Almost exactly five years ago I sat down at my computer and typed out eight simple words.

“Welcome to the Second Great Wave of Philanthropy.”

They were the first words I ever wrote on this blog. At the time I never would have guessed that those little words would launch me on a journey of philanthropic discovery that would take me on a crisscrossing tour (both online and off) of America’s vibrant philanthropic community. I have learned so much from the Tactical Philanthropy community and have become only more convinced that the field of philanthropy is rushing forward toward a Second Great Wave of philanthropic activity that is fundamentally different from the philanthropy of the last century.

But now it is time for me to take a break from writing and focus on other areas of my life. Starting today, I’m taking a sabbatical of indefinite length from writing this blog. I hope I’ll be back at some point, but I can’t say with any certainty when. At this time, I find that I want to pour myself into other aspects of my life; my family, my community, my other personal passions and the building of my investment management business which gave rise to all of this half a decade ago.

While I won’t be writing with any regularity, I’ll still be following along with what’s going on in our field. I believe that the next five years will see the visible impact of the Giving Pledge, the advent of Social Impact Bonds and the coming of age of the effective philanthropy movement. While I won’t be chronicling this shared journey we are on together, I’ll still be a member of the tribe.

Writing this blog has certainly changed the trajectory of my life. I’d like to think that as a group we’ve helped nudge the trajectory of philanthropy along the path leading towards effectiveness.

Every one of you reading this has helped make this blog what it has been. You gave me the gift of your attention, interest and engagement. I am forever indebted to the Tactical Philanthropy community for helping make me the person I am today and nudging me along the path of my own personal life journey.

Thank you.

This is a guest post by Ken Berger, president and CEO of Charity Navigator.

By Ken Berger

On September 20^th of this year, Charity Navigator (CN) launched a significant change to our rating system (called CN 2.0). In follow-up, Sean has kindly offered me the opportunity to put this event in the context of CN’s present and future. In addition, it offers me the chance to address some criticisms from the “three C’s” (critics, competitors and charities with lower ratings).

In 2010, CN formed an Advisory Panel. Sean is a member, along with a number of other members of the Alliance for Effective Social Investing, nonprofit operators, academicians and other experts in the nonprofit arena. We shared with them our preliminary thinking on the new Accountability and Transparency dimension and used much of their feedback, along with all our staff and our Board, in the final product you see today on our site. The end result is a dimension we have weighted a full 50% of the rating score for each nonprofit. As a consequence, there has been a major shift in the rating of many nonprofits we evaluate. A few statistics to prove the point:

1. We saw roughly 40% (around 600 out of 1500 nonprofits) lose their four stars rating, and another 20% gain it (around 300) with a net loss of 20% of four star rated nonprofits in our system.
2. 49% of the nonprofits we rate saw a change in their overall star rating (around 2,650). 19% saw a decline in overall score and 30% an increase.
3. There was an 8% increase in the number of nonprofits rated good (3 stars) or better.

Overall, the collective response of our site users has been positive, if not thrilled with the new information. Nonprofits as always, given the nature of “winners and losers” at ratings, have been both positive and negative. However, the vast majority do not question the importance of a good portion of this information. After all, the Nonprofit Panel (formed by Independent Sector) spent years to devise a set of Principles of Good Governance and Ethical Practices that encompass a good part of the territory covered by our new rating dimension.

One of the most striking results of this change in the rating system is the amazing response of many nonprofits (both “winners and losers” in the new rating system). This is a far cry from when we began operations ten years ago and you could hear a pin drop when we asked for information! The number of new governance and ethical practices implemented by nonprofits we evaluate, as well as posting of information on their web sites, has already totaled over 1,000 and continue apace. Here and here are two examples of web site pages that reflect these types of changes.

As noted earlier, some of the members of the Alliance for Effective Social Investing have been helpful advisors to CN in thinking through how we have been moving forward. Below is a chart that reflects one iteration of some Alliance member’s thinking on the critical qualities that define a high impact organization.

The basic point is that all these dimensions must be present to maintain a high performing or high impact organization. Therefore, for those who question the importance of financial health in measuring a nonprofit’s performance, I refer them to our advisors, as well as to any nonprofit CEO or CFO who must constantly concern him or herself with the financial efficiency and sustainability of the organization. To say results are all that matters is to deny the question of whether the organization will be able to afford to operate and provide those same results for the long haul.

