Friday, November 30, 2007

The Flip Side of Funding

What are we doing? Organizations are funded based on how great their development department tells donors their nonprofit is. It’s as if Amazon makes money because a group of donors believed they should, so gave them their revenue for the year. No, Amazon makes money because customers value their service and want to purchase the products they offer. We should expect the same thing of our nonprofits: deliver a product or service that people want to buy, using surveys as a proxy for payment.

That’s the accountability problem in the nonprofit world: currently, customer experience doesn’t factor into the funding process. Successful nonprofits raise money because a skilled grant writer, coupled with elaborate metrics (meals served, children tutored) and a few tear-jerking client stories convinced someone that the organization was worthy. (How can any of us resist those starry-eyed children?)

Let’s change that. If a nonprofit served 1000 at-risk teens, survey those teens to discover whether their experience was worth the money. If funding is tied to customer satisfaction, the nonprofit can be free to focus on making customers happy, instead of diverting precious resources to satisfy donor criteria. Forget about those overhead numbers, and focus on whether the money is changing people’s lives. So, let’s ask them!

I’m not suggesting that no customers are happy – in fact, many are, or nonprofits couldn’t support program fees (as an industry, roughly 50% of operating expenses). What I am suggesting is that from a macro perspective, very little of the $688 billion we give to nonprofits is spend on exactly what is needed or wanted. This doesn’t serve the people in need, donors, or even nonprofits themselves. As a former nonprofit director, it would have been much easier to receive funding based on what our customers thought, than how compelling we made our program descriptions and how rosy we made our “outcome” numbers and overhead percentages. (Trust me, everyone does this. I’ve worked at enough nonprofits large and small to know what needs to be done to get the money).

And, as an individual donor, wouldn’t it be great to see reports on the program’s effectiveness—in the eyes of their participants? Say, 70% thought the program made a difference, versus a nonprofit where only 30% thought it helped. Then it becomes an easy decision to give because you know that the program really works.


Socrates said...

First: Let me say that I learned about Tis Best on NPR this morning. I work for a humanitarian non-profit and three of us had "driveway moments" here in the parking lot. It was kinda funny. We were all listening to same thing. Charity gift cards - what a great idea!

Second - I really appreciate your insights posted here on the blog. Good stuff.

Question: I guess it's just up to the organization that the recipient chooses to "give" to in terms of whether the individual will receive any acknowledgement from the org? Is that right? Or does Tis Best provide any sort of correspondence itself?

I am wondering if I buy a $25.00 certificate for someone and they decide to give to, but only sends some sort of acknowledgement for donations of $50.00 or more, the experience (for the one who received the gift card) may not be that great.

I saw nothing on the Tis Best site that talks about this...the acknowledgement concern I have.

Thanks - I'll check back later. Or you can email me.

Keep up the good work!

Steven A. Stelma, DVM said...

Just like 'socrates', I heard the NPR story this morning on the way to work, and sat in my parking lot until the segment was over.

I agree with what has been said, and appreciate those thoughts and words. This is such a powerful idea, and one which I hope will spread like wildfire. I will do my part to ensure that it does.

I very often dislike giving and receiving more 'stuff'. I get a little sad at seeing all of the additional dust collectors that accumulate. Many of us simply have no more room for any more stuff, and have to throw out either the old or the new. What a huge waste!

I, too, would like to see a more automatic feedback to the card giver when the recipients spend the amount on the charity of their choice.

I feel better already about this Holiday season having learned today about 'Tis Best. Thank you, bless you.

Socrates said...
This comment has been removed by a blog administrator.
TisBest said...

Better late than never? Sorry about the delay - I forgot to check this blog for comments! There were a couple questions asked:

First, Socrates asks about acknowledgment from the organization receiving the donation. We do not provide donor email addresses to the organizations to which the money is given. This is so that you can make a donation without being hounded for the next two years for more money. You would be surprised how hard it is to stay off of mailing lists - at TisBest we receive all sorts of mail from the charities even though we repeatedly ask to be taken off of the mailing lists. It is sad really - give the printing cost, mailing cost and resources consumed.

Steven asks about feedback to the person spending a TisBest charity gift card. When a card is spent, we send an email from TisBest confirming the charity selected and providing a link to that charity's website. If the person spending the card checks the "Send a Note" box, we also send a note to the card purchaser advising what charity was selected, plus whatever personal message is created by the person spending the card. If a donor through TisBest wishes to have more information about any charity on our list, we encourage them to simply go the charity's homepage and register. A simple solution and that way we can keep our Privacy Policy perfectly clean - "Perfectly Private."

Again, my apologies about the late post. I hope the responses are helpful for others reviewing this blog in the future.