This is my newest column for the Chronicle of Philanthropy. You’ll find an archive of my past columns here.
Foundations and nonprofits are constantly looking for the right tools to measure success.
One of the most effective sources of information might come from the people who rely on an organization, suggests a new the book, The Ultimate Question 2.0, in which the veteran management consultant Fred Reichheld demonstrates that asking one simple question of a business’s customers can often reveal more about their performance than more traditional financial or product analyses.
The question is: "How likely is it that you would recommend Company X to a friend or colleague?"
Since recipients of nonprofit services don’t typically pay the costs of the services they receive, this approach to measuring results must be modified when applied to the social sector.
But a number of organizations are working on ways to reach out to beneficiaries of a nonprofit or foundation as well as to the general public. In so doing they may find the same connection Mr. Reichheld did.
The Center for Effective Philanthropy is one of the pioneers of this work.
For more than a decade, it has conducted studies of grant recipients and others to help foundations figure out how to reinforce strengths and fix weaknesses. Its flagship Grantee Perception Report has now been commissioned by more than 190 foundations.
The center has also been working on a Beneficiary Perception Report. Its pilot program is called YouthTruth and gathers the feedback of high school students who attend schools supported by The Bill & Melinda Gates Foundation.
In a report published this month, the Center for Effective Philanthropy notes that few foundations collect information from beneficiaries. The fact that the intended recipients of foundation programs are rarely asked for feedback highlights how much room there is in the social sector for Ultimate Question type measurement approaches to be deployed.
Keystone, a London charity, is also doing important work to gather and analyze the views of people a charity tries to serve. They are working with students in university service learning programs to gather what they call constituent voice; feedback from the beneficiaries of nonprofit programs
Since foundations serve the public good and not just one group of beneficiaries, they must reach out to a lot of different kinds of people to assess their work.
The James Irvine Foundation, for instance, has been publishing their Grantee Perception Report from the Center for Effective Philanthropy and actively seeking public feedback on their annual performance. Importantly, the foundation’s president, Jim Canales specifically says they are looking for feedback from critics of their work.
"The power dynamic inherent in philanthropy makes it critical that we resist the temptation to talk more than listen," Mr. Canales writes, "precisely because people will always listen politely to anything we have to say, regardless of its utility."
He recognizes that nonprofits tend not to tell foundations when they’re doing a bad job and it is the rare foundation that has ever lacked enough groups eager to take its money.
A similar dynamic exists between many beneficiaries and nonprofits, because a person in need of social services rarely is in a position to turn down subpar assistance. Few nonprofits ask such clients what they could do to better serve them. But organizations could make more vigorous efforts to encourage such feedback.
It is with this dynamic in mind that I’m reminded of a plea by Frederick Hess of the American Enterprise Institute for foundations to not react defensively when they are criticized but instead to actively seek out and encourage criticism.
"Foundations need to make it conscious policy to welcome-and even encourage-criticism." Mr. Hess wrote in Philanthropy, the magazine published by the Philanthropy Roundtable.
"Given that even tart-tongued observers will be unusually reluctant to share their thoughts, foundations need to make it extravagantly clear that they will not blacklist critics-or look kindly upon those who do. Only this kind of scrutiny, will flag blind spots, wishful thinking, or ineffective spending.
Whether the foundation personnel agree with such assessments, engaging with them is essential to forestalling the plagues of hubris and groupthink that are so much a part of human nature."
It is asking a lot of any organization to actively seek out criticism. But it is only by asking for constructive feedback that nonprofits and foundations can expect to improve the quality of their contributions to society.