Thursday, August 1, 2013

TrendsWatch 2013 Mid-year Update: The (ever) Changing Shape of Giving

In the first half of 2013, we're seeing a growing resentment on the part of nonprofits about the some of the expectations being projected on to them by funders, and the beginnings of concerted action to re-shape public expectations of charitable performance and accountability in key ways.

Exhibit one:  the OverheadMyth Campaign organized by GuideStar, Charity Navigator and BBB Wise Giving Alliance, launched with this open letter. The campaign aspires to “correct the common misconception that the percentage of charity’s expenses that go to administrative and fundraising costs—commonly referred to as “overhead”—is, on its own, an appropriate metric to evaluate when assessing a charity’s worthiness and efficiency.”  The counter argument to this prevailing view is that by equating low overhead with responsible management (and visa versa), individual donors and foundations cripple the ability of nonprofits to invest in infrastructure and build their capacity to scale up. (The campaign’s Overhead Myth pledge has 2,366 signatures so far, and you can add your name.)

This “misconception” may be hard to correct, however. One commentator recently opined that it is is na├»ve for the “metrics mafia” to think that more sophisticated data can abolish the overhead myth, because the myth is about emotion and values, not data.  Its “symbolic purpose” is to assure donors they can steer their dollars directly to impact and “expresses an important truth about popular sentiment towards charity.”  These “popular sentiments” and their corrosive effects on the nonprofit sector are explored in more depth in…

Exhibit 2: Dan Pallotta’s March TED talk, “The way we thing about charity is dead wrong,” (which I summarized and recommended in a recent Futurist Friday post). Dan Pallotta’s specialty is running multi-day mega fundraisers for charities such as AIDS awareness and breast cancer research. In this talk, he makes the case that our societal attitudes toward charity condemn nonprofits to small and inefficient operations by denying them the market advantages of pay competitive with the for-profit sector, advertising and marketing, risk taking, and investment capital. “Everything the donating public has been taught about giving is dysfunctional” Dan declares. This message evidently struck a chord, as the video has racked up over 2 million views since it posted.

However irrational or dysfunctional our attitudes towards giving, this pushback might not have gained steam if the old model of giving was stable and productive. But these movements are taking root in a landscape in which the forces disrupting traditional patterns of giving continue to build.

This year’s Global Philanthropy Forum explored how digital tools and technology are empowering “indigenous philanthropists” to bypass traditional power structures of funding and target their giving exactly where they want it to go. The Forum emphasized the ability of these tools to fuel innovation in the developing world, to democratize giving and empower local populations. But while such may provide “precision” in global philanthropic interventions (as GPF’s founder & CEO, Jane Wales observed), in the US they may further sap support for the capacity and infrastructure that enables organizations to effectively tackle broad needs. (Exactly the side effect that GuideStar, Pallotta et al are raging against.) As a college director of giving recently commented in the Chronicle of Higher Education, “Annual funds…have become a tough sell in an age when philanthropy has been divided into such micro units that a donor can give a tablet to a specific fourth-grade class.” 

Even bigger picture, there is some interesting debate bubbling up on the most effective form of funding the essential work performed by the nonprofit sector, whether the choice is between government funding v. philanthropy, or between accomplishing a social mission as a nonprofit or as a for-profit company.

We continue to tag CFM tweets about this trend with #Philanthropy. In addition here are some good people & organizations to follow on these topics:

GuideStar’s CEO Jacob Harold, who tweets as @jacobcharold and blogs for GuideStar

Brian Mittendorf (The Ohio State University) @CountingCharity, blog Counting on Charity

Philanthropy News Digest and the PhilanTopic blog, both from the Foundation Center

The Center for Effective Philanthropy blog, featuring “discussions on the challenges and benefits of effective, data-driven philanthropy”

Future Fundraising Now (oriented towards practical issues, but smart and punchy)

Chronicle of Philanthropy @Philanthropy, which hosts a boatload of blogs, listed here

Nonprofit Quarterly @npquarterly and on the web at

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