Non-Profit Whistleblower

THE ARTICLE YOUR CHARITY DOES NOT WANT YOU TO READ.

(But not for the reasons you think)

I've been working in non-profits for over 46 years, that's almost twice as long as Uri Berliner at NPR. So, if you give your hard-earned money to a non-profit then you need to read this.

Not because you should not be giving, quite the opposite. Despite the dysfunction rampant in most non-profits, the issue remains that there's simply no alternative route to achieving the impact you desire.

If you want to feed the homeless, clothe the indigent and teach inner city kids math, then you are going to need a non-profit.

Unfortunately though the vast majority of philanthropists have no idea how non-profits really work, and the non-profit wants to keep it that way! I know this because I have worked with hundreds (literally) of donors and it's a serious mistake, because there is much a good businessman or woman can add.

One of my mentors was the renowned Peter Drucker, widely hailed as the pioneer of modern management. In his later years, he devoted himself to advising non-profits, from which I gleaned invaluable wisdom. His guidance was invaluable, underscoring the wealth of knowledge that non-profits can derive from the business realm.

So, if you made your own money, and you want to ensure that that money makes the difference you think it should, then your charity needs to make space for you. And I am going to show you how to do it.

The fundamental issue afflicting nearly all non-profits is that the sole metric of success is donor satisfaction. This is precisely why they discourage your involvement in the actual operations of the organization.

I know full well all the metrics that charities typically churn out, but as you will come to understand, none of those numbers really mean much.

Yes, they have you on committees, and even in board meetings (if you give big), but you are kept far away from the things that make them function (or not) because they are sorely afraid you won't like what you see.

I am sure you get reports about all the impact and successes they are having. How they are meeting their goals and have even surpassed them. I've read too many of these reports to count and I can't remember one that was worth the glossy paper it was printed on.

When it comes to a business there are real metrics. They can compare their numbers to other similar companies, so that an investor can measure the efficiency and growth. That does not exist in the charity world, except how much money they raise.

Take a school. Registrations are up, truancy is down. Teacher retention is up, and so are grades. Success? Maybe, but not that you can tell from those stats. We've all been on the receiving end of a defective product that has great reviews. We've all been a sore customer at a highly praised restaurant. We've had our kids get upset at a bad teacher and ripped off from a crooked mechanic. Every measure, other than the actual dollars brought in can be massaged to look good.

And it often is.

Not for nefarious reasons, God forbid, but because it's the job of HR to ensure teacher retention, and that's what they do. Even if the teacher should be fired!

And it's the job of the social worker to make sure all the students are happy. And that's what they do. Really well. So for example, they give certain students a recess when that teacher is giving class.

Regardless of the efficacy of these strategies, the office is going to be a mess, because HR and the social worker are not going to get along.

Before we get to the cure, it's important to appreciate that THE most efficient and successful organizations in the world, are non-profits. I know, sounds like I am contradicting myself. But it's true, that a good non-profit is more efficient than Google, more than Apple, more than anyone else.

The problem is, there aren't many of them.

The hallmark of this kind of non-profit is that they are significantly under-funded and still run by the founders. Everyone is motivated and idealistic. It is this that makes them so great, because you can't beat an organization where everyone believes in the product.

It is for this reason that World War Two was America's moment of greatest productivity, because the whole country believed in the product.

Think an idealistic Thomas Edison who invents the lightbulb equivalent for solving drug addiction. That's the founder of a great non-profit. They see a problem, and are passionate to implement the solution, but it's not what everyone else is doing, so they struggle to get funding. Steve Jobs encountered this resistance, and he had a product that made money, imagine the same scenario where there are few objective measures of success. By the time such a non-profit proves its worth, it's invariably the next generation.

And invariably the only measure in such a non-profit is how much money they raised. Don't get me wrong, most non-profits have charts galore on much of what they do. But the dirty little secret is, these charts are practically meaningless. Stick with me and I will explain why.

Everyone (and I really mean everyone) is super focused on making you (the donor) think everything is peachy. Believe me, when you show up, from the janitor to the CEO's mother, they have all been prepped on what to say, and most importantly, what not to say.

It's like walking into an expensive restaurant. Everything is immaculate and you, the customer, are treated like a king or queen. But go into the kitchen and pretend to be the janitor and you are going to have a very different experience.

When it comes to a restaurant it's not a problem, because for the most part the customer doesn't really care that much about the kitchen. Maybe they should, but they don't.

But in a non-profit, you are not the customer. The homeless are, the indigent are, the sick are.

