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Jane Wales

Jane Wales

Posted: December 11, 2009 03:55 PM

Book Lays Out Plan for an 'Impact Index'

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Some of the best nonprofits have been prevented from growing as large or becoming as capable as they should be. What's needed, according to Steven Goldberg, a consultant to nonprofits and social entrepreneurs, is a new nonprofit capital market that would take the form of a prediction, or information, market, akin to political polls.

In a new book, Billions of Drops in Millions of Buckets: Why Philanthropy Doesn't Advance Social Progress, Goldberg argues that such a market, while not a silver bullet, would increase social impact by fundamentally restructuring the sector, turning philanthropy from being loyalty-based - guided by fundraising and relationships - to merit-based - guided by performance. The idea of a nonprofit capital market has been mentioned by many thought leaders in the sector, Goldberg acknowledges. Nonetheless, he feels it has not received sufficient attention to date. Such a virtual stock market or "Impact Index" would allow philanthropists to know what various nonprofits accomplish, through evaluation and transparency, and not just what nonprofits are trying to accomplish, through anecdotal reporting. Such data will help make the most promising nonprofits, with the greatest likelihood of "transformative social impact," stand out from the "weeds," he writes.

Goldberg is not alone. Most established foundations are making the case for improved impact assessment -- and for a decision-making process that is based on objective measures. And most organizations that study or support the sector -- including GEO, FSG, Independent Sector, the Foundation Center and UPenn's Center for High Impact Philanthropy -- have made the case as well. But, we may be better at devising viable metrics than we are at changing behavior. And so Aspen's program on Philanthropy and Social Innovation will convene thought leaders, practitioners and funders to consider how impact measures and other data can lead to field-wide learning -- and changed behavior. Engaging in this workshop series will be members and partners of the Global Philanthropy Forum.

Before detailing his plan for this Impact Index, Goldberg writes about the problems of the current financial structure governing the sector. Traditional fundraising takes too much time and offers too little money, as foundations offer too many small, short-term grants with lots of strings attached. This practice reduces foundations' risks of failure, he writes - but may also lead to less significant achievement. The sector's most critical flaw, he says, is the fact that funding is tied to relationships, not performance.

The release of Goldberg's book is timed to take place when the discussion of metrics and evaluation is taking place in all corners of the sector -- but has not yet exhausted us. Superb work has been done and is being undertaken by many organizations on both the local and the national levels. For some, this is the time to take the discussion the last mile, from thought and successful experiment to field-wide change. But, in trying to do so, we might want to bear in mind the resilience of human nature. Both performance and relationships will surely play a role.