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November 16, 2009

I appreciate the responses to my blogs on the Intrepid Philanthropist site last week. I think my favorite line was this, from Laura Deaton: “Love outcomes, hate sector-bashing.” That certainly boils it down.
Like Deaton, a number of others—both on the blog and in many private emails—thanked me for placing the vital effort to improve the effectiveness and impact of nonprofits in a context of appreciation for the sector’s distinctive purpose and history. It was clear to me from the reaction that people are sick and tired of the caricatured, overly simplistic critiques of the sector.
Others, of course, took issue—especially those whose thinking I had argued against. Perhaps most adamant was Dan Pallotta, who believes I misrepresented his book by suggesting he was attacking the sector, when he says he was only criticizing “nonprofit ideology.” I certainly intended no misrepresentation, of course—and we had a lively exchange in the comments section.
My view is that we should be sober and clear-eyed in recognizing that each of our sectors—business, government, nonprofits—has real work to do and that each needs the other to perform well. As Rockefeller Brothers Fund President and Center for Effective Philanthropy Board Chair Stephen Heintz has argued eloquently (most recently at a plenary session at the Independent Sector conference this month), the past few decades have seen the balance shift toward a sort of idealization of business in our society.
This idealization has had consequences. I am currently reading How Markets Fail, which brilliantly describes the rise of what the book’s author, John Cassidy, calls a “utopian economics” that rendered many blind to “the problem of distorted incentives.”
“Markets encourage power companies to despoil the environment and cause global warming; health insurers to exclude sick people from coverage; computer makers to force customers to buy software programs they don’t need; and CEOs to stuff their pockets at the expense of their stockholders. These are all examples of ‘market failure.’”
Cassidy is hardly an enemy of capitalism; but he is concerned, rightly, about a “dogma” that prevents candid discussion of the problems and risks inherent in the reverential approach to markets that we have taken in recent years. He believes this is responsible for the recent upheaval we have seen in the economy, including the subprime mortgage debacle and the collapse of major financial institutions. To me, his book is also a powerful reminder of why we need organizations in our society that are not beholden to shareholders.
Pallotta is of course right that there are some aspects of dogma in the nonprofit sector that need to be challenged too (though we differ on the specifics, and I don’t think we should replace one dogma with another). Too many in the sector have been satisfied with anecdotes over data and have resisted the call for more rigorous assessment and improvement efforts.
But I worry that when critics inside and outside philanthropy paint with too broad a brush, arguing, as some do, that the nonprofit sector has achieved little or nothing, we lose the opportunity to appreciate what was on the canvas. Only when we appreciate it can we decide wisely whether to paint over it or add to it. The fact is, there are successes—and also failures—from which we can learn, if we analyze the data.
Yes, we have a long, long way to go, for sure. No thoughtful person I know thinks philanthropy is achieving all it could or should—and I sure don’t think so, either.
But if we are data-driven in our approaches, if we focus on impact, if we understand the sector’s distinct identity and role, if we resist the temptation to reach for quick fixes or snappy slogans, if we learn from the many exemplars both in our midst and in our history, we can do a lot.
A final note: I’d like to thank Edward Skoot, Joel Fleishman, Barry Varela, and their colleagues at Duke for inviting me to be a guest blogger on their new site. I thoroughly enjoyed it and look forward to continuing the conversation online and offline in the days and months ahead.
Disclaimers and Disclosures: The views I express here are entirely my own. They are of course very much informed by my perspective as president of the Center for Effective Philanthropy, but we have had spirited debates among our board and staff on the very issues I discuss in these blog entries. CEP’s mission is to provide data and create insight so philanthropic funders can better define, assess, and improve their effectiveness and impact. It should be noted that several of the foundations I cite as examples in this blog, including the Robert Wood Johnson Foundation and the Bill & Melinda Gates Foundation, have been clients of CEP’s and have also provided grant support to the organization. A full list of our funders, by size of funding, can be found at
Last Friday’s post: Will the Real Nonprofit Sector Please Stand Up?
Thursday’s post: Undermining Ourselves.
Wednesday’s post: The Attack from Within.
Tuesday’s post: The Attack on Philanthropy.

Phil Buchanan