Don’t Feed the Zombies
This heading sits on top of an article by Kevin Starr in the March 28 issue of Stanford Social Innovation Review. Kevin leads the Mulago Foundation, and he is singing our Results1st song. I have worked with about 100 foundations—as large as the Gates Foundation and as small as $10 million in assets. My core theme is fundamental: shift from funding programs to investing in results. The first is the business of distributing money. The second is the business of securing the highest human gain for the dollars available. Zombies gets to that bedrock in a hurry.
Kevin begins by noting that several years ago researchers decided to investigate what they called “the puzzle of ineffective giving.” He notes that the first major finding of their research is that among charities experts polled that think there is a huge difference, donors generally did not see a difference in effectiveness . He noted what a friend calls the useless charities zombies, and goes on to where responsibility in his view lies:
I used to blame those organizations, wondering why they didn’t work harder, smarter. The absence of accountability for impact is the bane of the social sector, and it seemed obvious that they were the prime offenders. But they’re not. It’s us the funders. Money is the lifeblood of social sector organizations, we are the ones who allocate it, and we are the least accountable in the whole system. If there are zombies roaming the landscape, it’s on us.
I have long held that foundations investing in results are helping nonprofits to raise achievement and get more money. The current approach to trusting the nonprofits to know what is best does a great disservice to those many nonprofits that need more rigor in defining, tracking, and verifying their impact. Equally important, the idea of spreading money among many groups addressing a worthy cause is just as misguided. Rather, find and concentrate investment on the highest performing groups to increase philanthropic effectiveness.
One point in this article is our theme song: don’t equate activities and results. Move away from the body count of those served or “reached” to that of those who get to a gain as a consequence of a program. My Results1st partner Robyn and I take this to the point of suggesting that nonprofits focus on the metric of CPG—cost per gain. Simply put, divide the cost not by the number who participate but by the number who get the intended result.
Another theme resonates in this article. Kevin speaks to “impact is change that would not have happened otherwise.” I approach this by noting that smart investors do not want nonprofits to spend huge sums trying to prove that your program “caused” a result. Rather they want to know if the gain would have reasonably happened without you. The most critical baseline for a nonprofit is not where participants are when the program starts. It is where they would be in the same timeframe if the program did not exist.
Thanks, Kevin. This article will ruffle some feathers. I hope so. We want to see our zombies without the coloration of goodness with which philanthropy can be cloaked.