Change Agents

A Pay It Forward Blog

Both the CEO and COO from the nationally recognized Wounded Warrior Project have recently been fired after reports by CBS that donations were being used for frivolous spending. Supporters of WWP are understandably upset and are demanding accountability. Here are some comments left from individuals chiming in after hearing the story:

  • This is why I never donate cash, but will offer my skillsets and time to a cause I believe in.
  • I've heard this kind of garbage before regarding a lot of charitable organizations with a big publicity budget.
  • Charities in theory are great organizations....but time after time this is what we see. I guess we should not be surprised these are the same people that are in charge of a lot of the governing organizations. Same old story, greed and selfishness. How very sad when the people that contribute are expecting their dollars to be used wisely.

This is not the first time that a large non-profit has been let down by supporters, and it will not be the last. In fact, some of large charities are wasting donor dollars to grow and will likely continue doing so. The most recent report "Pennies for Charity" from the Attorney General highlights the fundraising activity of for-profit telemarketing companies hired to raise money for their nonprofit clients. The report summarizes 2014 activities and indicates that just 48% of the $302 Million raised in 2014 actually went to the organization that was being solicited to generous donors.

So, what can you do to protect yourself from organizations that choose to use donations foolishly?

First, it is important to note that these situations that make the headlines are not common practice among the nonprofit community. Stories about these bad apples do tend to overshadow all of the good work being done by the overwhelming majority because, to be frank, it is what generates more clicks and equates to more advertising dollars. Unfortunately we live in a world where the majority of the news we consume is driven by negative emotion.

“The most powerful predictor of what spreads online is anger.”

Ryan Holiday, Trust Me, I'm Lying: Confessions of a Media Manipulator

Fortunately all hope is not lost. There are several fairly simply steps that you can take to make sure that your donation is making its intended impact.

  1. Do your homework (or consult someone that does). Resources such as Charity Navigator and PIF Foundation's Impact Report help you quantify how money is being spent by non-profits, the latter even analyzes the actual impact each dollar makes. Use these resources or do your own research before deciding where to give. Evaluating a charity’s 990 through Guidestar is also a good place to start.
  2. Focus on outcomes, not percentages. This news story and others like it use percentages to enrage donors (Less than 60% of WWP donations go to veterans). However, these percentages tell us nothing about the outcomes of the charity. From our perspective it is just as much a letdown when you have a charity using close to 100% of their annual donations to make an impact but actually yield little to no real results.
  3. Be a proactive donor. The fact that charities must solicit donors to keep programs operating means that donations will continue to be wasted on solicitations rather than a cause. Do your part by being proactive with your donation, do not wait for an invitation to start making a difference. Pure accountability in the nonprofit space will only exist under a system where the nonprofits themselves no longer need to focus on raising their next dollar.

Scams like this will not stop, but do not use this as an excuse to deny worthy charities. Instead, take the steps that we described and be confident in your choice to give because you have done your homework. Choose change, Pay It Forward.

Peter Singer, in his work The Life You Can Save argues for near-compulsory donation:

"If major corporations, universities, and other employers were to deduct 1 percent of each employees salary and donate the money to organizations fighting global poverty, unless the employee opted out of the scheme, that would nudge employees to be more generous and would yield billions more for combating poverty." (73)
 

This is in direct contradiction with Singer's other arguments. During an interview with the Giving What We Can organization at Cambridge University, Singer testified: 

"I don't favor a law that says everyone must give x percent of their income to charity. I think that if a government wants to do something like this, it can increase the money given to foreign aid. The government can also educate people and make it easier for them to give, as can corporations. I don't want to make it compulsory." (June 18th 2013)

I think where Singer comes into direct conflict with himself is where the evidence lies. Singer looks at organ donations in both Germany and Austria. In Germany, where people must opt-in to organ donation, only a mere 12% of the population is registered to donate organs. In contrast, in Austria the role is reversed--people must opt-out of organ donation. The amount of organ donors in Austria is 99.98%. 

