February 19, 2013

Obama’s College Scorecard Is a Bad Idea for All Nonprofits

In his State of The Union address, President Obama called for the government’s student financial aid to be tied somehow to the particular value of education at each college or university.

That presents a challenge not only to higher-education institutions but to every nonprofit organization in the nation. Who gets to define and measure the value of any charitable program? And who gets to stipulate its purposes and to assess the success of its performance and outcomes?

We seem to be falling for the idea that we should measure nonprofit programs only for how much good they do for individuals, not for how our larger society benefits. Colleges, hospitals, arts institutions, international aid groups, and others will be valued based on how much they better and enrich the relatively few people they serve, not society itself.

The “College Scorecard” just announced by the White House embodies this problem. It wants to report how well an institution’s graduates do in the job market and how much money they make. This interest is one of the few areas of bipartisan agreement in Washington: Florida’s Senator Marco Rubio, who delivered the Republican response to the president, feels even more strongly about that point since he co-sponsored the “The Student Right to Know Before You Go Act” to require colleges to provide exactly such information.

Given the economy and people’s concerns, that makes a lot of sense practically and politically. But is that what colleges and universities and society as a whole think ought to be the exclusive or even the principal measure of the value of a higher education?

Certainly most colleges and universities don’t limit their mission statements to such vocational concerns. They go well beyond the purpose of developing the intellect and skills needed for economic success. Many believe that part of their role is to build character and moral judgment, to teach civics and engage people in community life, to turn out good citizens active in democracy, to help develop the aware and caring people we want as neighbors.

A college student or anybody else who needs a service provided by a nonprofit should get to choose the one that best fits his or her needs based on good and easily available information. Donors and volunteers ought to have similar opportunities in allocating their money and time, although ideally many of them will take a more expansive view than people with immediate need for a nonprofit service provider.

On the other hand, government and organized philanthropy are obliged to operate with the broadest possible perspective and support nonprofits based on concern for the larger society and the common good.

Using that consideration, government might be expected to wrap into its scorecard the essential role colleges play in helping people from impoverished backgrounds achieve the American dream. Yet we already know that few colleges are truly moderating society’s inequities. For example, the Education Trust found only five of 1,200 institutions were doing a good job serving those low-income students who actually managed to cobble together tuition.

If some colleges and universities are more successful in serving society, if an institution is among the five in 1,200 doing a good job in advancing equity, how would that be reflected in the value assigned it on the “College Scorecard”? 

Quite likely, it would not be part of that equation, nor would it be even another institution’s extraordinary accomplishments in building character and morality or producing graduates who are active citizens.

Across the nonprofit world, we see such gaps in the rush to produce outcomes measures at all kinds of nonprofits, and as some even coercively endorse narrowly defined pay-for-performance schemes.

Such assessments don’t include the role nonprofits play in averting problems, such as keeping kids from delinquent crimes that land them in jail or providing preventive health counseling and nutrition services so adults won’t later need costly medical care.

Nonprofits contribute to a strengthening of civil society and democracy, to increasing civic good and social capital. They strive to influence public policies to ensure that everybody has a high quality of life.

But when those kinds of things are left out of assessments of value, they will be ignored by nonprofit institutions as well as by those who are keeping score. Unless the full range of nonprofit purposes is included in assessing the value of all charitable programs, everything but the most fundamental functions will be discounted and marginalized.

We will lose societal impact when we calculate the value of outcomes. And we will turn away from the long-term investments that will truly benefit the common good in favor of a narrowly defined short-term individual payout.

How wrong that would be. Think how valuable it is to society, for instance, for colleges to develop people who care and understand all around them. Think about how a college education offers the splendid wonder of a man or woman using it to leave poverty behind. Think what it truly means to our larger society when people can see the American dream at work.

If we care about such things—as especially foundations and government must—we are lost unless we ascribe and assess their value. We must make sure that any nonprofit organization’s scorecard accounts for social benefit.

If we fail to build that into our calculus, we will lose the common good and see the world only through the lens of individual profit. How much poorer that would make us all.

Mark Rosenman is an emeritus professor at the Union Institute & University and directs Caring to Change, an initiative that seeks to improve how foundations serve the public.