Regarding overhead, show me a nonprofit that uses 70% of its funds for overhead and and I’m 90% sure it is an organization that is either clueless or focused on lining someone’s pockets rather than serving others. People may disagree on what the best metric of overhead should be, but to say overhead is dead or a red herring is to deny a useful indicator of where many thieves and scoundrels dwell. I have worked in enough nonprofits with unethical leaders to say without question that we need to get serious about their existence as more than a rarity (see the book Silence, by Gary Snyder). This is not meant to imply that we think our financial metrics can not be improved upon! I refer you to a blog post I wrote a while back on the limits of focusing on overhead alone. In addition, we have recently formed a task force of financial experts to think through possible changes to our traditional financial metrics.

As to the value of Accountability and Transparency (CN 2.0), if a nonprofit does not have strong governance and ethical practices it greatly increases the risk that someone will rip them and their donors off. Therefore, good impact today can once again be of short duration if you do not have such practices and oversight in place. Furthermore, measures of transparency such as posting critical information on the nonprofit’s web site, provides all stakeholders with a chance to monitor the organization to at least some degree. That further mitigates against unethical behavior that could take a nonprofit on the road to ruin.

Of course results are the key and the central quality that every nonprofit should be focused on! However, to suggest that results (impact, outcomes and the like) are the only concern a nonprofit should be focused on reflects a fundamental denial of what is necessary to sustain those results. My thirty years of operating nonprofits provides me with an endless stream of examples of how critical all three dimensions are to assuring ongoing high performance and ultimately impact.

Looking ahead we are now in the second year of developing the third dimension of our rating system which evaluates the quality of results reporting of nonprofits (which we are calling CN 3.0). Thanks to seed funding from the Hewlett Foundation, we have been testing a number of possible prototypes for how we will go about this analysis. In addition, we have secured the help of a number of graduate schools and volunteers from around the country to do background research as well as try out the prototypes we have developed.

We are hopeful that we can formally announce what the selected tool will look like by next year and then begin the process of compiling this data on all of the nonprofits we evaluate. However, we intend to continue to conduct basic research and continuously improve the results reporting metrics as we learn. For example, it is conceivable that we will measure results differently at least to some degree, by nonprofit cause area, based on the aforementioned research.

Furthermore, as always, we will provide this information at no cost to our users. In addition, we will provide our four star seal at no cost to the nonprofits who receive it. Therefore, the added effort that will be required to analyze nonprofits performance in all three dimensions requires us to scale up our operations significantly. We plan to do this with the growing support we anticipate from voluntary donations from our users, foundation funding and earned income. In addition, we hope to recruit a significant number of volunteers to expand our capacity to deepen our rating system (to CN 3.0) and broaden our coverage (we have a goal to roughly double the number of nonprofits we evaluate from 5,500 to 10,000).

Looking further down the road, we hope that some day we and our competitors will truly collaborate by aggregating data to deepen our rating system even further. However, that is a blog for another day.

• A Thirtysomething Billionaire Couple’s Bold Philanthropy – The Chronicle of Philanthropy

  A great profile of the impact focused philanthropy of thirtysomething billionaire couple John & Laura Arnold.

  tags: philanthropy

Posted from Diigo. The rest of my favorite links are here.

This is a guest post by Rich Polt, the founder of Communicate Good.

By Rich Polt

The best communications campaigns are grounded with a single, clear idea. For truly iconic campaigns, the line between idea and slogan is blurred, such that all you need to hear is the message itself and you immediately know who it’s from: “Yes we can,” “Just do it,” “The other white meat.”

Achieving this kind of communications nirvana is not easy. It’s challenging for even the most focused, experienced and disciplined nonprofit (and for-profits for that matter) to develop a simple message and to deliver it to audiences in a compelling manner, again and again and again.

Unfortunately, by the very nature of the grantor-grantee relationship, clear messaging in this sector often falls prey to the compromises and hoop-jumping that is required to secure funding. The net result is not just weaker messaging and marketing campaigns, but ultimately diminished philanthropic and societal impact.

I recently saw this unintended and unfortunate dynamic with a nonprofit that had secured a sizable grant from a funder. While both funder and grantee undertook the collaboration because of clear mission synergies, the reality was that the funder brought tremendous leverage and its own marketing agenda to the mix. Despite both parties feeling that they were entering the relationship with eyes wide open, the nonprofit ultimately needed to have its external message take a back seat to that of the funder for the campaign. We’re not talking about a major conflict of messaging mind you. But it was enough of a nuanced shift that the growing nonprofit was no longer able to articulate its unique value proposition.

Communications is a discipline that by its very nature is squishy, subjective, and difficult to evaluate. In the same way that the Tactical Philanthropy community perpetually seeks better mechanisms for measuring philanthropic impact, thoughtful communications professionals lose sleep over how to best measure the return on their efforts. What does it mean to create buzz or to become a thought leader? So naturally, when we look at the interplay between two arguably nebulous disciplines – communications and philanthropic impact – it is difficult to quantify the problem.

