About Bob Bob serves as President and CEO of GuideStar and serves on the boards of Vision TV, Grameen Foundation USA, and the AAFRC Trust for Philanthropy. More...
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Posted on March 11th, 2010, in these categories: General
A few weeks ago, I gave several presentations at a conference called the Art House Convergence. In attendance were the owners and operators of about 150 theaters across America that specialize in featuring independent films and documentaries. The event was held several days before the Sundance Film Festival, which is one of the largest showcases in the nation for independent films.
According to the Convergence Web site, the conference was designed to "be a stimulating gathering that will provide a chance to get to know one another and to share our successes, our challenges, our anxieties, as well as our hopes and dreams." One of the group’s biggest anxieties is over finding a sustainable business model. As a result, many of the theaters are nonprofit organizations, or in the process of converting to nonprofit status, and they were eager to learn more about how nonprofits operate.
Like most of us, the art house theaters face increasing competition as new ways are created for distributing films and documentaries. I reminded the audience that people are looking for more than just more choice—they are also looking for a sense of community. People are looking for ways to network. To link in. To engage. For a sense of belonging.
I think art houses have the potential to become indispensible community institutions, as important as the public library or the public school or a community center or green space.
The opportunity is to use thought-provoking films as the centerpiece for bringing people together, where they share ideas, debate, learn from others. Maybe work together to make their community better.
The Skoll Foundation not only understands what I told the Art House Convergence, they are leading the way. Last year it launched a $3 million three-year partnership with the Sundance Institute Documentary Film Program. The project, called Stories of Change, is designed to explore the role of film in advancing knowledge about social entrepreneurship. Here’s how their Web site describes it:
This partnership creates new opportunities for leading social entrepreneurs and outstanding documentary filmmakers to collaborate and to create new projects about the innovative approaches found in both fields. The development and production grant awards support the creation of feature-length independent documentary films that examine social entrepreneurship as an innovative approach to the central challenges of our time. …
A combination of invited gatherings and documentary film project funding, the partnership believes that powerful storytellers and innovative changemakers can benefit from each other. In addition to funding the creation of new documentary films, Stories of Change supports convenings of leaders in both documentary film and social entrepreneurship at key gatherings globally over the course of the three year partnership, including the Skoll World Forum and the Sundance Film Festival.
Later at the Sundance conference, we saw one result of this partnership when a film called To Catch a Dollar featuring Mohammed Yunus of the Grameen Bank was featured. It’s definitely worth seeing.
I think there is an opportunity for exciting collaborations between the art house theaters and nonprofit organizations. I hope you’ll begin thinking about how you can use film as a way to inspire and motivate your community to do more.
Posted on March 2nd, 2010, in these categories: General | GuideStar.org
Last year, our GuideStar Exchange program began accepting videos as a way for you to better tell the story of your nonprofit’s work. Since then, hundreds of nonprofit organizations have begun posting videos on GuideStar. We hope eventually every nonprofit will include a video—or several—in its GuideStar Exchange report.
Some may have thought it odd for GuideStar—known for its hard facts and data—to be adding videos, but I believe videos are a powerful way to engage the public in what we do and help them to understand the meaning of our work. Plus we think that multiple data points are needed to evaluate a nonprofit organization effectively. We do not advocate judging a nonprofit solely on the basis of a video. Neither would we advocate judging a nonprofit solely on the basis of one IRS Form 990—or worse, an overhead ratio. We’ve added user reviews, too, not because we think they are the ultimate way to look at it a nonprofit, but because we think they are an important data point among many for gaining perspective on an organization’s work and impact.
Recently I read a piece by Nicholas Kristof that gave some helpful insights into what it takes to tell our stories successfully.
Kristof says, "I turned to the field of social psychology, trying to understand how I could craft my writing so that it would generate a response rather than a turned page. Over the past 20 years, there have been many studies that shed light on this question, and, increasingly, I’ve come to believe that those of us who care about human rights and global poverty can do a far better job in our messaging. Like Pepsi, humanitarian causes need savvy marketing. Indeed, they need it far more than a soft-drink company."
