Evaluating Charities for Impact: Benchmarks of Highly Effective Organizations (Rotary District Conference 5360)

Last week I presented at the Rising to New Heights, Rotary District 5360 Conference in Canmore.  Below is the transcript from this presentation:

Opening Slide (comic):

Good afternoon

Before we get into the meat of this presentation how many of you can relate to the comic on the screen?  I have a feeling that we have all experienced this at some point in our lives, whether it is walking down a street in North America, or on our travels in different parts of the world.

Today, we are going to peel away the layers that funders and strategic philanthropists such yourselves and Rotary, go through when making determinations on which charities and projects to support.

Slide #2 (title): Thank you for your time. I would like to take a moment to acknowledge that we are meeting on Treaty seven land and only a few kilometers from here is the sacred land of the Stoney-Nakoda, Blackfoot, Cree and T’su Tsina nations.  These tribes have come to this region for learning, trading and connecting only to return to their communities to take what they acquired in this space back.  Similar to what we are doing today, taking information, making connections and trading stories to take back to our home communities and apply these learnings and experiences.

Slide #3:

A bit about myself, I have been a member of Rotary Calgary South for just over six years and started a philanthropic brokerage firm in 2002 when I returned to Calgary from NYC.  My background is in non-profit management and I work with individuals, families and family-owned businesses helping them set up their strategic giving and legacy plans. I grew up in Calgary in a family of all girls, part of a larger pioneering legacy of Jewish settlers on the prairies.

Slide #4:

My company is bi-furcated, in that we have a for-profit business that supporting individuals, their families, their family-owned businesses and acting as a resource for advisors and an online Donor Advised Fund, Place2Give Foundation.

Slide #5:

This is an interactive workshop. I encourage you to make this a discussion so I don’t mind being interrupted and questions asked.  I believe that the collective knowledge is greater than just my experience and having you together in a room is an opportunity to learn from each other.

Over the next little while, this is what we will cover (Read slide)

Slide #6:

At the end of this, I hope that you will leave with a framework for evaluating what most needs doing, and how the projects you support, whether they are through Rotary, or on your own.

Slide #7:

What is philanthropy?  How do you define it? (Wait for people to answer)

Slide #8:

What is strategic philanthropy? (Wait for people to answer)

Slide #9:

When I first start working with a client we articulate their social vision and values so that when we have to make critical decisions we have a foundation of understanding to lean on.  We don’t have time today to do the full exercise, so I have a modified activity for us to do today at your tables.  I encourage you, in your own clubs at your grants committee meetings to consider having a values conversation and vision discussion.  It will help you see the individual values that are shaping discussions and how each person on the committee is approaching the funding request that is being presented.

For today’s activity there is a deck of cards at each table.  What I want you to do is pull three cards that reflect the following three questions from your personal perspective.  I don’t want you doing this wearing your Rotary hat... this is you as a personal philanthropist:

1. 1. What is the legacy that I want to leave?
2. 2. What is the impact that I want to achieve?
3. 3. Who is the funder that I aspire to be?
4. At your table, share your cards with each other and why you have chosen the ones you have selected.

Now I want you to do the same thing wearing your Rotary hat.  

1. What is the legacy that you want your Rotary club to leve?
2. What is the impact that you want your Rotary club to achieve?
3. What type of funder do you aspire your Rotary club to be?

At your table, share your cards with each other and why you have chosen the ones you have selected.

Slide #10:

When I sit down with a client, we look at each organization and project within a system.  The first question we ask is who else is playing in this sandbox.  Those in the sandbox may be other charities, they may other funders, or perhaps they are businesses offering a market-driven solution.  It could also be that government agencies are involved.  Once we have mapped out the landscape then we can really start to dig into the question of “What Most Needs Doing?” and the solution space.

Recognizing that there are unintended consequences of giving, we want to make sure that we have made the necessary connections with the various players to ensure that when the infusion of capital comes from my clients it will be used and leveraged to generate the greatest impact on the issue at hand. 

Slide #11:

Once we have identified the social issue we want to tackle then we look at the project design that is being proposed to figure out how best to measure the impact that will be generated.  I want to be very clear, impact is not the number of kids that have been fed or women that have graduated a program.  The impact that we try to measure is the ripple effect of those numbers.  What is the economic impact and the social impact that has been achieved.  We go back to the fundamental question, “What most needs doing?” and use this template to answer the next question which is, “How do you know?”

Slide #12:

By working this process it becomes apparent which organizations are good and which ones are great.  The great ones know who else is in their sandbox and how they manage the external market-place as much as they manage their internal operations.

The organizations that are going to have the greatest impact are the ones that take a system’s approach to their solution.  They work with donors beyond the “Please sir can I have some more?” funding model that we have become accustomed to.  These are the organizations that when given the opportunity they are able to leverage their funders dollars beyond the traditional granting system.

Slide #13:

As funders we know there is no silver-bullet solution to the wicked problems facing our societies.  It is for this reason that I advocate groups, like Rotary, to take a portfolio approach to their longer-term funding.  To pick an issue and really hone in on it by creating a diversified portfolio of giving that is tackling the social issues at hand.

