How Small Data Can Make A Big Difference

April 5, 2012 • Blog, Measurement & Evaluation, nonprofit • by
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There’s been a lot of talk about “big data” recently. The idea that if we just collect more and more data we can find hidden correlations and exploit those for our advantage. It’s definitely an interesting field and will shape many larger organizations but you don’t need “big data” to succeed.

I am a proponent of what I call data informed decision-making. Too often we rely on instinct, our gut, or randomness when making strategic decisions. It’s not that these things are always wrong but I believe the organizations that truly succeed don’t rely completely on instinct, they move towards data informed decision-making. Integrating data informed decision-making into your organization is quite simple. The first step is to simply begin collecting data that you feel is informative in some way. This includes things like sales & profits by region and data but can move much beyond that. Especially in the social sector it is important to move from measuring activity data to outcome data.

Next, when making key strategic decisions, go back to the data. Ask yourselves can we justify this decision based upon the data in front of us? If not, can we collect some data to help support this decision? Data informed decision-making is just about adding a check in the decision-making process. It’s about checking your instinct, gut, or ideas with data. You won’t always be able to support every decision with data but this will help your organization succeed more of the time.

How to Create A Logic Model (And Why Everyone Should)

April 3, 2012 • Blog, Measurement & Evaluation, nonprofit • by
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I have been spending a lot of time working on logic models lately. It’s a tool that I believe every nonprofit must utilize. Logic models are quite simple but their effect can be quite powerful because they help to connect activities to outcomes. They help ensure that all the work you are doing is connected to your mission and being done for some impactful reason.

The best way to begin your logic model is with a problem or opportunity statement. I like to think of this as how the current reality. For example it could be that X% of kids in a certain community are homeless or hungry. You then write the Long-Term Impact you want to have on that problem. This is how the world should look after your organization is successful. So for example, there are no more hungry kids.

Then you think back a step and say, for that long-term impact to occur, what kinds of changes in behavior, knowledge, or circumstance need to change for that to occur. It could be things like everyone who is eligible for food-stamps is on them. These are your near-term impacts.

Backing up one step further what kinds of outputs need to occur for that change to take place. This is often a specific, benchmarked number like X number of people need to become educated on food stamps. Backing up one step further, what activities need to happen for that output to take place. There need to be people to teach people about food stamps and help them get registered. The final step is examining the inputs necessary to perform those activities. That includes financial resources, human capital, facilities, etc.

 

So in the end you have created a causal change that looks like this.

There is a problem in the world.

If we can gather these inputs we can perform these activities.

If we perform these activities we will achieve this level of output.

If we achieve that level of output we will realize these near-term impacts.

If we can realize these near-term impacts we will have this long-term impact.

 

In this way everything that your organization is doing is leading to some level of impact. This is a great way to focus your resources and energies around things that will actually be making a difference.

Why I Don’t Believe Your Annual Report

February 22, 2012 • Blog, Development, nonprofit, Research • by
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I received your annual report today. You claimed that 80% of your students go to college while only 40% of those in the community do. You told me its more likely your students go to college than become incarcerated, while it’s the opposite for the neighborhood you’re in. The same for teen pregnancy.

But the thing is, I don’t believe you.

It’s not that I don’t believe your numbers. I’m sure you are reporting them as honestly as you can. I just don’t believe that it was you who caused this difference in students’ lives. You’re suffering from the selection bias.

See, the students in your program are not a random sample from the community. While you’re open to everyone, not everyone shows up, just those that choose to. So you can’t compare yourself to the average of the community. Let’s think of it this way.

In year 1 the community has 10 students, 4 graduate high school. So the number you’re comparing too is 40%.

You start your program in year 2 but can only accept 5 students. Of the 5 students who show up to your program you notice that 4 graduate high school, a full 80%. Twice as much as the previous year. What you don’t realize is that no one else graduates high school (because the students with the will to succeed will seek out opportunities like yours to help them succeed). So for the community, 40% still graduate, you haven’t made any difference.