Kristoff offers several lessons about how to engage stakeholders. First:
[People] intervene not because of stories of desperate circumstances but when we can be cheered up with positive stories of success and transformation. For example, one experiment found that people are quite willing to pay for a water-treatment facility to save 4,500 lives in a refugee camp with 11,000 people in it, but they are much less willing to pay for the same facility to save 4,500 lives when the refugee camp is said to have 250,000 inhabitants. In effect, what matters is saving a high proportion of people, not just a large number of lives. … Unfortunately, the most cost-effective aid interventions tend to be the kind that are incremental and save only a small proportion of lives—and are thus least satisfying to the giver.
The second lesson:
Storytelling needs to focus on an individual, not a group. A classic experiment involved asking people to donate to help hungry children in West Africa. One group was asked to help a seven-year-old girl named Rokia, in the country of Mali. A second was asked to donate to help millions of hungry children. A third was asked to help Rokia but was provided with statistical information that gave them a larger context for her hunger. Not surprisingly, people donated more than twice as much to help Rokia as to help millions of children. But it turned out that even providing background information on African hunger diminished empathy, so people were much less willing to help Rokia when she represented a broader problem. Donors didn’t want to help ease a crisis personified by a child; they just wanted to help one person—and to hell with the crisis.
Kristof concludes:
It’s clear that the philanthropic community hasn’t absorbed these lessons. When we want to get help, we make logical arguments about the scale of the suffering: Five million people have died in Congo! We make people feel guilty if they don’t help, rather than good if they do. In particular, humanitarians often make poor countries sound like unremittingly tragic hellholes full of starving children with flies in their eyes. That’s counterproductive: The challenge is to acknowledge both the desperate needs and also the very real progress in parts of Africa, the prospect of improvement in real people’s lives if the help goes forward.
Any consumer-products company rolling out a brand of toilet paper will agonize over marketing. The messaging will be carefully devised, tested with focus groups, revised based on polling, tested in a particular market, tweaked, and tested again. And that’s for a product whose launch makes no difference for humanity. In contrast, if an aid group is trying to raise support for a new program that could save many lives, it will often rely on a hodgepodge of guilt and statistics that limit its effectiveness. It has been said that "statistics are human beings with the tears dried off." That’s precisely the problem—all the psychological research shows that we are moved not by statistics but by fresh, wet tears, with a bit of hope glistening below.
For a good example of what Kristof is suggesting, take a look a the book he and his wife recently released called Half the Sky. They wanted, Kristoff says:
to call attention to sex trafficking, acid attacks, maternal mortality, yet we knew a focus on such a litany of horrors would go unread. The solution we came up with was to find stories of women who had overcome adversity rather than succumbed to it. We looked for heroes, not victims. …
So far, this positive approach seems to have worked. Half the Sky became a New York Times bestseller and went through seven printings before it was three weeks old. Young people particularly seem to want to move from reading about problems to addressing them, so we started a Web site for them, halftheskymovement.org. We’re also developing an online video game and television documentary to bring new people to the cause.
Posted on February 22nd, 2010, in these categories: Disaster Relief
It has been over a month since the earthquake in Haiti. Now that the story is pretty much off the TV screens, most Americans are paying less attention to this crisis, and contributions have declined dramatically. I spoke to many reporters in the first weeks after the disaster and tried to get them—with only limited success—to include in their reports the fact that Haiti was in crisis before the earthquake and will need our help and contributions for many years to come. I hope you and your friends will be thinking about that as you plan your own individual giving.
