April 07, 2013

The Hard Work of Achieving Results

The hype related to “social entrepreneurship” and “social entrepreneurs” is as overheated as it is ubiquitous.

Entire journal articles have been devoted simply to trying to define the terms, and skeptics—sometimes including me—have wondered what all the fuss was about.

My doubts have been several.

I have wondered whether we’re just putting a snappy new label on something that’s been around for centuries—individuals building organizations that act as catalysts for significant social change.

I have wondered whether who gets labeled a “social entrepreneur” is more about marketing buzz than substance.

And I have wondered whether the comparison of nonprofit founders to business entrepreneurs is remotely helpful or just confusing.

In the comprehensively researched Social Entrepreneurship for the 21st Century: Innovation Across the Nonprofit, Private, and Public Sectors, Georgia Levenson Keohane focuses on social entrepreneurship, rather than individual social entrepreneurs, and makes a convincing argument that something significant has happened over the past decade and a half—something with historic roots that is now touching more nonprofits, businesses, and, increasingly, government.

But I am still not sure what it is.

Ms. Keohane, a Roosevelt Institute Fellow whose resume includes time at the September 11th Fund and McKinsey & Company, essentially punts on the definitional issue, saying that, like obscenity—as Supreme Court Justice Potter Stewart famously noted—you know it when you see it.

That is either the book’s biggest weakness—because it’s not clear what, exactly, she is writing about—or its biggest strength—because she doesn’t get bogged down in the definitional minutiae. (Disclosure: I attended business school with Ms. Keohane more than a decade ago, and we have stayed in touch.)

Either way, Ms. Keohane persuasively chronicles something that is happening in American philanthropy (with occasional nods to developments outside the U.S.).

She discusses social entrepreneurship among nonprofits, highlighting the usual suspects such as City Year and Teach for America, as well as organizations that give money to social entrepreneurs, such as the Edna McConnell Clark Foundation and New Profit.

She chronicles the rise in interest in “impact investing” in the business world. And she describes the focus on social innovation in government, discussing Obama administration efforts such as the Social Innovation Fund and Investing in Innovation awards as well as the apparently increasing interest in social-impact bonds.

Refreshingly, she is neither a flag waver for social entrepreneurship (despite the hype on the book cover, presumably courtesy of the publisher, asking, “Are you ready for the social entrepreneurship revolution?”) nor a flag burner. Instead, she analyzes all sides.

Especially helpful is her common-sense approach to sorting through the warring assertions about whether our pursuit of social-impact goals is best achieved through nonprofit or for-profit means, asking whether it might be possible to get beyond the ideological battles with two simple questions.

First, “When does commercialization bring efficiency, scale, and reach to populations or communities that have not been adequately served by government agencies or nonprofit providers?”

And, second, “When does the profit motive sufficiently diminish the quality of a good or service that we decide it is an inferior mode of delivery?” as, she argues, may be the case in microfinance.

Her questions are the right ones—and helpful for cutting through the rhetoric on both sides of what sometimes looks like a “sector war.” Ms. Keohane reminds us that we need business, government, and nonprofits all to play their parts to fulfill our society’s potential.

But perhaps surprisingly (and it is a welcome surprise), in a book about social entrepreneurship, Ms. Keohane suggests that it is ultimately government that may matter most in solving our most vexing social problems. She describes what she sees as a “new kind of approach to governance, one that embraces, to varying degrees, measurement and evaluation, competition, and innovation in a number of forms” requiring a “reclamation of the role of government as market shaper.”

So, back to the definitional issue: What, then, is it that Ms. Keohane has written a book about?

I think it is mostly about a focus on results in business, government, and nonprofits. My view is that, unfortunately, sometimes that focus on results is more rhetorical than substantive, and she doesn’t really try to sort out the imposters from the real deals. But her comprehensive chronicling of the embrace of a results focus, whether rhetorical or actual, is important.

But, what, then, does it actually take to get results? That is the topic of a very different book: David Hunter’s Working Hard and Working Well: A Practical Guide to Performance Management.

 Mr. Hunter, who has served as chief executive of a psychiatric hospital and as the head of evaluation at the Edna McConnell Clark Foundation, focuses his message to leaders of human-service organizations. (Disclosure: I have known Mr. Hunter for more than a decade, retained him as an adviser on performance assessment to the organization I lead, and occasionally both agreed and disagreed with him publicly on philanthropy-related issues.)

Mr. Hunter’s book is a sequel of sorts to Leap of Reason, whose primary author, the chairman of Venture Philanthropy Partners, Mario Morino, has supported the free distribution of Mr. Hunter’s book.

If Mr. Morino’s book is the passionate call to arms for the importance of performance assessment for nonprofits, Mr. Hunter’s is the battle plan. He walks nonprofit leaders step by step through what it takes to drive performance.

It is a powerfully clarifying and helpful book—and makes clear just how difficult the work of “nonprofit performance management” is.

Mr. Hunter offers a road map for organizations that want to do it, drawing both on his own experience at the psychiatric hospital he ran—his description of this experience is downright riveting—and on examples drawn from his consulting work.

Interestingly, the organizations he names as real exemplars are not generally the ones that Ms. Keohane and others writing about social entrepreneurship generally hold up.

The examples that Mr. Hunter’s book describes include Roca, an organization in Massachusetts that seeks to “alter the life trajectories of America’s most high-risk young people”; Wings for Kids, an “education program that teaches kids how to behave well, make good decisions, and build healthy relationships”; and the Center for Employment Opportunities, which works with prisoners leaving incarceration to help them be job-ready and avoid recidivism.

It’s important to recognize that the success of many of the “innovative” practices Ms. Keohane describes (including more government support that rewards outcomes or new financing instruments like social-impact bonds) depends on organizations being able to monitor, measure, and improve outcomes for those they serve in the ways the exemplars Mr. Hunter cites do.

If the reading of Ms. Keohane’s and Mr. Hunter’s books in close succession drove home anything to me, it is the size of the gulf between the rhetoric about assessment and actual practice—because the actual practice of measuring results for nonprofits of the type Mr. Hunter describes is so difficult (and bears almost no resemblance to measurement of performance in the corporate world).

This, of course, is where grant makers come in—or, sadly, don’t come in. The organization I lead has documented through our survey research the contrast between what foundations say and do in this area.

A majority of foundation CEOs say they want nonprofits to be held to higher standards of evidence, but very few foundations actually support that difficult work.

This clearly infuriates Mr. Hunter, who writes in the final paragraph of his foreword, “I intend this document to be an admonishment to those funders who demand performance in which they don’t invest, results for which they don’t pay, and accountability from which they exempt themselves. Stop the madness!”


But both books leave me wondering, hopefully, if perhaps this will finally change. Perhaps we’re at the moment of truth. Perhaps there is reason for optimism. As Paul Brest, former president of the William and Flora Hewlett Foundation, has often reminded me, a rhetorical embrace of something is often a precursor to an actual embrace.

Talk precedes action.

Now, with the neon signs promising results ablaze in all the ways Ms. Keohane describes, is the time to deliver. Mr. Hunter’s book offers a guide for how to do so.

Phil Buchanan is president of the Center for Effective Philanthropy and a regular columnist for The Chronicle of Philanthropy.