinction Dr. Hunter makes between “low-risk” and “high-risk” social investing, and while I agree that nonprofit organizations should be held accountable for demonstrating positive societal impacts, he suggests that funding poorly performing nonprofits is a “high-risk” activity, without fully taking into consideration the area of need that the poorly performing nonprofit is targeting. For example, if a community has three well-funded, well-run nonprofits focused on reducing teen pregnancy and only one underfunded, poorly-run nonprofit focused on reducing drug addiction in an area with a disproportionate drug problem, which choice represents the greater risk? Investing in one of the well-run teen pregnancy organizations might arguably represent the larger risk, when considering how best to allocate one’s social investments. I applaud Dr. Hunter’s focus on steering social investing towards high-performing organizations, but not at the expense of meeting public needs. The need comes first, and we must all be careful not to let the perfect get in the way of the good.
Our mission at Third Sector Connector is helping nonprofits thrive, regardless of where they find themselves on any given performance measure. We believe that there is creativity to be harvested by sharing ideas across the sector, and that innovation can come both from market forces and from dialogue and change within the sector itself. What do you think?
–LD
(photo credit: Flickr:CarbonNYC)