In my personal life, one of my volunteer activities is serving on the board of the Grameen Foundation USA. One of the organizations we support is Fonkoze, the Haitian branch of the Grameen Bank. There were many acts of personal heroism and extraordinary effort after the earthquake. Here is an excerpt from an amazing story reported by Peggy Simpson that tells one of them, this one involving Fonkoze. Read the full blog here >
At a time when Haitian commercial banks remain closed, Fonkoze, the Haitian branch of the Grameen Bank of Bangladesh, mobilized over the weekend to get funds to its members in rural towns as well as Port-au-Prince.
Between 2 a.m. and 2 p.m. last Saturday [January 23, 2010], Fonkoze brought in $2 million in cash from their U.S. bank and distributed it by helicopters to regional offices in the most remote parts of the country. That got money flowing again. The cash came from Haitians working abroad who had sent funds—remittances—to their relatives.
Also known as Haiti’s Alternative Bank for the Organized Poor, Fonkoze found a way to get money to its members through the 34 of its 41 branch offices still open after the earthquake. It had a lot of help in high places: the U.S. secretary of state, top Treasury and Defense Department officials, the Federal Reserve, the Agency for International Development, the United Nations, the Inter-American Development Bank and more.
The actual operation read like a cloak-and-dagger saga.
Anne Hastings, the CEO of Fonkoze Financial Services, was point person on shaping the unorthodox solution. It involved many conference calls to Washington, New York and Miami, as well as intricate strategies with managers on the ground in Haiti who would get the money to the women.
By last Friday, the plan was ready. Remittances from U.S.-based Haitians deposited in Fonkoze’s accounts at City National Bank of New Jersey were sent to JP Morgan Chase in Miami, converted into cash—and packed in office supply boxes. An armored vehicle transferred the boxes to Homestead Air Force Base.
A C-17 plane, diverted from Langley Air Force Base, landed at Homestead at 3 a.m. Saturday, took on the camouflaged cargo of cash, and flew to Haiti, where the major airport at Port-au-Prince has been under U.S. military control since the earthquake.
There, Hastings and two other Fonkoze executives inspected the cash cargo—and called the Pentagon to say so far, so good. Under a military escort, the Fonkoze vehicle loaded with the boxes of cash awaited the two helicopters that could fly the money to 10 designated drop-off locations.
Fonkoze’s Jean-Guy Noel rode with the helicopters as they began deliveries before dawn. Seven hours later, all the cash had been delivered and the helicopters were back in Port-au-Prince. By early afternoon, the cash had been distributed to the 34 Fonkoze branches. Almost immediately, the Fonkoze managers began giving Fonkoze members cash from their relatives, a financial lifeline at a time when the formal banking system is in shambles and remittances sent through it from overseas Haitians remain locked up.
… In 2007, 79 percent of Haitians lived on less than $2 a day and 55 percent lived on half that.
Fonkoze’s micro-lending program has four different levels. The first step is for the poorest of the poor and may involve home repairs and health care, as well as building the confidence of the women as they plan to start a micro-enterprise. Next the women may qualify for small loans—perhaps only $25—with a short repayment period, while they enroll in literacy classes. In Haiti, more than 50 percent of people are illiterate.
The third level is the core: a "solidarity" group in which friends take out loans together, then morph into credit centers of 30 to 40 women. These women can start out borrowing $75 but if they prosper, they can borrow up to $1,300 for six months.
The fourth level focuses on business development. Some women in this group borrow up to $25,000 and are being nurtured to become part of the formal economy, creating jobs in rural areas where there are few employment opportunities.
Posted on February 18th, 2010, in these categories: Donors | Economy | Giving Wisely
How many times have we heard critics say that donor decisions in the nonprofit sector are all too often subjective and irrational? Why, say these critics, can’t nonprofit decisions be more like those in the so-called real world, where decisions about stocks and houses are based on rationality and solid facts and figures? They say we need more rigorous criteria to make decisions, more focus on metrics to track performance, and a better way to measure outcomes.
Now I’m not disagreeing with the advocates of introducing more rationality into philanthropy. After all, that is one of the bedrock positions on which GuideStar is based. We believe that armed with more information, donors can indeed make better and more informed decisions.
