It is unreasonable to assume that charities alone can address the vast majority of our societal issues. After all, that would be inefficient; there are governments, for-profit companies, and other institutions who can solve large portions of our problems. That being said, charities can still be doing more. I interviewed several charities in the greater Phoenix area, and what I learned was astonishing. Charities’ decisions are far heavier guided by where their dollars come from than for-profit companies. Unlike for-profits, major philanthropists give large donations to programs and fund certain existing options, but do not always fund new programs that can spark innovation.This puts charities in a bind where they cannot innovate quickly enough to solve problems. Charities are oftentimes unequipped, under-funded, work on low-resources, struggle to pay top talent, but present the opportunity for the highest focus and dedication to solving our problems. Charities, unlike for-profits, can have complete focus on solving our problems, and not on making a profit or meeting the interests of investors. When they have the funding and support necessary, they can become change machines. Which is why finding ways to improve charity impact efficiency can have wide-ranging benefits for society. We have to realize that collaborative efforts amongst for-profit companies and other non-profits, governments, and the rallying of people will be how we solve more problems in the world.
How can we improve charity impact?
Change our Unreasonable Expectations
As American entrepreneur Dan Pallotta argues, we cannot expect charities to perform at the same level as for-profit companies – who employ Ivy League MBA graduates to run their companies. We can, however, expect them to solve problems within the scope of their funding, resources, and talent. In the United States during 2016, there were approximately 1.5M Charities. In 2016 there were approximately 32M businesses in the US. Still, we expect charities to solve and help with more disasters, war crises, health issues, and poverty struggles, when they only account for 4% of businesses and are a small portion of global GDP. We have to hold them accountable for their fair portion, and then we can expect to see reasonable results. But that doesn’t mean drop our expectations completely, and give up on charitable work. Instead that means we have to change our outlook on charitable impact. We have to redesign the giving, volunteering, and charitable impact models.
Take Advantage of Publicly Available Data When Donating
One model that can be vastly improved within charitable giving is the way we record data and the way that funds from the general public are allocated. There is more data being created on which charities are actual problem solvers, and which charities have large marketing budgets but don’t solve the problems. While marketing is required, devices like Charity Navigator are helping track ratios of funding against problem solving. Data structures on sustainable impact are starting to become more commonplace with the introduction of IRIS, helping ensure that charities collect the right information for the right problem no matter their size. Smaller and more local charities do great work, but are sometimes spread thin by attempting to market and solve the problem with staffs as small as four employees. However, if there were models set in place for them to track data, these charities could improve their focus and stretch their dollars further, without having to expand large marketing budgets to raise more funding. Giving locally, innately, can be even more impactful because these charities are in the afflicted regions permanently, meaning they can gather data longer and have larger data sets. When disasters strike, large charities are there until the publicity leaves, leaving gaps in information on if the problem is solved. Numerous companies are curating this kind of information for donors to be aware of during their donation decision process. It is our responsibility to use this data to make smarter decisions, which can result in increased efficiency.
Approach Volunteering Differently
Another model which can be improved is the way we volunteer. To help improve charity impact, we need to approach volunteering differently. It is true that volunteering is at an all-time high, and rates are climbing in the youth. However, charities need more than just volunteers who pick up trash, or watch the dog kennel for the day. Our traditional view of volunteering ignores how charities can benefit much more from people who volunteer their talents and skills. Charities need talents that they can’t afford. Marketing experts, software developers, data analyst, designers, writers, health specialists and doctors are all professionals that could donate their services to save charities time and money. Donating a fully refurbished website, building data structures, creating high quality design work, writing copy or important press releases, volunteering to give shots or studying new diseases are all tasks that could help improve the charity volunteering model. This helps close the gap between the Ivy league MBA operated for-profit companies, and vastly increases efficiency for non-profits.
How can charities improve impact?