A diversified giving portfolio is just as described – it looks that the complex problem that is being addressed and layers different approaches to the solution such that when you go back to evaluate the performance of your philanthropic activities you can actually see how and where the needle is being pushed on the issue.

For Rotary your social change portfolio could include the charities you support, the investment strategy that you have undertaken to have a certain lens on the stocks in your portfolio, the vendors and suppliers you choose to do business with (i.e. do they pay their employees a living wage), your volunteer activities and the advocacy work that you do.  As you can see from this slide, your social impact isn’t just limited to the charitable donations you make.

If you, as an individual or a club, has chosen to tackle domestic poverty and you have the stock of a company that has a history or proven track-record of reinforcing a cycle of poverty by paying below a living wage in your investment portfolio, what implication will this have on the poverty programs that you are trying to address? 

The new philanthropic landscape looks beyond the charity to the root cause of the issue. 

Slide #14:

In an effort to adapt to the new philanthropic landscape, a new language has arisen and the sector itself has expanded to encompass for-profit, non-profit and co-operative models as well as different investment vehicles.  This new marketplace calls itself the social profit sector.

You might be familiar with some of these terms.  At the end of the day, how you evaluate a charity or a non-profit recipient will likely be influenced by some of the other market pressures in the social profit space.

This also means that the role of Rotary Clubs and service clubs in general might need to shift in how they approach their philanthropic objectives.

Slide #15:

As donors, either personally or through Rotary, the role that you play can shift from committee to committee, project to project and even over the course of your lifetime.

You might be the champion of a charity stewarding the funding request through the various channels of Rotary one day and the next day you might be called upon to help identify creative solutions or network with others to leverage your contribution. 

Slide #16:

Regardless of which hat you are wearing that day, how you evaluate your partnerships with organizations comes down to six criteria:

• Leadership
• Program Implementation
• Community Engagement
• Volunteerism/HR
• Governance (policies & procedures)
• Funding & Financials

I have purposefully put funding and financials at the bottom because if there are any gaps in the first five those will become apparent in the financials and the fundraising.  I also don’t want to get hung up on the overhead conversation as it has been proven time and time again, that a charity with low overhead does not mean they are the most effective.

I am not going to get into the donor profiling process, but again, I suggest that each of you consider your own philanthropic risk profile as this is the lens that you wear when you are vetting projects for your club and within your family.  Each of you has a unique donor profile, that when combined, gives your club or your family an overall risk score within which you can assess the types of social profit investments you want to make – philanthropic or otherwise.

Slide #17 –

Think about how much time you spent researching your car before you purchased it.  From the time you decided you wanted to buy a new car, to the online research, to the test drives and asking friends’ their opinions… my guess there was a few hours invested. 

Now consider how much time you spent on the charitable investments you have made.  These financial investments actually shape the communities in which we live, the policies that ultimately get debated in our government, and services that are offered.  Imagine if we took that same amount of time, to evaluate the social investments… perhaps we would have a different social profit landscape, not one that has almost 90,000 charities and equal number of non-profits, but one that is right-sized to the marketplace with organizations that actually can measure their social return on your charitable contributions.

When I review a charity, there are over 200 questions that I gather information on.  Here are just a couple things that you can consider in each category:

Slide #18 –

I want to take a moment to break these topics down further and give you the opportunity to come up with some evaluation questions of your own.

When we consider Leadership & Governance, as donors we have an obligation to understand how the organization operates strategically to ensure that the societal objectives and the donor stewardship is aligned.

Slide #19 –

Community engagement is as much about how a charity works with others in their industry as it does with how it partners with donors and understands the competitive landscape in which it operates.  An example could be the 27 literacy organizations in Calgary where only four can sufficiently show how they are pushing the needle on literacy rates.

Slide #20 –

Program implementation is about the products and services that are being developed and taken to market as well as the efficiencies and effectiveness of those solutions.  Understanding how success is measured and what expectations are from the outset is critical.

Slide #21 –

Volunteering is shifting.  It used to be that volunteers had a direct offset against staffing expenses.  Now, the nature of volunteering is episodic and skills based.  When evaluating an organization from the volunteer perspective, being cognizant that volunteers are not taking paying jobs away from local community members, nor that are they doing “make-work” projects for organizations.

Slide #22 –

Financials should be looked at in the context of the industry that the charity is operating.  For example, Meals on Wheels is as much a food distribution organization as it is a poverty reduction agency as it is a transportation and logistics company.  When looking at the financials you have to make sure that the context in which the numbers are being presented are reasonable and the assumptions made make sense. 

Slide #23 –

For this activity each table has been assigned a benchmark.  Take a few  minutes and come up with three to five questions that you feel are critical to evaluate the effectiveness of a charity.  We will bring everyone back together in a few minutes to share the questions.

Slide #24 - #29 – Review some of the questions on slides but pull most from the audience

Slide #30 –

Over the years I have amassed a huge library on philanthropy, social enterprise and giving.  Here are just a few resources I suggest.

Slide #31 –

Thank you for your time and I will happily take some questions.