But I’ve just finished reading a fascinating book by Robert J. Shiller called Irrational Exuberance (taken from Alan Greenspan’s famous speech in 1996), and if you think the so-called real world is the perfect model for what we want to do in the nonprofit world, you may want to think again.
Shiller is a professor at Yale, a prolific author, and co-creator of the S&P/Case-Shiller Home Price Indices, the place where we learn the depressing news about the declining values of our homes. So he comes with some credibility to his subject matter. Shiller’s book tries to explain why our economy seems to experience a constant roller-coaster ride of boom and bust. You can learn more about his book here: www.irrationalexuberance.com/index.htm.
Shiller gives many reasons for why irrational exuberance happens, but it all boils down to this: people make lots of irrational decisions.
Here’s how he sums it up:
The high valuations that the stock market attained at its peak in 2000, and the relatively high valuations that it still shows today, came about for no good reasons. The high valuations that the prices of homes attained in many markets by the opening years of the twenty-first century came about for no better reasons. The high stock market levels did not, as so many imagine, represent the consensus judgment of experts who have carefully weighed the long term evidence. The markets have been high because of the combined effect of indifferent thinking by millions of people, very few of whom have felt the need to perform careful research on the long term investment value, and who are motivated substantially by their own emotions, random attentions, and perceptions of conventional wisdom. Their all too human behavior has been heavily influenced by news media that are interested in attracting viewers or readers, with limited incentive to discipline their viewers or readers with the type of quantitative analysis that might give them a correct impression of fundamental value.
Wow, let me repeat that again: "motivated substantially by their own emotions, random attentions, and perceptions of conventional wisdom."
My conclusion: Continue to give with your heart. Sprinkle in some passion, too. Try, if you can, to introduce methods for a more rigorous analysis and steer more of your giving to the those who can demonstrate they are high-performing organizations. But whatever you do, don’t use the same methods you used to select your last stocks or purchase your home.
Posted on February 16th, 2010, in these categories: Donors
What does Toyota’s sticky gas pedal problems have to do with the nonprofit sector?
The February 6 Washington Post reported that "Toyota’s recall of millions of cars … could also be undermining public confidence in the system of independent ratings and reviews that consumers have come to rely on and that for decades gave Toyota vehicles high marks for reliability and safety." The article continues:
The consistently strong ratings Toyota vehicles have received over the years from Consumer Reports, Edmunds.com and other consumer auto sites have fueled sales and helped the Japanese company surpass General Motors last year as the world’s largest automaker. …
Auto safety experts say consumers might need to adjust their expectations about ratings from private groups because of the limited nature of their testing and the degree to which they rely on government and industry testing that itself is in large part based on trust. And their recommendations are no substitute for proper surveillance by regulators and manufacturers. …
Randy Whitfield, who runs a Crownsville statistical analysis firm, Quality Control System, likens what Consumer Reports does to a small-scale clinical drug trial, which makes it unlikely it will uncover every potential problem that is liable to crop up when the drug is used by millions. "Everything changes when you put something out in the field," he said. Whitfield’s firm, which has done work for Consumers Union, said a better surveillance system is needed to track problems such as sudden unintended acceleration.
We in the nonprofit sector like to compare ourselves unfavorably to the for-profit world when it comes to reviews and ratings. There’s no doubt that we have a long way to go and much to learn. But it’s good to remember that producing meaningful reviews takes a lot of effort and is always evolving. There is much trial and error. We at GuideStar recognize that our partnership with Great NonProfits still requires improvement and refinement. Each year it will get a little better.
Here’s what we need to recognize: The American public wants reviews and has grown to rely on them in every facet of their lives. We in the nonprofit sector need to respond to that market demand.
Posted on February 10th, 2010, in these categories: Economy
I went to a presentation the other night where the speaker outlined four scenarios for the U.S. economy over the next few years based on past experience and computer modeling. The scenarios ranged from an average growth of up to 10 percent to an average decline of 40 percent.