The issue that arises in discussing an opt-out system of charity would lie in the fact that people will be less likely to privately donate, feeling their civic duty and moral obligation to help those less fortunate has been filled by this mere 1%--or less as Singer will move on to argue--thus causing most people to donate significantly less than the 5% goal advocated by most philanthropists. So this begs the question: Is 1% of all income worth more than 5%--or potentially more in cases like Warren Buffet and Bill Gates--of voluntary donors? 

This question--while likely calculable--really does not address the heart of the matter. Is it ethical and moral to implement an opt-out system? Is this a viable, acceptable, and ethical choice the world should make in order to combat global poverty? 

Singer does argue in his text, that the worlds superpowers have a moral obligation to combat the effects of global poverty and care for the underdeveloped nations, because they are a direct cause.

"If we accept that those who harm others must compensate them, we cannot deny that the industrialized nations owe compensation to many of the world's poorest people." (33)

In stating that, why not guarantee reparations to these countries with some form of an opt-out system. After all, would we not then effectively say to people: "You need to live morally, or make the conscious choice to live immorally" -- and who would make the conscious choice to live an immoral life? When something so simple is put in front of you, such as 1% of your income will go to this cause, it is similar to putting a drowning child in front of you. In order to opt-out, you are essentially making a choice to let the child die, to live immoral.  Do the drawbacks of an opt-out system--the potential lack for further donations above 1%--outweigh the vast amount of income 1% would bring to the cause of fighting global poverty?

Passion is a powerful thing. Leaders of both for-profit and non-profit organizations strive to find passionate individuals to associate with in order to fulfill their mission. For non-profits, this may be diehard volunteers willing to give a lion’s share of their free time to a cause. For-profit organizations may have passionate customers who eagerly act as an unpaid sales force as they enthusiastically share their excitement about a product or service with their peers. Regardless of the how your organization is structured, passionate supporters can result in more sustainable revenues, higher profit margins, and faster growth.

Non-profit development staff often rely on passion as a primary driver when soliciting gifts and recruiting volunteers. I have personally experienced how difficult it can be to try to create passion in others both from a traditional sales sense, as well as acting as an advocate from several non-profits. I once found myself in a position (unsuccessfully) trying to convince my peers that they should spend some of their free time mentoring at-risk teens in Northwest Ohio for an organization that I had grown to love.

In summer of 2011 the fulfillment from my new found passion of mentoring at-risk teens was quickly diluted by the harsh reality that the vast majority of people that I spoke with simply were not interested in getting involved. The individuals that I was talking to were good people, people that I looked up to; people that inspired me, and people that I know wanted to make a difference for their community. Why was it so difficult to get them to take action for something that would have such a positive on their community; and for them personally? Several fundraisers, many conversations, and equally as many failed attempts to recruit new volunteers left me feeling disappointed and defeated. Honestly, there was a point that I was even angry with the folks I had unsuccessfully tried to recruit.

After a bit of self-reflection I decided that it was not fair for me to be angry with the individuals that I spoke with. I was attempting to “sell” them on something that they simply were not passionate about, and there is nothing wrong with that. After all, I am certainly not passionate about every single cause the gets promoted to me, why should they be? I found that the disappointment and defeat I was feeling was actually a great opportunity to become a student of what it takes to motivate people for positive change.

“Whether you think you can, or you can’t – you’re right.” – Henry Ford

I began spending time talking to individuals about what motivated them, as well as what caused them to want to take action (donate, volunteer, change a habit, etc.) These lessons ultimately lead me to the conclusion that I was taking the wrong approach all along. The strategy should not be “I am passionate about this, and these are the reasons that you should be too.”, but more along the lines of, “What are you passionate about and how can I help you experience more of that?”

Even though this alternative approach was proving to be much more effective for people that already had an existing passion, it did not address the folks that did not have a clear conviction for what they are passionate about. In those cases it made sense for us to try to spark a passion flame within someone to get them start on a path what I call Intentional Philanthropy. Knowing that simply introducing a person to a cause or organization was not enough, I began to wonder what elements go into creating passion within a person. The following is a result of an afternoon brainstorming session on the topic….