The selection bias is everywhere. There’s really no way around it other than to force people randomly in and out of your program. So be careful when comparing your statistics to the general statistics of your community.

Tomorrow I’ll talk about how to get me to believe your numbers.

The Good Social Business

February 16, 2012 • Blog, Business, nonprofit, Philanthropy & Giving • by
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Earlier this week I wrote the post, Why I Don’t Like Your Social Business. It turned into one of my most shared and read posts of the last year, in part because I think it struck a nerve with many social entrepreneurs. Many know and can sense that the field has been inundated with bad social businesses, which I rant against in the post.

Today though I’d like to talk about the good social business and the parts necessary for creating one.

1) The best social business is a business!

This might seem odd but I think many social entrepreneurs are people who would have generally joined or started nonprofits but they see this trend and the potential for a continuous and sustainable revenue source, so they start a business. This, in my opinion, is backwards. I think the best social businesses are actually started by people who start businesses but they stumble upon a business model with positive social benefits.

2) The best social business doesn’t rely on charity.

You would think that would be covered by actually being a business, but a surprising number of businesses ask people for investment without giving them upside, return, or equity. This makes the investment a charitable gift without a tax deduction. This creates an environment where bad businesses last too long. In the normal market if you aren’t making money and have no hope of making money, you shut down. The charitable action in the social business world just prolongs the inevitable.

3) The best social business aligns social and financial returns.

This is the crux of the matter. Businesses that are built around giving a portion of their profit or each sale away are really just glorified corporate giving strategies. I think a social business is one that has found a way to align the social and financial returns. If your investors aren’t crying for you to increase social returns so they see an increase in financial ones then I don’t think you have created a social business. If you feel a tension between the financial bottom line and the social bottom line then you have not truly aligned the two.

If you are able to accomplish these three goals I think you’ve probably created a pretty awesome social enterprise. It will be sustainable, impactful, and lasting. If you are meeting a consumer need while addressing a social ill you have truly created something revolutionary. I am sure that many people will disagree with my definition here but I think that if you have not accomplished these three things you are probably just a nonprofit in disguise and you should embrace it already and give your donors the benefit of a tax deduction. You can still sell things as a nonprofit and operate in much the same way as a business.

I think social businesses can be powerful agents of social change but they cannot address every problem and it has become too large of a fad and people are being taken advantage of and good is not truly being accomplished. As I always say, bring a skeptical eye to the social business world and ask yourself are they really a business and are they really accomplishing anything good?

Why I Don’t Like Your Social Business

February 14, 2012 • Beliefs, Blog, Business, nonprofit • by
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I don’t like your “social business” because you aren’t actually a business. You wouldn’t exist unless people donated money to you on Kickstarter and you aren’t even able to give them anything in return, not even a tax deduction. If you have a product people aren’t buying it but you might not even have a discernible product or service that you are offering.

I don’t like your “social business” because you actually aren’t doing much socially. Since you aren’t really a business and aren’t making any money you have nothing to give away and more likely than not your business model isn’t doing any measurable good. You would have been better off pouring your time more directly into the problem you set out to address.

I don’t like your “social business” because you see the “social” and the “business” as being at odds with one another. You steal profits from the one to give to the other. You believe one to be good and one to be a necessary evil. You did not take the time to build into your business model (because you don’t have one) the social side of your business in a way to create harmony between the dual goals.

I don’t like your “social business” because you couldn’t cut it the business world and this is your way to still do something that makes you feel important. Or you think this is trendy or cool or a way to make a fast buck.

Please stop. I just don’t like your “social business.”

That’s not to say I don’t like any social businesses. I like social businesses that are actual businesses. That make money. Have customers and sales. That can operate without charity. They have aligned their social and financial goals so that their shareholders and stakeholders insist that they do more good because that will help the bottom line. They are addressing real needs, both economically and socially. They are meeting a demand that exists naturally. They are not scoring branding points or look to wash their business in charity to trick consumers. There are good social businesses.