After the presentation I raised my hand and asked why none of the scenarios predicted a return to 2007 levels. The presenter groaned and said, "You need to get over it and just forget about it."
In other words, the asset amounts reached in 2007 may not return for years.
Last month, Jason Zweig wrote about the same subject in the Wall Street Journal and asked, "What are we smoking, and when will we stop?"
Zweig gives as an example a survey taken by David Salem to suggest that even the biggest investors in the world of philanthropy are often too optimistic:
David Salem is president of the Investment Fund for Foundations, which manages $8 billion for more than 700 nonprofits. Mr. Salem periodically asks trustees and investment officers of these charities to imagine they can swap all their assets in exchange for a contract that guarantees them a risk-free return for the next 50 years, while also satisfying their current spending needs. Then he asks them what minimal rate of return, after inflation and all fees, they would accept in such a swap.
In Mr. Salem’s latest survey, the average response was 7.4%. One-sixth of his participants refused to swap for any return lower than 10%.
According to Zweig, Salem says he would swap at 5%.
Zweig "asked several investing experts what guaranteed net-net-net return they would accept to swap out their own assets. William Bernstein of Efficient Frontier Advisors would take 4%. Laurence Siegel, a consultant and former head of investment research at the Ford Foundation: 3%. John C. Bogle, founder of the Vanguard Group of mutual funds: 2.5%."
I have written before about the "new normal" for the nonprofit sector. Although our sector is by no means without resources, I think we need to acknowledge that the rapid growth we experienced in the ’90s and up until 2007 are over. We are entering a period where assets will be lower than before and growth will be smaller than we have previously experienced. It will be a long time until we see universities and foundations endowments earning 20 percent–plus on an annual basis. It will take time for foundation assets to recover as well. Nonprofits will need to rebuild their endowments. Fewer wealthy individuals will start new foundations and individual giving will be down or flat. Nonprofits searching for contributions will find it more difficult as donors have less money or reduced ability to increase their donations.
The new normal is here and likely to stay for a while.
Posted on February 5th, 2010, in these categories: Donors | General | Giving Wisely
I went to the supermarket the other day to do the weekly family food shopping and, while I was paying my bill, the checkout clerk asked me if I wanted to make a contribution to a charity. I said no, but I felt a little guilty about it. When I left the supermarket with my bags of groceries, there were kids on the curb asking for contributions to local charities, all of them good causes. When I got home I paid my bills, and my insurance company asked me if I wanted to make a contribution to their nonprofit. I’m not sure what it does. That one was easy to reject; I just didn’t click the box. No human interaction required.
What’s going on here? Eric Felton wrote about this growing trend in the Wall Street Journal last month. He thinks these requests are annoying at the very least—and ultimately bad for charities:
My guess is that putting the touch on people in semicaptive situations such as the grocery-store checkout line isn’t necessarily a good thing for charity. Perhaps I’m wrong, and quotidian solicitations will make us more mindful of the plight of others and more open to helping the sick and the needy. But I suspect that the growing number of stores asking customers to chip in may end up creating a backlash. There was a time when telephone solicitations for charity worked—and so they proliferated. But after a while, people became ever more practiced at saying no.
I wonder how committed to promoting charity the retailers will be if they find shoppers have started to look at their storefronts with the same dread that greets the phone ringing at dinnertime.
I personally am not offended by this approach. There are probably some people who donate very little to charity, and this may be one of the few times they think about making a contribution. I personally won’t give to these requests, however, because I have my doubts about how much money actually ends up in the hands of charities after it has gone through all the corporate processing. And these are usually not causes that are of primary interest to me. More important, I’m concerned about whether this approach underscores the stereotype that suggests that charities are nice people doing nice work but not really that important or serious.