Partner with For-Profit Companies who are Working to Solve the Same Problems
The collaboration alone will increase the size of the impact, but these relationships can result in new volunteers, new donors, and new approaches to the problem. For example, there are many for-profit companies that work with solutions for purifying water, such as Brita, who could partner with smaller non-profits on improving purification technology. If partnerships like this, became commonplace the missions of the for-profit and non-profit sectors would move forward faster. People who normally purchase products from a company may now also donate to their partnered charities. Employees working for partnered companies may volunteer more often at their charity ally. This benefits for-profits by finding extra labor toward their missions, helping fulfil corporate social responsibility standards, and opening new markets of customers and new advertising channels. With more minds, and different sectors working together we can see collaboration of problem solving ideas and develop new approaches to making the world a better place. It mutually benefits both companies, while still keeping their models separate for a more efficient charity output.
Embrace the Technology Revolution
The non-profit sector is widely conservative, but must become more open to new technology. Many charities still use email, letter mail, and phone calling for donations, even though social media, websites and emerging technology platforms like VR are helping some modernize their outreach. Charities must become data driven decision makers. As previously mentioned about IRIS, there is so much data that can be collected in this industry, and yet there are data gaps on the national level and even on the global level. New technologies like machine learning, cryptocurrency, blockchain, internet of things, the immersive augmented/virtual reality experiences, and artificial intelligence have so much to offer charities. Unfortunately, if emerging technology is never utilized by non-profits we will see slower innovation in this sector. If charities began, instead, driving innovation, and catering the newer technologies for change and not profit, we could see amazing inventions. Check out what these charities have done with virtual reality!
Restructure Leadership in Organizations
The last model that could be made more efficient is the organizational structure within non-profits. Charities must soften bureaucracy and be wiser in who they choose to sit on their boards. Public figures chosen for public relation stunts do not always result in positive impact. If charities choose public figures to sit on boards, they must contribute besides dollars and branding image. All board members should contribute in resources, human capital, workspace at the problems epicenter, strategy, and data collection. Charities need people on the board, who want to run the non-profit how a board for a for-profit operates despite being a volunteer position. These roles will be hard to fill, but it is essential that these individuals are chosen carefully. In addition, charities have to shorten their decision making processes in order to adapt to rapidly changing problems. Problems today are solved through rapid prototyping and agile strategies in most for-profit companies. Agile strategy is hard to utilize in the non-profit world because bureaucracy is spread between decision makers who run the non-profit, and major philanthropists who fund the non-profit. If this relationship was viewed similar to an investment in a for profit company, charities could become more agile. While the investor can make demands in for-profit companies, the final decision is up to the executives. Non-profits do not pool their investments, and instead target philanthropists with existing opportunities, meaning funding goes down a channel. That channel means philanthropists demands, become decisions. This channel closes off the opportunity to pivot or innovate, and instead non-profits run the same programs for years before they can create new approaches to solve the same problem.
This isn’t a rant; it’s a call for action, a call for change, and a presentation of solutions. I don’t write this article without having done my work as well. We are taking the first steps with GLIMPSE to help charities become data driven and fast decision makers, to be collaborative with other charities and for-profit businesses in their space, and to utilize emerging technologies like machine learning, blockchain and cryptocurrency. My goal is not to rant in this article about the hardships of being a non-profit, but rather to show that there are solutions being developed. Increasing donations means more stakeholders will have higher expectations for their selected charities to solve the world’s problems. It is only a matter of time until this expectation results in a pull back of donating. If we can curb the expectations and over deliver by taking the above steps, donors and charities alike can play their part in contributing to the world’s solutions. If we change the models of how we operate, give, and volunteer with non-profits we will see leaps and bounds in efficiency. So this is my call-to-action: Take the steps to change your view on non-profits, change your ways of giving and volunteering, and if you work for a non-profit call for re-organization, ask donors to support an innovation budget for emerging technology, and begin collecting more data on the problems you solve then use that as a guide to create new solutions.