Elements for Creating Passion

(Figure 1)

  • Clear Need/Demand – There must be a need in order for passion to exist. The need should not only be identified, but also quantified. The better we are at communicating the need, the more effective we will be at creating passion within an individual.
  • Sustainable Interest – An individual must have a sustainable interest in what we represent in order to create true passion. Interests that have no deep connection will be like a fad diet. It may have the potential to be very positive, yield great results, but does not hold an interest long term which leads to great short term results that eventually get lost in the shadow of a reversion to normalcy. We look at what elements create sustainable interest for an individual later in Figure 3.
  • Clear Plan to Implement Positive Change – It always easier to get people to do something if you first give them a plan to do it. The best plans are those that are both simple to execute and result in high impact/results. Plans that are highly impactful but not very simple may still prove to be useful and necessary; however plans that are very simple and not very impactful should be avoided.

Elements of an Ideal Strategy to Implement Positive Change

Elements that Create Sustainable Interest

(Figure 3)

  • Outside Influence – This is the category that I would place in the previously mentioned “These are the reasons you should be passionate about this cause” technique. While it can occasionally yield results, outside influence on its own is not enough to create a sustainable interest in a person, however it is almost always a necessary element for sustaining interests.
  • Personal Experiences – This is what I would consider the most powerful individual element for creating a sustainable interest. Personal experiences can mold a person’s belief system in a way that has a dramatic impact on their actions.
  • Personal Expertise – Developing an interest in something that we are already good at means that we will be able to contribute at a much higher level, and that getting involved will be much more natural for us than when experiencing something completely new.

Elements for Creating Passion

(Figure 4)

  • Communicate Vision – Some of the most effective leaders credit their success largely an ability to get “buy in” from those contributing to the organization’s success (employees, volunteers, etc.) The vision for any organization should articulate the why of what we are collectively working to achieve. An organization’s ability to cultivate passion will be determined by its capacity to find people that agree with, and are willing to align to, the organization’s vision.
  • Give Autonomy and Ownership – An individual’s maximum contribution to any organization will be limited to the opportunity that he/she has to succeed. Too often contributors (employees, volunteers, board members, etc.) limit their output to the process delegated by organizational leaders. Leaders that want to effectively cultivate passion need to be willing to be flexible (within reason) with their instructions on how their subordinates will use their role to contribute to the organizations vision. Freedom to explore new techniques, make mistakes, and think outside of existing policy and procedures are all good ingredients for innovation.
  • Show Progress – Individuals will only be a part of a losing team for so long. It is important that you communicate the individual and collective progress of organizational efforts. The progress that is being reported should align with the organizations vision and can be broken down to individual roles within an organization. The objective is that each contributor knows exactly how his/her role impacts the rest of team and contributes to the success of the organization.
Once passion is created within an individual it is important to understand the elements that keep the “passion flame” burning. Think about a relationship; what keeps passion sustainable over long periods may not be what started the flame in the first place. It is important to be mindful of the elements that are necessary for cultivating passion once it exists, Figure 4 considers those elements.

An Outcome Plan is an invaluable tool for any organization looking to successfully achieve a desired end result. For non-profits in particular, it can provide clarity for both individuals directly involved in the success of the organization and donors that are considering supporting the organization. It also helpful compared to other plans in that it keeps the focus on the future, rather than only evaluating what has already passed. Later in this article we will also look specifically at how an Outcome Plan can be used to leverage efficiency (and even innovation) within an organization and how it can be used by development staff to more effectively communicate with donors. First, consider the different factors that make up an Outcome Plan.

Before we can begin to develop our Outcome Plan it is important to understand and differentiate the components that lead to a successful outcome:

We must start by looking at Inputs, which represent the resources that are used to support program efforts. Inputs can come in many forms but are often represented by staff, time, financial resources, etc. Next are Programs, which represent what an organization does in order to influence a desired end result. An example of a program may be an after-school training class designed to help at-risk teens prepare for job interviews. The class itself represents the Program, whereas the Teens that complete the class are examples of Outputs. Outputs represent what the program produces – in this case our program is producing teens that are prepared for a potential job interview. It is important to note that an output may or may not lead to an Outcome. Outcomes are the intended end result of an organization’s efforts. In our after-school training example, an outcome would be the percentage of teens that actually get a job after completing our program.

