Thursday, September 30, 2010

Skoll Foundation ... Social Edge discussion about "Nonprofit Analysis: Beyond Metrics"

Dear Colleagues

The question of metrics and management comes up in many places ... a lot more now than twenty years ago ... but the systems to do metrics are more or less the same, or perhaps worse than decades ago.

This week Social Edge, a program of the Skoll Foundation started a discussion under the title "Nonprofit Analysis: Beyond Metrics". The URL is:
Nonprofit Analysis: Beyond Metrics
Hosted by Sean Stannard-Stockton (October 2010)

One of the holy grails of nonprofit evaluation is to be able to compare nonprofits across issue areas. Concepts like “social return on investment” strive to quantify how much “good” an organization is creating, regardless of whether they are a soup kitchen or a job training program.

In recent years, the push towards using “metrics” to judge nonprofits has matured and moved beyond simplistic measures towards more holistic analysis. Groups like GiveWell, Root Cause, Philanthropedia, GreatNonprofits, and New Philanthropy Capital all strive to determine which nonprofits are best through analysis that seeks to go “beyond metrics”.

Charity Navigator, which popularized one of the most well known metrics – the overhead expense ratio – has begun a process of overhauling their evaluation approach to become far more holistic.

In my own writing about nonprofits, I’ve urged donors to focus on supporting “high performing” nonprofits. These are organization which:
  1. …base their programs on research about what works
  2. …actively collect information about the results of their programs
  3. …systematically analyze this information
  4. …adjust their activities in response to new information
  5. …and have an absolute focus on producing results.
However, Holden Karnofsky of GiveWell has argued that the key to identifying the best nonprofits is to focus on identifying which ones have the best evidence that their programs work. This approach prioritizes “evidence of program impact” over “evidence of organizational performance”.

On October 5, at the Social Capital Markets conference, I’ll be hosting a live analysis of the nationally recognized nonprofit DC Central Kitchen. Representatives from Root Cause, Charity Navigator and GiveWell will be presenting their analysis of the organization alongside a presentation from DC Central Kitchen’s CEO.

Today, we want to kick start a conversation about how nonprofit analysis can move “beyond metrics”. Here are five questions to get us started.
  1. What are the most critical elements that signal that a nonprofit is deserving of a donation?
  2. What is the most meaningful financial information that can help a donor determine a nonprofit’s ability to sustain their organization?
  3. What is the most meaning non-financial information that can help a donor determine a nonprofit’s ability to successful implement programs that work?
  4. What is the most meaningful information that can help a donor determine how much of a difference a nonprofit’s programs actual make?
  5. Since much of the information of interest to nonprofit analysts is released only on a voluntary basis by nonprofits, how should they react when some charities share substantive information, revealing weaknesses and past failures, while the vast majority share no substantive information?

Join Sean Stannard-Stockton, CEO of Tactical Philanthropy Advisors, in the conversation.
I probably would not have noticed this conversation but for Jeff Mowatt alerting me to it, and commenting favorable on my work.

This is the beginning of the conversation as of today
Redefined in terms of human benefit
Posted by Jeff Mowatt at Sep 29, 2010 12:45 AM

Hi Sean,

As one enegaged in social purpose business I can't respond in the context of nonprofits but do have some thoughts on the concept of SROI. For some time I'd assumed this meant "social return" for a given financial investment and admit to being rather surprised to find that it was an attempt to express in financial terms, what the consequence of a "social investment" has been.

I'd been acquainted with Peter Burgess online for some time and was very interested in what I'd read about his BMVA method for value accounting.

From our perspective, a business rather than a nonprofit we've been making the point that "Profit is redefined in human terms rather than pure quantitative analyses" for some time so I'll be very interested in what develops from dialogue with Peter.

