10th Anniversary Reflections

A series of reflective posts by regular Stanford Social Innovation Review bloggers in honor of SSIR’s 10th anniversary.

What if donors just don’t care about nonprofit performance? Why measure? These questions as relevant—and as unanswered—today as they were when Katie Cunningham and Marc Ricks posed them almost 10 years ago in their Stanford Social Innovation Review Summer 2004 article. I started blogging about philanthropy in 2006, and for quite some time I was taken in by a doubly untrue meme: “Today, donors care about impact.” It’s the meme that launched Cunningham’s and Ricks’ research project on what measures would be most useful to nonprofits and donors.

What the two authors found—and what I eventually learned all too painfully myself—was that donors didn’t really care about nonprofit performance or impact. The duo interviewed dozens of individual donors, working primarily in the finance industry, who gave large amounts. They found common beliefs: there wasn’t much difference between nonprofits, any giving was good, and performance measures were a waste of time and money. Most importantly, they found that the donors picked nonprofits based on personal relationships, not performance.

Same as it ever was. That’s the other side of the double-myth of the “donors care about impact” meme: that claims to care about impact are new or a distinguishing feature of the present. A decade after the original article, you still can’t read about philanthropy without encountering the claim that today’s donors are different. You can also find the same claim in stories about philanthropy from 1994—years earlier. The truth is that donors have always claimed to care about impact. If you care to look, you can easily find examples of donors making this claim in every era of American philanthropy.

Behind every era’s claims of being different, of caring about performance and impact, is a truly persistent attitude among donors: Other people (whether predecessors or contemporaries) are giving in the wrong way to the wrong nonprofits. Cunningham and Ricks cite a quintessential complaint from Andrew Carnegie: that other people give indiscriminately. This attitude is glaringly clear from the Money for Good and Money for Good II research conducted in the last few years, which I advised. I’ve called it the Lake Wobegon problem: the idea that all the nonprofits I give to are above average.

Here’s what seems to be happening in some donor’s heads: “Since I’m a smart person, I must have good reasons for giving to this nonprofit. So they must be good at what they do. So I care about impact. Since other people don’t give to my favored nonprofit, they must not care about impact. I’m different!”

The reason to point this out is not to say that no progress has been made, no donors care about impact, and no nonprofits are effectively using performance management. It’s to fight the persistent false perception of reality that leads to wrong-headed theories of change and ineffective actions.

So, what can we do to improve the quality of giving if today’s donors aren’t different and most don’t actually care about performance? I think there are three things:

The first is to recognize that the enemy is us. The problem is not a lack of information, or measurement or reporting systems. The problem is not ineffective nonprofits. The problem is people, specifically donors. That’s not to say that the solution is turning people into heartless calculating machines when it comes to charity. It means recognizing that we need to change what people want and shift deeply held beliefs. That takes time.

One way to change deeply held beliefs is to slowly habituate people to a “new normal.” That’s the second step and an important message of the More Money for More Good project that I worked on with Guidestar and Hope Consulting. There are donors who will use performance and effectiveness information if it is available—enough to make beginning steps by nonprofits in this direction worthwhile. Those beginning steps will begin to get donors used to the idea of seeing, understanding, and using performance data. The important thing is to recognize that you are in a habituation process, not an active-change process, something that by definition happens very slowly.

That’s the third piece of the puzzle. This will be a long, long, long-term process. If you’re expecting to see dramatic change in less than 10 years, you’re going to be disappointed. You may even be disappointed if you expect to see small changes in 10 years. I fully expect that in 2024 I’ll be reading news stories about how a new generation of donors is “different” and “expects results.” Maybe by 2034 those stories may at long last be true.

Read more stories by Timothy Ogden.