Whatever the organization panics about, that is what gets done. If you are Boeing, you panic when a panel falls off. When you are Tylenol, you panic when the pills have been tampered with. When you are Microsoft Excel you panic when the numbers don't add up. And that is the ONLY reason they are the best. And the reason your charity raises the most money is because they panic about you being happy.

So if anyone from staff says anything to you that deviates from the carefully crafted script, you better believe they will be severely reprimanded.

So, if you like the feelings of importance, then keep going to restaurants, and keep writing those checks. But if you want your money to do more good for the world, then these are three things to make your non-profit become great:

1) Bang For The Buck

It's great that you raised more than last year, but that goal is almost completely irrelevant.

The great Harvey Hecker zt"l, the past president of Aish Hatorah, used this metric to measure success, cost per student. Let's say you give to a school. The school raises a $100m. 10% of the kids drop out and 30% go on to higher education. This then is your metric. Of course, you can drill down and include other measures of success. But once everyone agrees, then it becomes far more challenging and therefore, far more meaningful, when time comes to fulfil your pledge. At that time you get to ask this question: "Per dollar of my gift, did the metric increase?"

This is not the same thing as raising more money. And it will put your charity in another class. Three years ago it cost $1000 to send one kid onto a school of higher education. Which they consider their measure of success. They use these numbers on their web site and literature, flaunting how many graduates they turned out,

The problem is, two years ago it still cost $1000. That means your school has not figured out the methods and techniques that makes one kid a success and another not. A lot of kids in that school could be positively affected, but they are not because the school does not measure that, or at the least, they don't tell you.

And this is where your input is going to be far more necessary, because achieving these goals is going to require a significantly broader type of thinking. And it's not typically found in non-profits. A non-profit is very good at explaining why they need a bigger building, but is very challenged to make the same building achieve twice as much. That kind of thinking is very entrepreneurial.

Simply having more students is no better than raising more money. But when you link the number of students to the amount raised, then it forces the organization to find ways to improve their inner workings. It's easy to attract more students by advertising more, but it's more cost effective and healthier if it's done through word-of-mouth. To achieve that, the students have to love the school.

Do you want to solve the problem, or just make it less severe? That's a key question you need to ask yourself. Do you want to cure cancer, or simply reduce the numbers? Dick Horowitz, a legend in Aish Hatorah, found us because he didn't simply want to reduce assimilation, he wanted to eliminate it. Let's use homelessness as a paradigm for all problems.

The charity has figured out how many people they can help for $100. Using this metric is very limiting, because it will never solve the root cause of the problem. It's going to require an army of social workers and a budget that exceeds the national debt. Instead, their metric, and the one you can request of any charity you support, is how more effective are you this year, than last year?

Any non-profit that is really digging deep at the causes and solutions to the problem, and asking themselves how they can be more effective, will discover new techniques that will improve that statistic.

The same way a business does! And that is why, you the donor are so vital to a non-profit. Because they will panic over such a measure.

Because that is what will make you happy.

2) A Seat At The Table

If you really want to make the difference you are hoping your non-profit will do, then the people who implement the decisions you make in the boardroom have to have a seat at the table. The line workers have to be represented at the meetings.

The reason they are not there is because they will tell you all the nitty gritty junk that your curated meetings are meant to filter out.

Maersk, the biggest shipping company in the world, was founded by Peter Maersk in 1904. Peter broke the protocol of the day and made it a habit of having lunch with the sailors, and not the officers of his ships. Much to the chagrin of the officers. He did this because it was the sailors who told him what was really going on when he was not looking.

If the line workers are not in the meetings, then you are like a captain of a ship giving orders from the bridge to a crew speaking another language. What you decide is probably not going to happen, or at least won't work the way you would like. Or, there is a better and cheaper way to achieve the same end.

3) Who Has Drunk The Coolade?

Every organization needs at least one fanatic. Two is amazing!

These are the people who truly believe their company makes the best toaster. Think of an army, it's not the same platoon when it's made up of forced conscripts or Jews liberating a concentration camp in World War Two.

How many of these gems are in your non-profit and are they treated well? You see this in hospitals, there is a kind of nurse who believes nurses save the world. This is the nurse you want taking care of you.

The reason they are kept away from you, and are often not treated well, is because they make everyone else look bad. They don't complain, they work longer hours, and they get done what everyone else doesn't want to do. You, the donor, can make a big difference here.

In Conclusion

The vast majority of non-profits have a good product, but they could have a great product. And you can make that happen.

At one point in Aish Hatorah's history, someone mentioned to Rav Noah Weinberg zt"l how wonderful was his success. Rav Noah replied, even if I had achieved nothing, it would have been worth it just for the experience.

You've worked hard for your money, but you have worked even harder for your experience. Neither of which should be wasted.