In the same context, there's an absolute gem in one of Muhammad Yunus' recent video presentation where he expresses the 'bottom line' of social business in tyhe number of people who are removed from malnutrition by what Danone has been doing.[…]/muhammad-yunus_31.html
Then this:
Posted by Rubens Turkienicz at Sep 29, 2010 04:25 AM

Dear All,

Please consider the following:
a) How about leaving behind military concepts? What the world needs is to change thanks to common people taking life in their hands - yes, a revolution that will be motivated by the COMMON GOOD and have as main objective BENEFITS FOR ALL!
b)"Common sense" is at best an oxymoron and at worst brain-washing! Do we want more slogans (or "metrics", which are likewise useless) or CONSCIOUS WORK?
c) Please get off the tall horse? Let us make sense - i.e., propose things that anybody can verify, test and eventually use by themselves (mindful approach, scientific method, clarity, transparency, ethics). Otherwise this will be a sterile "operation" (here we go again with the military/war approach... uff!) that will produce more oxymorons and much blablabla.

Thanks for listening, as I am surely listening back,

Rubens Turkienicz
And then this
Social Return on Investment (SROI)

Posted by Lakshmi Narayana at Sep 29, 2010 06:21 AM

The concept is welcome and certainly helps to assess the utility of the investment made in the social development. It is the need of the hour and we all need to work for it with better sustainable and quality approaches / strategies as a problem solving one on need based approach.

NEED BASED APPROACH should be the manta for Social investment which should work as a development model against earlier concept of charity.

While doing the audit with the concept of SROI, the parameters will vary based upon the cause or the target groups. In the case of persons with disabilities in general and particularly the one with intellectual disabilities, the parameters of SROI should be based on their challenges, skills, needs and living circumstances.

Based on the cause and target group, the concept of SROI is welcome and needs to follow for the empowerment of the people under coverage which helps all of us to remove the barriers and to improve the access & connectivity so that real development can be achieved with better efficiency and quality.

N Lakshmi Narayana
For me, the idea that there will be better analysis when we go "beyond metrics" is not credible ... rather we need metrics that are better and more meaningful ... metrics that go beyond metrics that mainly measure money to measures that reasonably measure other important factors in the quality of life. This is not "beyond" metrics, this is better metrics.

I posted the following to the Skoll Social Edge discussion ... but by the time I did the writing there were some thirty plus other comments. There is interest in the subject of metrics ... I like to think The Burgess Method will make better more meaningful metrics practical.
Dear Colleagues

Thanks to Jeff Mowatt for alerting me to this discussion.

I am delighted to see an active discussion around "Nonprofit Analysis: Beyond Metrics" ... but my take is somewhat different from most people. I start with the idea that "management information is the least amount of information needed to make good decisions in a timely manner" and also that more and more and more money and wealth should not be the goal of economic activity in a sane society.

Since the beginning of my career I have been impressed by the elegance and power of double entry accounting ... and appalled by the idea that more and more consumption and more and more profit are the primary goals of market economics and capital markets. Money is only a part of the equation ... the other is value.

People usually respond to the idea of value by observing that it is subjective! My response is "Yes ... but is it important?". In most all cases people consider value to be important ... and even though it is subjective, I then argue that it can be quantified. There are methods for doing this ... simply put, everything is relative. In some cases price is a proxy for value ... but some very important values are usually not being traded so there is no price proxy but there may still be quantification.

In The Burgess Method for Value Accounting we use standard values in much the same way cost accountants use standard costs ... it simplifies everything, without going simplistic ... the problem with, for example, averages!

"Beyond Metrics" suggests that there is going to be quantification of the money metrics and only qualitative information about everything else. This is the approach that has been in play for decades, and really does not work very well and contributes to information overload without contributing much to understanding progress and performance.

The Burgess Method which uses "State". "Progress" and "Performance" as three discreet elements of a coherent framework enables way more understanding with reduced data overload ... just as corporate financial reporting facilitates corporate management and decision making.

The Burgess Method also looks at entities like the community as a reporting entity ... and activities ... not so much simply the organization. People work in an organization, or buy from an organization ... they live in a community and it is improving quality of life in the community that should be the core metric for success!

Early in my career I worked on getting money accounting computerized in the corporate world. It would be great to see value accounting sitting on top of the technology used for modern social networks!

Peter Burgess
The dialog can be found at

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