This tension in funder-grantee communications mirrors the already documented tensions between funders and their grantees in other areas: program efficacy, mission drift, boardroom relations, etc. In a study by The Center for Effective Philanthropy on funder-grantee relationships, a key finding (detailed on the bottom of page 10) is that the “pressure grantees feel to modify their priorities in order to receive a grant” is an important contributor to the measure of the overall relationship. We know this is a very real issue. So it stands to reason that this also impacts the realm of communications.

While I am looking at this problem from the lens of the nonprofit, it is equally possible for the reverse situation to hold true. When smaller foundations, ambitiously working to create their own brand in the market, make grants to powerhouse nonprofits, they run the risk of having their messages eclipsed by that of their steamrolling grantees.

So what should be done?

A comprehensive analysis of this issue is outside the scope of this blog post and the sheer complexities involved indicate that no one-size-fits-all solution is practical. However, I do believe there are some basic preventative measures that both funder and grantee can take as they embark on a collaborative marketing effort.

1) Have a heart to heart. Both parties should acknowledge outwardly – from the very beginning – that they each have their own marketing agendas. Share these. Discuss key messages. Are there any messages that are so fundamental to identity that they cannot be compromised? Make communications part of the larger conversation about philanthropic impact and the intended outcomes of the relationship.

2) Know who is leading the charge. At the end of the day, one person needs to be responsible for the success of this campaign. Is it someone on the funder side or the grantee side? This fact alone says a lot about where ultimate messaging power should lie.

3) Sacrifice the rigidity of your message when it makes for stronger outcomes. If a nonprofit is participating in a campaign being spearheaded by the funder, than the nonprofit should be prepared to have the funder’s messaging and marketing agenda take center stage, even if it doesn’t completely mesh with its own messaging. At the end of the day, if the campaign is a success – and strong marketing helped bolster that success – than the nonprofit will be thrilled to have been a part of it. If this doesn’t sit well with the nonprofit, than hopefully they would have recognized the issue early by following suggestion #1 above.

On a macro level, I doubt anyone can say the degree to which differing grantor-grantee messages have degraded net social benefit. But having seen marketing campaigns fall flat as a result of this dynamic, I can say with complete certainty that it’s a problem (a.k.a. an opportunity) – one that merits our collective thought and consideration.

My friend Laura Arrillaga-Andreessen is a pretty remarkable person. She is the founder of SV2, a silicon valley based donor partnership focused on venture philanthropy. After launching and teaching Stanford’s first philanthropy course, she started the school’s Center on Philanthropy and Civil Society. And now she’s published a philanthropy book called Giving 2.0 that focuses on how people from all walks of life can engage in effective philanthropy.

The easiest way to learn more about the book is through this video:

(Click here to see the view if you are reading this via email.)

And of course Laura has a new blog and is trying out Twitter. You can learn more at the Giving 2.0 website.

In a testament to how deeply connected and admired Laura is in the philanthropy world, the endorsements for the book reads like a who’s who of the field:

Melinda Gates: “Giving 2.0 empowers everyone-from volunteers to donors to advocates-to get the most out of their giving and themselves.”

Judith Rodin: “Arrillaga-Andreessen is a brilliant storyteller who has the rare gift of animating both the heart and mind of philanthropy”

Mark Benioff: “Laura Arrillaga-Andreessen shows us the power of new thinking around philanthropy”

Paul Brest: “Through vignettes of individual and family philanthropists, Laura Arrillaga, a great philanthropist and leader in her own right, captures both the passion and tough analysis and decision making necessary to turn that passion into results.”

You can order the book here. If you are in the Bay Area, you should consider attending the October 27th book launch:

Thursday, October 27, 2011
CEMEX Auditorium at the Stanford Graduate School of Business

Doors Open 5:30pm. Program 6:00pm-7:00pm. Be the first to hear the extraordinary leader Laura Arrillaga-Andreessen, Stanford PACS founder and Advisory Board chair, and author of the new book Giving 2.0: Transform Your Giving and Our World during launch week. Jim Canales, President of The James Irvine Foundation and Stanford Trustee will be making the special introduction. Laura is a remarkable leader, teacher, speaker, and philanthropist providing important, accessible insights for givers of all ages, interests, or levels, and whether giving time, networks, or expertise. In Giving 2.0, readers go on a fascinating journey through the fast-changing world of giving and read compelling stories of individual philanthropists. This is the Stanford and Silicon Valley main event for the book launch!

RSVP here:  pacscenter.stanford.edu/laura-arrillaga-andreessen-giving-20-event