Metrics, Math, & More: For Charitable Giving, Follow Your Heart, and Keep Your Head
by Randy Kaufman, with research assistance from Dustin Lowman
As advisors to individuals of means and conveners of philanthropists, I’ve enjoyed a ringside seat to the rewards and challenges of charitable giving. I’ve watched those I've served give money away assuming that, since it had a charitable purpose, it would surely do good. But often, when I’ve asked the charitable givers if they believed their money was making an impact, they would look at me in disbelief, and wonder what I meant.
For a long time, the unquestioned assumption was that good intentions begat good results. Well — not always.
Over the past decade or so, metrics and measurement have become increasingly mainstream and pervasive in the charitable arena. While I have embraced the movement wholeheartedly, I also hope that this trend doesn’t undermine the essence of philanthropy: genuine and heartfelt caring for others. Good giving is always a product of head and heart. Overemphasizing either side leads to ineffective giving. But a compassionate base, supported by comprehensive metrics, makes for strong, impactful giving.
Intentions alone do little good — money alone does even less
Many advisors continue to encourage folks to incorporate performance management and impact analysis in their philanthropic giving. After all, who among us wouldn’t care whether the money we put to work was achieving its intended results? On the one hand, I’m pleased that the average donor can now rely on numerous organizations to help evaluate their giving (see: Givewell, Charity Navigator, Great Nonprofits, Center for Effective Philanthropy, and Guidestar). On the other hand, I’m not pleased to announce that way too few people take advantage of these valuable services — and not all provide deep insights, but that’s a separate issue for another article.
For now, let me offer these observations on the “measurement and impact movement” with the hope, as always, that it helps inform your personal giving strategies.
The measurement movement has come under some fire. Vocal critics emerged in the 2010s, claiming that measurement can be misguided and misused, and that excessive analysis can clog the system. These objections were summed up rather pithily by Steve Lawry, senior associate at the Center for International Forestry Research, in an article entitled: “When too much rigor leads to rigor mortis.” Nice.
Of course, anything taken to an extreme can do harm. But as Ken Berger, CEO of Charity Navigator said in a subsequent post, “Measurement tools such as primary constituent feedback, volunteer reviews, expert reviews, independent in-depth research and analysis…all have value and provide different perspectives that can lead to a rich, multifaceted view of a charity’s performance.” While the tools vary in rigor, when utilized in concert, they can provide comprehensive accounts of a charity’s performance.
It starts with the heart
I applaud the metrics movement and will continue to do everything I can to support it. I’m thrilled to see this discussion reach a new level, and thrilled also at all the relative newcomers to the field who have elevated the conversation to a much more sophisticated level for mainstream audiences. Without measurement of impact, a charitable gift can be remarkably similar to me buying yet another pair of black stilettos. Overall, does it harm or help society? Who knows? But does the purchase make me feel momentarily good? You betcha!
A rational analysis would say: Rational people, when presented with the data, make rational choices. But as anyone who has studied behavioral finance knows, rational men and women exist primarily in economics textbooks, not so much in the real world. Irrational behavior is evident in countless investing decisions. Unless Soros or Buffet is among my readers, I’d posit that most of you have panicked and sold investments at the worst possible time on more than one occasion, due to the Loss Aversion cognitive bias.
The same irrational behavior is evident in our decisions regarding diet, exercise regimens (or lack thereof) and, of course, our charitable giving. I know I’m as vulnerable to the irrational giving response as anyone. As much as I rail against the countless irrelevant stories and pictures thrown up by most charities, and beg my clients to just take them for what they are (pretty much nothing), I am so prone to being influenced by pictures of animals that I have given my husband strict instructions to never let those solicitations enter our house.
Most people are moved by stories of suffering and respond disproportionately to dramatic and extraordinary events (Narrative Fallacy — another cognitive bias). Also, according to noted psychologist Paul Slovic, our cognitive and perceptual systems are designed to sensitize us to small changes in our environments, possibly at the expense of our ability to detect larger, more significant changes.
Slovic talks about this phenomenon in his paper, “If I Look at the Masses I Will Never Act.” He explores why, after saying “never again” after the end of the Holocaust, we have all sat passively by as atrocities play out all over the world. Many of us still remember baby Jessica, the cute kid that got stuck in a well in 1987, but don’t seem to care (or even know) about the Rwandan genocide, where 800,000 people were murdered in about 100 days. The world watched, and did nothing. Baby Jessica received more news coverage, and ended up in then-Vice President George H. W. Bush’s arms. Stalin certainly nailed it in 1947 when he said: “If only one man dies of hunger, that is a tragedy. If millions die, that’s only statistics.”
Think about what bothers you on a day-to-day basis. Do you spend more energy fretting over a late assignment, a missed call, a dip in the markets, or the fact that more than a million Somalian children suffer from malnutrition? My goal is not to make you feel guilty (if you do, look into impactful charitable giving and its companion, impact investing) but to illustrate that isolated stories that happen closer to home are more likely to stir an emotional reaction and a call to action, but may not make nearly as great an impact to a cause you care about.
A Good Gin & Tonic on a Hot Summer Night
After having spent far too many years trying to convince people to give based on metrics alone, I threw down the gauntlet and gave up a few years back. It was a misguided mission to begin with. Metrics are critical, but few people will live, or give, by metrics alone.
As Gara LaMarche, President and CEO of Atlantic Philanthropies said in a speech at the Social Impact Conference years ago, “No one marches to war under the banner of effectiveness. People mobilize to right a wrong or address an injustice. They convene around a collective will to change the world for the better.” I agree, also, in his assessment that “rigor and moral clarity need not be in tension. They are mutually reinforcing and mutually dependent.”
Phil Buchanan, president of the Center for Effective Philanthropy, got it right by saying: “…while passion and emotion are often the problem because they lead us astray, they’re also the solution. For it is only a passionate commitment to really getting it right — to seeing results — that can provide the will and discipline necessary to do the hard work of data-gathering, strategy formulating, assessing, and analyzing.”
He went on to say that passion and emotion, combined with data and analysis, can be more like a gin and tonic than like oil and water. Together, they form something better than either alone — worth more than the sum of their parts.
With apologies to Phil and Gara (thought I trust they won’t mind me citing them) perhaps it was Einstein who said it best: “Not everything that can be counted counts, and not everything that counts can be counted.”
The challenge for us all is to move beyond feel-good philanthropy and the use of silly metrics like overhead expenses. Robust evaluation of one’s giving is hard, but like many hard things, it's also extremely gratifying. Thoughtful, focused donors can help shape a future in which charities do more than tell moving satires about their good intentions and hard work. They can help shape a future where outcomes and real achievements are showcased, a future in which hard data trumps anecdotes.
Yet as we become more rational in our philanthropic decision-making, let us not forget that, first and foremost, joy and passion are the bedrock ingredients in charitable giving.
If anything in this article sparked your interest, please don’t hesitate to reach out!
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