As charity donation requests flood your inbox, it’s time to rethink whether you’re giving or buying, says Impact Lab co-founder Andrew Means.
Impact Lab relies on the kind of data science used by Google, Netflix and Amazon to help nonprofits and other organizations do more social good.
Means co-founded the Chicago-based data, research and strategy firm in January. By May, it had grown enough that he left his job at the University of Chicago, where he was associate director of the Center for Data Science and Public Policy.
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He explains why we need to treat charities more like investments.
Q. What are the biggest shifts you’ve seen in the way we give?
A. I’m seeing more organizations, and especially high-net-worth individuals, talk about their social activity from a purchaser perspective. They’re not giving something away. They’re buying something, and what they’re buying is social change.
There are lots of different providers of that. A nonprofit is providing and selling social change to its donors. A social enterprise is providing and selling social change through its product line.
What we’re seeing is the realization that any business has social ramifications, whether positive or negative. Any kind of business transaction can also be viewed in terms of the social returns that it’s creating. When you start thinking about returns, you start caring less about the entity type and more about the value that you’re getting.
Q. What’s driving that change?
A. As people started to realize that there are social returns everywhere, they became more comfortable with the idea of “Am I willing to go after specific investments or enterprises that are dedicated to the social returns I care about?” That lens of what we personally care about is very important.
For some people, you could even spin the fact that investing in Wal-Mart is a social enterprise because they’re selling more organic food and providing more low-cost health care. Other people would balk at that idea.
This idea of seeing this old mentality of “We make money, and somehow that’s bad, so we make up for it by giving it away because that’s good,” move to more of a mixed model is really what’s important.
Q. How does that affect how we judge an organization’s impact?
A. In some ways it’s creating interest for measuring impact to begin with. Organizations, especially nonprofits, have traditionally used data to say, “I haven’t run away with your money and bought a boat,” and not around truly leveraging and improving impact.
Let’s say I care about reducing hunger in a community. The traditional model organization would say, “We helped 1,000 people last month get food.” Today, that’s no longer enough. Let’s use data to measure not just the number of people that I fed, but the number of people I took away from ever being hungry again.
Maybe that looks like food stamps or job creation. Donors and the social sector in general are more interested in sustainable solutions rather than tons of transactions around trying to address a problem.
Q. Do organizations resist using new methods to measure their effectiveness?
A. When I start talking about data and holding organizations accountable and that we should defund organizations that aren’t working and overfund organizations that are, everyone assumes that they’re the organization that’s not working.
We have these unicorns in the private sector that everyone is chasing, and in the social sector we don’t because quality of programming and funding are so uncorrelated. No one senses the upside opportunity to really execute well and solve a problem and get financially rewarded for it, so there’s a lot of resistance.
Q. What organizations do you admire and why?
A. I’m a big fan of The Robin Hood Foundation in New York. They are relentlessly going after poverty alleviation in New York City and using data to help them meet that goal.
The water and sanitation organization Splash, based out of Seattle, uses data to drive transparency. They have a site called “Proving It” where they post unedited reports from the field. Users of their systems can even text in reviews that get published without any filtering.
I’m on the board of Ingenuity. It’s collecting data from as many Chicago Public Schools as they can on the type and length of arts education they receive and posting it online. Then, depending on how much arts education each school is giving to students, they’re able to apply for different types of funding opportunities to improve. It’s a nice carrot-and-stick model.
Q. Is there a lesson that changed how you view social impact?
A. Every organization has some sort of impact. Identifying exactly what it is and comparing organizations is really hard. That said, just because somebody is working in a charity doesn’t mean we need to treat them charitably.
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We should hold them accountable to make a difference in the world. We should treat them with a lot of grace as they try to figure out how to solve these problems.
If they’re unable to do that, we need to begin defunding these organizations that have shown us again and again that they’re not impactful.
Kate MacArthur is a freelance writer.