But not every problem can be solved with a social business. Lets stop acting like it can.

Not every social business is inherently good because they call themselves a “social business.

Lets stop giving people a pass just because they claim to be a social business.

Distorting Nonprofits

December 20, 2011 • Blog, nonprofit, Thoughts • by
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The nonprofit world has a fundamental distortion; the people who pay for services hardly ever receive them. The person who pays for the homeless shelter, never uses it. The person who pays for a child to receive a meal in Africa will most likely never meet that child. There is one portion of the nonprofit world for which this fundamental distortion is not generally true, the arts world.

Those who pay to keep art museums open, symphonies playing, and theaters performing are generally those who visit them regularly. This gives these organization a fundamental advantage when it comes to funding (and why some think these organizations should not really be considered nonprofits).

The Stanford Social Innovation Review, a go-to resource for all in the sector, had an interesting article last week entitled Arts Funding Promotes Neighborhood Vibrancy. What I found most interesting though, was the idea of selling the general community benefits of arts organizations. The SSIR had originally reported that arts funding spurs economic development but the organization ArtsWave responded by saying, while that’s true we like to say that it increases neighborhood vibrancy.

Here’s the ArtsWave insight: people are ready enough to agree with the notion that the arts are good for the economy. But if you probe deeper, and ask what top three things we should do to improve the economy, no one answers “subsidize the arts.” So apparently the argument that the arts are an economic engine (true or false) is unpersuasive, which is what really matters.

Let me just pause here quickly and say that I think they are slightly incorrect. Everyone would probably agree with the statement that having a healthy diet will improve an athletes performance but it probably wouldn’t show up in the top three ways to improve an athletes performance. Other things like exercise, good coaching, and practice might be the best ways to improve performance but they are not the only ways.

But the ArtsWave research also uncovered the fact that if you ask people what would improve their neighborhood the most, the arts come up time and time again. Why? Because artists’ residences are known to herald an improvement in real-estate values; because arts audiences mean feet on the street and therefore greater public safety; and because arts venues are known to spawn coffee shops, restaurants, and other places of urban liveliness.

Therefore, the argument for public funding needs to be focused not on the art but on the public benefits of art-making.

I think this is an important insight. When approaching donors, the focus needs to be on persuasiveness, not just what is true. Organizations need to think about how to sell their impact to donors. This is true for all organizations, not just arts organizations. Think about the effect you have on your community and how that benefits various stakeholders, then approach them and ask them to pay for that benefit. It is a subtle correction to the fundamental distortion found in the social sector.

Admitting Failure is Necessary

December 16, 2011 • Blog, Ideas, Measurement & Evaluation, nonprofit, video • by
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This guy gets it. This TedX talk is essentially the stuff I think about boiled down to 13 minutes. He addresses the distorted demand in aid, where those with the power who fund services don’t receive them. He talks about the need to focus on soft skills, not hardware. It is a very eloquent and interesting talk and worth your time.

How Mobile Money is Changing the World

December 14, 2011 • Blog, nonprofit, Public Policy, Research • by
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An M-Pesa Client

Mobile money is one of those revolutions that not many people in the U.S. are familiar with but which is having profound implications in much of the rest of the world. The Stanford Social Innovation Review highlights the most successful mobile money system in the world, the M-Pesa in Kenya. The article, entitled Mobile Money: A Game Changer for Financial Inclusion, is a great introduction to the mobile money movement and its implications.

The basic idea is that in rural, poor countries, access to financial institutions is essentially non-existent. Yet in many of these places, large portions of the population use cell phones. By moving currencies from physical bills to virtual money on their phones, financial institutions can be opened up to entire communities without ever opening up a bank branch.

