Thoughts on Evaluation and Outcome-oriented Philanthropy

The recent lectures drive my attention to two points:

First, the complexity and difficulty of evaluation. I used to think that the more quantifiable the better. People like hard figures. Especially for investors, they will be satisfied to see their money sent how many children to school or how many new jobs are created. Sometimes, it is true, numbers can be a good indicator but they are far from enough. My thoughts were deepened after reading last week’s reading “Measuring Social Value” and last lecture the in-class question is enough for this point: a poverty-alleviation foundation said that last year they have feed 10000 people. Cannot agree more with the point that “output is not that important, the outcome/impact counts” trying to consider what alternatives do we have in that context. The opportunity cost.  I have to say that from now on, I will be skeptical when a social program shows so many “numerical” achievements.   Because so many times, the program is inherently not objective.

Second, the importance of intermediary. If we compare the whole social innovation ecosystem to a giant machine, with different parts working together, intermediary is like lubricate. I first know this word in the Social Innovation Bond report. The intermediaries participate in the whole life-cycle of a SIB, transferring risk from government to investors, get evaluators working, raising fund and so forth. I feel that the success rate of a SIB greatly depends on the competency of the intermediary. To be more general instead of focusing on such a newly-emerged tool, the author of “let’s hear those ideas” stressed the importance of “non-profit intermediaries” to scale up promising ideas, to offer private capital. Who always assume the role of an intermediary? My understanding is that most intermediaries are philanthropic foundations.

I cannot help linking my two points together, which brings another big question: how to evaluate a philanthropy, especially those who invest in social enterprises? the evaluation of them appears even harder but even more important. It is hard because obviously an organization is more complex than a program. to evaluate, donors need to consider its missions, specific program it invest (similar to program evaluation), its organizational effectiveness, its management and so forth. It is important because only by investing in the most capable and promising philanthropies, can the money go to the best programs. so I searched on the web and came across this article “A Decade of Outcome-Oriented Philanthropy” published this year on the Stanford Social Innovation Review. http://www.ssireview.org/articles/entry/a_decade_of_outcome_oriented_philanthropy

This article reflects on the currents that made outcome-oriented philanthropy in this recent decade and presents the debates on this approach. In this article, there are many links that give readers a holistic view on this approach (so much information that I will follow up..) and many other topics worth digging deeper.

Some information that I wish to dig deeper in the future and my questions are:

1.       “The number and quality of consulting companies providing grantees with management and strategic advice have greatly increased.” How do they improve with time, in what ways?

2.       There are a lot of initiatives around to increase organization transparency on philanthropy, some example: “ GiveWell and Root Cause provide in-depth analyses of nonprofits. Philanthropedia (recently acquired by GuideStar) aggregates experts’ opinions of organizations as a proxy for their effectiveness and outcomes. Charity Navigator, once exclusively focused on financial data unrelated to outcomes, is beginning to develop outcome indicators.”  What do these analyses focus on?

3.       The author classifies outcome-oriented philanthropy into two categories: supporting organizations and problem-solving organizations. Three strategies for supporting organizations: philanthropic buying, providing risk and growth capital, and impact investing.

Problem-solving ones are more focused on problems. They engage with their grantees in designing and implementing strategies. They “build fields, broker collaborative arrangements and support system change and advocacy” I feel this kind of organization is more like the ones that get involved in SIB.

Which of these two kinds of organizations is more effective in what kind of situation?

What I like about this article is its abundant information, clear logic and more importantly, a relatively balanced opinion. The author states both the success and concerns of this approach, which is even more inspiring.