icon_play

Solving the Fatal Flaw of the Non-profit Sector through Data Insight

A few weeks ago, I delivered a talk about the fatal flaw of the non-profit sector and solutions to this problem at TEDxJNJ. I believe that the fatal flaw is the genesis for Uptake’s new foundation and civic innovation arm—beyond.uptake—that’s bringing data-driven insight to address the world’s most pressing problems.

 

Check out a summary of my talk.

 
Trillions of dollars are pumped into U.S. non-profits each year with the goal of creating social change. It is expected that Americans will give more than $120 Million on #GivingTuesday alone. Yet too much of this money will flow into ineffective organizations that aren’t delivering on their mandate.

I think this is the fatal flaw of the non-profit sector.

Non-profit organizations exist because there’s something about the world as it is today that they believe should be changed for tomorrow and neither government nor private industry is able or willing to address. The non-profit’s job is to create that change. That’s the product they sell.

However, the people paying for the services non-profits provide—donors—are often not the same people receiving the services. This leads to some complicated consequences. Since donors aren’t consuming the services of the organizations they support, they don’t have a mechanism for understanding the quality of services the non-profit is providing. In fact, often times, donors have little information about the quality of services a non-profit provides.

The information donors do receive comes in the form of stories. Stories that tout the transformation its beneficiaries undergo. But these stories aren’t exactly true, they’re advertising. Wouldn’t it make sense that a non-profit would choose to tell the best stories it possibly could about itself? Wouldn’t it make sense that these stories exaggerate the non-profit’s actual impact?

This lack of feedback about quality drives down the social change we receive for every dollar we donate. Why? Because we can’t allocate our funds efficiently when we don’t know what works.

This—at its heart—is a data problem. That’s why I care about it so much and why Uptake is poised to make a significant impact on this very issue.

If we had better data about the actual performance of a non-profit or social enterprise and its ability to create change in the world, many people and institutions would naturally want to support the most effective organizations working on the issues they care about.

We don’t have that data. We don’t have Generally Accepted Accounting Principles (GAAP) for social impact. GAAP, help every company talk in the same language about financial performance even though there are many ways to handle accounting.

These principles don’t exist when we talk about educational outcomes, the effectiveness of malaria prevention programs, or the quality of an elder care initiative.

Communities are beginning to come together and create impact reporting standards and shared data systems. Groups like Strive Together are promoting the use of data to improve how communities serve children from cradle to career. They are bringing together dozens of non-profits and setting up ways for non-profits to share data in partnership with government. They collaboratively set key performance metrics for their community and share their progress publicly and transparently.

This transparency aspect is important. It’s one thing for non-profits to know their performance and quite another for them to share it with their donors. We need to require this transparency from non-profits. We need to hold them accountable in a way that wasn’t possible 50 years ago. We need to provide them with better resources to collect, manage, and analyze data.

At beyond.uptake, we help non-profits do just that. We leverage Uptake’s people, technology, and expertise in data-driven insight to address the world’s most pressing problems. We do this by building data products that allow non-profits to operate in a more effective and efficient manner—tools that allow them to better monitor and share impact. We know that technology alone is not enough, so we’re committed to supporting individuals and leaders searching for innovative ways to use data in their organizations.

Through the power of data-driven insight, we change the incentives and rules of the game to drive social impact.

Do you have an idea for how a data tool can help your organization improve its impact and make the world a better place? Then let us know. We want to hear from you.

Andrew Means is the Head of beyond.uptake, the civic innovation arm of Uptake.