Impact should also be evaluated to the extent that we have the ability and resources to do so. Measuring impact can be particularly difficult because the factors that make up Impact measurements may not be able to be credited directly to our outcomes. However, our outcomes should have a direct correlation to the Impact in a supportive manner. In our example, we may not be able to prove that our program is solely responsible for a lower crime rate among at-risk teens in the area we serve, but we should be able to show a correlation between crime among at-risk teens that go through our program vs. those who do not. Perhaps another example would be the overall crime rate in the area we serve before starting the program vs. after the program has been implemented for a period of time.

Keeping a constant pulse on the overall process is very important if we want to be able to communicate that our efforts are actually making a difference, among other very important factors such as eliminating or changing outdated or wasteful programs.

Expert Tip: When creating your Outcome Plan, start with the Impact and move left on the figure above to determine what is required to be successful at each step. Once complete, you will be able to communicate the process from beginning (Inputs) to end (Impact).

Using an Outcome Plan to Leverage Efficiency and Evoke Innovation

Efficiency is paramount for non-profits. With limited resources and pressure from donors to reduce wasteful spending, non-profits can find themselves in an environment that seems to shy away from innovation. Innovation plays an important role to the success of many businesses, for profit and non-profit alike. Because a properly designed Outcome Plan begins with the “end in mind” it can help create an environment where those who traditionally opt against innovation begin to welcome it; or are at least more open to the idea of taking calculated risks to fuel progress.

In order to leverage efficiency for an organization, an Outcome Plan should be shared with all individuals working within the organization. The complete plan should be a hierarchy of the organization’s overall target outcomes, followed by outcomes for each program, completed with outcomes for each individual responsible for working within each program.

Efficiencies are created through autonomy and unity. By having clear communication on what everyone in the organization is working towards, we decrease the confusion around what each individual is working on. An Outcome Plan allows each team member, as well as executive staff and board members, to more easily discern who is responsible for contributing all of the factors that lead to successfully fulfilling organizational outcomes.

Invoking innovation happens when autonomy is embraced, which is often the case for organizations that believe in their outcome plan. Google is often credited with the “20% Time” concept, which gave employees the opportunity to dedicate 20% of their workweek towards innovating projects that did not fall within their regular job responsibilities. The idea is that as long as what is expected of you (outcomes) are being produced, then you have the freedom to work freely on projects that you think can take your organizational efforts to the next level. Freedom invokes innovation; an Outcomes Plan can create an environment of freedom within an organization. It has been rumored that Google has put the kibosh on its “20% time” however the policy has been copied into the cultures of mega firms such as Apple, Microsoft and LinkedIn. Google’s 20% is gets credit for about 25% of the company’s revenues thanks to projects such as Gmail, Google Transit and, Google News, all of which were born out of “20% time”.

Donors Love Outcome Plans

Outcomes Plans are transparent and comprehensive. When used properly as a part of the developmental efforts an outcome plan can be used to align donor passion with the practical necessities of any non-profit. Outcome Plans start with the desired end result and work backwards to determine what is needed to achieve success. In other words, Outcome Plans begin with donor desires and communicate what is necessary to fulfill those desires. I generally recommend keeping the Outcome Plan “open-sourced” to encourage contributions from both internal and external influences. Regularly updating the plan (one or twice per year) will welcome feedback rather than scrutiny, and create a sense of ownership for contributors. By using an outcome plan as a part of the “ask” we invite any unease the donor feels about an organizations strategy to fulfill outcomes and will create an opportunity for suggestions on how to improve or further explain existing strategies.

Resources: The best, most comprehensive resource that I have found in developing your own Outcome Plan is The Nonprofit Outcome Toolbox written by Robert Penna, PhD.

About the author: Matthew Moses is a Chartered Advisor in Philanthropy (CAP®) and Advisor Consultant for Independent Financial Advisors. He regularly works to bring the non-profit community together with financial professionals in an effort to create additional giving capacity for donors by using advanced charitable and investment planning techniques.

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