I am constantly encouraging nonprofits to pay more attention to data because each organization sits on an incredible amount of useful information. The problem is that few agencies have figured out a way to capture and analyze this information. But how do you measure entrepreneurial activities? Mark Kramer asks this question from a funder perspective and concludes:

“In short, without more rigorous research, one cannot know that the new idea just discovered is actually a more effective approach to a given problem than other methods that may have been tried. Collecting the practical information needed for immediate management decision-making is essential, but so is the codification of that knowledge so that more general principles can be discovered and learnings can be shared more widely. If results are not tracked consistently and systematically, it will be very hard to improve over time.”

Still, how and who interprets this information. I often come across foundations with highly elaborate outcome measures and accountability systems in place only to find that the data is never used for anything. Why? We don’t have time, resources or competence are among the most common answers. Measuring as an end itself, no wonder certain individuals are questioning the purpose and legitimacy of foundations. Another observation I’ve made is that the person (if any) in charge of data organizing and data cleaning is often hidden away in some windowless room and not easy to access for anyone.



Several exciting folks are hiding within the University of Missouri system, perhaps I should move to the Show Me state. Peter Klein at Mizzou is a personal favorite. With an Austrian economic focus he actually wants to discuss organizations and organizing. In Kansas City (University of Missouri-Kansas City) a bunch of crazy economists are running the econ department. For those of you interested in old style institutional economics James Sturgeon has posted tons of readings for your pleasure. Nothing beats an afternoon with Veblen and a moose drool. Recently UMKC also added this dude to add to the bubbling soup in the econ department. Maybe a field will do, they say they have good BBQ too.


Sociology lesson

Posted: August 14, 2010 in Cleetus posts

It is great to be back in the Midwest after some marvelous adventures in South America and the northwest. I have plowed through 36 books (thank you K for the Kindle) and conducted 90 interviews. There is so much to talk and discuss but I don’t have time right now. Instead, why not indulge in some sociology. I learned that Scandinavians loves Foucault and can not use the word reality without using “the rabbit ears of forced irony”. I also realized I must go to Iceland and that complexity theorists apparently enjoys talking about social entrepreneurship.


Yesterday’s discussion

Posted: August 13, 2010 in Bubba posts

Apparently a lot of people are interested in discussing nonprofit vs. business practices, we even had to move to a bigger conference room. Unfortunately the debate went south pretty quickly. To summarize, “if nonprofits operated more like business then ….” fill in your own (often heavily uninformed) comment and there is our discussion. At four separate occasions I asked people to back their comments and opinions with research or any type of investigation over time that support the claim that businesses are better at solving social problems to the degree that nonprofits should seek to mimic them, but ignorance is apparently bliss or it is “obvious that businesses are more efficient”. Still, efficiency is not effectiveness and once again I had to surrender to foundation executives and nonprofit consultants who are better salesmen than I am.

Perhaps our most interesting debate focused on outcome measures – are OM objective or socially constructed creatures? In particular, when can OM provide useful information about the impact of nonprofit activities? I argued that OM are often more political than actually useful tools to capture effectiveness especially since OM’s tend to be very short-term in nature. Alan Johnson put his finger on this problem when asking is the mainstream ready for output-based aid? In addition, GPOBA had launched an e-book about outcome-based activities and best practices. It is also interesting to notice that even foundation executives cannot still not differentiate between outputs and outcomes.


Nonprofits and business practice

Posted: August 12, 2010 in Bubba posts

I have spent 10 days in Canada discussing social innovation, social economy, eating seafood and predicting the upcoming NHL season. Cleet will be back from his exile tomorrow and we need to prepare for the new semester. Later today I will debate this lovely book that has been hailed as an absolute for philanthropists and nonprofit managers. I suppose the person(s) that put together this discussion believe I will lend support to the basic premise of the book, so eloquently summarized in this review”

Don’t charitable causes deserve the same kind of competitive forces that work to get results in the for-profit sector? Wouldn’t social causes be better served if charitable organizations were headed by the kind of bright, aggressive executives that work in the for-profit sector?

I do agree with several aspects in the book including the common belief that nonprofits are miracle workers that can deliver outstanding value by simply funneling money from A to B and at the same time keep all other costs to a minimum. It is indeed necessary to take on the expectation gap that exists in society. However, the idea that business practices are the same as best practices or practices for success is highly doubtful. Show me the evidence that for-profit business practices are better at solving social issues (and no, theory alone is not enough) and I will seriously start to consider the utility of business practice in the nonprofit sector. Second, I am always surprised when authors write about nonprofits and conduct all their prior research looking at either foundation reports or what consultants write. Why not look into nonprofit research and you will find, for example, that effectiveness is a different animal in the nonprofit sector.


In a recent paper review my analysis was questioned on the basis that I do not pay enough attention to individuals and because Schumpeter “pointed out that entrepreneurship is an individual act” it makes little sense to talk about groups and even less about organizations. It is always striking how reviewers tend to think that there actually is some sort of consensus in (certain aspects) of social entrepreneurship research. Given my interest in Veblenian institutional economics it may come as no surprise that I don’t think indviduals can accomplish anything and there are indeed many scholars who are skeptical about the individual approach. Gartner and Co. made this clear more that 15 years ago: “the entrepreneur in entrepreneurship is more likely to be plural, rather than singular. The locus of entrepreneurial activity often resides not in one person, but in many”. Even Schumpeter reached the same conclusion in his later work: “The entrepreneurial function need not be embodied in a physical person and in particular in a single physical person. Every social environment has its own ways of filling the entrepreneurial function.” Again, what worries me about those reviewing social entrepreneurship articles is not so much their knowledge about the social issues as much as their knowledge about what entrepreneurship is.


Status report

Posted: August 3, 2010 in Bubba posts

The nonprofit landscape is shifting. In May, the IRS began revoking tax-exempt status from nonprofits that failed to file three consecutive annual returns. The first prediction is that as many as 300,000 nonprofits may lose their tax-exempt status, effectively shrinking the nonprofit sector. While many people fear this development I believe it is positive because it will hopefully release passive resources back into the sector. Guide Star just released a report about the revocation process discussing which nonprofits are at risk, what happens to a nonprofit that loses its exemption, and what happens if a donor gives to a charity that has lost its exemption? Also, The Rome Group released the results from its philanthropic landscape survey showing some interesting figures:

  • Only 49% of nonprofits said they met their fundraising goals in 2009.
  • 87% have reduced all unnecessary expenses.
  • 57% have tested new strategies, such as social networking.
  • 49% froze all wages and 43% will operate with smaller staffs.
  • Half (50%) of local nonprofits have three or fewer months of cash available; 9% have no cushion at all.
  • 39% said it is too soon to tell when things will get better, but 41% expect improvement later this year or next.

More about the Group’s findings can be dowloaded here.