What’s Wrong With the Analysis of “What’s Wrong With Charitable Giving-and How to Fix It”

Pablo Eisenberg, a Senior fellow in the Center for Public and Nonprofit Leadership at Georgetown Public Policy Institute in Washington, D.C., penned a terrific op-ed in The Wall Street Journal Tuesday entitled “What’s Wrong With Charitable Giving–and How to Fix It.” But his analysis of the challenges facing the nonprofit and charitable community and his suggestions for how to fix the system didn’t go far enough.

Mr. Eisenberg is absolutely right when he says “Much of current philanthropic giving, by foundations and individuals, neither meets the needs of our charitable organizations nor addresses some of our most urgent public needs.” And his nine recommendations, including increasing payouts and general operating support, adopting rolling grant-making, and reaching out to local groups and under-served regions, are sound. But even these significant changes in the way the nonprofit and charitable community operates won’t fix the problems. Why not? Because they are mostly surface level suggestions. They assume that the nonprofit and charitable community is functioning properly, or could function more effectively, save for a few problems in approach and perspective.

My take: if we are going to have a vibrant, sustainable, and (most importantly) impactful philanthropic community, the very nature, focus, and function of nonprofits and charities needs to change. The space has lost its way. To get back on track we need a total reset.

Back in August I wrote a post entitled “Its not (just) the economy, stupid,” about the many reasons, beyond the economic slowdown, that nonprofit and charitable organizations were having trouble raising money. Let me offer a few related points here:

1) There are too many nonprofit organizations. There
are more than a million registered nonprofit organizations in the
United States, and tens of thousands of new nonprofits are created
every year. They are all competing for the same dollars and in many cases fighting to serve the same need. I believe in the free market, and a vibrant community of organizations all working to address serious issues will spur new ideas and innovation in how to serve the public. But there is such a thing as too much. There are simple too
many nonprofits, too many messages, too many options, and not enough
success. More money won’t solve that problem, it will only make it worse. We need to take a good, hard look at all the organizations out there and make some choices about which ones are truly effective and worthy of continuing to operate. We need to find the groups that are operating successfully and figure out how to apply their expertise to other areas that are struggling. We need the organizations who are focused in the same areas to collaborate and work collectively to make progress. And we need to get rid of the egos–the people who run organizations more often than not get in the way. So ask yourself: is your organization having a real, meaningful measurable impact? And are you helping advance the whole community with your work? If not, please step aside and let someone else use the limited resources we have more effectively.

2) Service the Cause, Not Solving It. In my experience, most nonprofits and charities focus their energy on growing and
sustaining their organizations and not so much on improving the way
they do business or deliver their services. Making improvements to the system–how groups are funded, what systems they must follow, etc–will help. Having a watchdog will call attention to the issues. But operational changes can’t provide the fundamental reset that is needed. Organizations are
serving their causes instead of solving their causes in large part because the people who are running these organizations don’t know any other way. The audiences who support them believe that their contributions are making a difference. We recognize and reward short term progress and not long term change and we have to stop. When we demand immediate outcomes, instead of demonstrating the patience it takes to shift how a society operates and people behave, we undermine our own efforts to improve our society. The whole system for addressing serious issues is flawed, and every day we move a little further away from having a real impact.

What is needed? First, a fundamental shift in the way we think about serving issues, recognizing how people get and share information, what motivates their behavior, and how it can be applied to what plagues our society. Second, a commitment–in dollars, but also in energy, and time, and perspective–so we can set long-term, ambitious, and meaningful, measurable goals for change on the big issue (and the small ones) and ensure we meet those goals over time. No more trying to change the world on a day-to-day basis… we have to look ahead. (NOTE: Mr. Eisenberg talks about funding over a multi-year period, but even if that money was made available, few, if any organizations have demonstrated their ability to maintain the talent and focus over that time to get the job done).

3) Anything You Can Do I Can Do Better. The
Internet has empowered audiences in new and powerful ways. Technology
gives each of us direct control over our information and the choices
about how we spend our time and focus our energy. And we can use these
tools to help organizations and address causes in ways that go well
beyond donating. As a result, we simply don’t believe–and probably for good reasons–that the institutions that once offered the guidance, support, and direction for how to address the issues facing our society know best. We can do it on our own, we don’t need them. Moreover, most nonprofit organizations haven’t embraced
these new and different ways to engage and mobilize their audiences.
Nonprofits invest much of their focus and energy on directing action
behind a single, centralized agenda, instead of expanding their reach
and looking for the best way to tap into the community (online and
offline) to help address issues. They send a message that the public isn’t truly important to the process.

Put another way… everything
about how we communicate, get and share information, engage each other–online and offline–has changed because of the role that
technology and the Internet play in our lives. Information moves
faster, people are more closely connected, and the expectations we all
have for where we will donate, who will we trust, and what kind of
relationship and support we want from an organization, is changing. That
means how organizations operate, educate, engage, and look at directing
supporters and donors to take action must change as well.

We can
use the tools that are now widely available online to conduct
campaigns, and send notices, raise awareness of issues or solicit
funds, and do so more efficiently and cost effectively than ever
before. But, that doesn’t mean that work should take priority over
developing relationships and providing value to our audiences. We have
prioritized telling a quick story that suggests progress over investing
in long-term impact that both changes the world and drives people
towards deeper commitments to organizations. We have become too
accustomed to measuring success based on the size or popularity of an
organization and not the value that the audience, who we rely on for
support and donations, places on the work that groups are doing. As
long as groups continue to focus on these wrong efforts, or blame the
economy for its larger issues, nonprofits will continue to struggle.

Few people understand that and nobody–in any sector–has figured out exactly what it means. Nonprofits and charities aren’t looking at the long term implications that technology and the Internet are having on society–they are struggling just to figure out how to design an effective Web site or use Twitter to make some easy cash. There are few, if any, larger organizations looking at these shifts at a level that all in the nonprofit and charitable community will benefit from either. The game is different, the rules need to be rewritten. And until the nonprofit and charitable community, and those who support and benefit from it, understands that everything has changed as a result of the impact of technology and the Internet, everything else is window dressing.

I have said before, and I will say it again here–there are lots of incredible nonprofit organizations, focused on
serving a particular community in need or addressing an important
cause, and doing so efficiently and/or with an innovative approach that
drives real, meaningful, measurable impact. And there are people, in the nonprofit community, or coming from outside, looking at ways to apply their knowledge and expertise to solve some of society’s most challenging problems. They are beginning to change things. But, for every person inside the nonprofit community who thinks differently, there are hundreds of corporations pumping money into a cause for the sole benefit of improving their brand, and reinforcing what doesn’t work. For every organization that has shaken up its leadership, re-structured its team, begun to experiment with new, and different ways of tackling big issues, there are tens-of-thousands of other groups who are still stuck in a model that (maybe) worked twenty years ago, with little interest in, or hope of changing, and little prospect of having a meaningful, measurable impact on our society.

We won’t make any progress until that ratio/balance changes, in a big way.

The challenges that
nonprofits have had in convincing people that they are worthy of
support, and sustaining that support, have been brewing for a while. We haven’t made enough progress on the major issues plaguing our society in a while either–certainly not the kind of progress we are capable of, given the tools we have available, the interest and commitment from the global population, and the obvious need and desire for change.

Dumping more money into a bad system won’t fix anything. Making some operational changes won’t alter the DNA of the nonprofit and charitable space. We need to address the core identity of the nonprofit and charitable community issues first. Only then, with a total reset of how these groups operate, will we figure everything else out.