Financial inclusion is one of those things that has grabbed my heart lately. I know its a weird thing to say that I’m passionate about financial inclusion, but I am. Financial institutions move economies forward. They make people’s lives better. They move capital around in (hopefully) efficient ways. Communities without access to financial services are significantly worse off because of it. Whether on the south side of Chicago or in rural Kenya, individuals’ lives are made better when they can open up a savings account, easily move their money around, and begin to access markets first-hand.

Read the SSIR article here to learn more.

Tapping Into Entrepreneurship

November 22, 2011 • Blog, Leadership, nonprofit • by
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A recent Philantopic blog by long-time nonprofit activist and scholar Mark Rosenman entitled, Do We Really Need 12 Million New Nonprofits? grabbed my attention yesterday. Rosenman quoted a Civic Ventures Study that showed 12 million baby boomers are interested in starting their own social venture or nonprofit over the next 5 to 10 years. Setting aside the fact that survey results are next to useless when it comes to asking people about hypothetical future behavior, what the study does show is an increasing interest in social entrepreneurship of all stripes.

Rosenman believes that this entrepreneurship will hurt the sector.

“Why do I find this aspiration so distressing? I worry that the addition of millions of new nonprofit and social enterprises — on top of the million or so incorporated charities and foundations already registered with the IRS — will make it more rather than less likely that we continue to view and treat critical societal issues as if they were fragmented and unrelated. And that means less effort to bring about the broad-based changes needed in our social, political, and economic institutions.”

While I too believe that we have way too many nonprofits in America and that there should be a pretty large scale re-structuring, I don’t think a lack of entrepreneurship is the answer. We need innovative and inspiring ideas and we need them to grow and spread. I agree with Rosenman in that we don’t need every Tom, Dick, and Harry starting a nonprofit because they feel like it, but we do need existing nonprofits to tap into this entrepreneurial spirit.

There is no question that we are becoming an increasingly entrepreneurial nation. More and more people are starting their own businesses, entering the “creative class“, and viewing themselves as a product that they sell to various organizations. These people want to move quickly, lead with autonomy, and tackle problems in innovative ways. It’s what makes them entrepreneurs. But not all entrepreneurs need to start their own organizations, they just need to find existing ones that let them loose and tap into their entrepreneurial spirit.

The nonprofit sector however, is notoriously anti-entrepreneurial. When every decision needs board approval, the entrepreneurs will leave in frustration. When movement and momentum are constantly being slowed by organizational processes, the entrepreneur won’t stay. Of course not all nonprofits have these overly-structured systems, but many do.

It will be vital to addressing our current challenges for the bureaucratic systems often found in the social sector to be left behind. It is exciting that 12 million people want to direct their entrepreneurial passions towards social problems and as a sector, we must be ready to welcome them with open arms.

WaterForward: An Experiment in Social Giving

October 31, 2011 • Blog, Development, nonprofit, Philanthropy & Giving, video • by
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It’s long been known that, for some, the motivation to give to a cause is that others will know about it. That’s why everything from buildings to hallways to benches are named after donors and its why we tweet and Facebook our favorite causes. The innovative water provider charity:water is bringing this tradition into the 21st century with WaterForward.

The idea is simple. Someone pays $10 to get you into the WaterForward book which can be viewed online and will be printed after every million members. You get a message that you’ve been placed in the book and you are asked to pay it forward by buying a spot for your friends for $10. They will then be invited to do the same. The only way to get into the book is for someone to buy your spot (though initially there are some other ways to get invited).

I think it is a tremendous way to raise awareness and money at the same time while literally making your fans your development team. This is something that charity:water has always excelled at.

After a quick perusal of the book its hard to tell how well it is catching on but often times these social movements need to reach a tipping point and when they do they’re unstoppable.

To learn more about WaterForward read this article from FastCompany and watch the video below.

 

 

How WaterForward works. from charity: water on Vimeo.

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