For me it boils down to the head/heart dichotomy again. Giving spontaneously from the heart is a good thing to do occasionally. I personally go out of my way to support street musicians, because many of them are really good and I appreciate their effort to make my world a little more enjoyable. We can all afford a few dollars here and there, and there are lots of good causes. But let’s not kid ourselves: if we’re really serious about tackling an issue, it’s going to take some solid research about organizational effectiveness and impact—as well as some serious money—to make a difference.
Posted on January 26th, 2010, in these categories: Disaster Relief | Donors | Giving Wisely
Last Friday’s New York Times included an excellent article by Ariel Kaminer on giving to Haitian recovery. It includes two questions that my colleagues and I have been answering since the crisis began:
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"What about in-kind donations?"
The article tells of a store in New York City where generous patrons donated food, clothing, and water for Haiti. "By early last week, the donations had been stacked into huge piles, and a plan had come into view: the store would lead a delegation of 25 people to Haiti, to rescue the children stranded at the Life for the World orphanage in the town of Source Matelas. Doctors, nurses and anyone else who wanted to come would each carry two large suitcases stuffed with food and medical supplies." Logistics, however, were a problem. Toting pounds of donations in suitcases was problematic, and "no one was sure if they would even be allowed to enter Haiti."
At GuideStar, we advise people that monetary gifts are more effective in the early days after a disaster. Even if your in-kind gifts do get to the scene, they may not be what’s need most right there, right then. If you feel compelled to give things rather than money, be sure to give them to an organization that can get them where they are needed most.
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"The best charities are the ones where most of the donations go to the cause, not administration, right?"
If you have been reading this blog for a while or are familiar with GuideStar’s stand on financial ratios, you already know our answer to this question. Katherina Rosqueta, executive director of the Center for High Impact Philanthropy, expressed our point of view perfectly in the NYT article: "What really matters in this situation is not their ratio of overhead to other expenses. … It’s their experience and record of having impact in Haiti."
The tragedy in Haiti has inspired outstanding dialogues on giving wisely and measuring impact. I hope that these lessons stay with us long after Haiti and its citizens are on the road to recovery.
Posted on January 21st, 2010, in these categories: Disaster Relief
On January 18 the Giving Institute and Giving USA Foundation, working with the Center on Philanthropy at Indiana University, released an analysis of giving during the first five days since the earthquake in Haiti.
As of the 18th, $189.9 million had been donated to 43 organizations for relief efforts. This tracks with the five-day fundraising response to the 2004 Asian tsunamis and the 2005 hurricanes.
In 2006, the Giving USA Foundation reported that the previous year, American individuals, corporations, and foundations donated $7.37 billion for disaster relief in the aftermaths of the hurricanes that struck the Gulf Coast of the United States, the Asian tsunami, and an earthquake in Kashmir. An additional $1.17 billion was raised for hurricane relief in 2006.
Donations are sure to increase with the news of the aftershock Haiti experienced yesterday and with continuing media coverage of relief efforts on the island. Only time will tell if this year’s contributions for disaster relief will reach 2005-2006 levels.
Posted on January 21st, 2010, in these categories: Disaster Relief | Giving Wisely
It seems that everyone—including GuideStar—has a list of organizations helping in Haiti. And with these lists come questions. From donors: Which organization(s) should I support? From nonprofits: How does my organization get the public’s attention?
Working with our partner GreatNonprofits, we have created a Haiti Disaster Action Center. This page lists more than 40 organizations working in Haiti. Here’s where you can help in a different way. If you have personal experience with any of these organizations—as a donor, volunteer, board member, or person helped out in a time of need (but not as a paid staff member)—share that information by writing a review. Your rating and comments will help donors decide which nonprofits to contribute to and also provide valuable feedback to the organizations themselves.
The reviews appear on both GreatNonprofits and GuideStar. And their impact will last long after the relief workers leave and Haitian citizens are able to resume their regular day-to-day activities. For there will be other disasters in the future, and these organizations will be there to help. Your reviews will help create a complete picture of each nonprofit’s effectiveness in times of crisis and great need.
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