When the Charity Machine is Built to Break

If you haven’t heard or read anything about this in recent days, there is a rumble that has been echoing about the social sector that began this weekend. That one book, Three Cups of Tea, which has been an amazing best-seller for a number of years, about that guy named Greg Mortenson who has been trundling around Pakistan and Afghanistan building schools for the last 15 years, has been the subject of a 60 minutes expose’. The ruckus is the sound of a hero and icon crashing to earth. 

Let me summarize the findings on Sixty Minutes:

*Also, that Mr. Mortenson has made a good deal of money from this stuff, and does poor and unexplained accounting of his programs and finances.

For many reasons, this is an enormous deal for the whole charitable sector. Greg was considered to be one of the best examples of a nonprofit with a great story and enormous policy impact. Obama gave a big chunk of his Nobel prize to his organization (the Central Asian Institute), and Mr. Mortenson’s book is required reading for service members in Afghanistan. To effectively get to that level of notoriety and influence is no small accomplishment, particularly while running a moderately unprofessional development operation. But this is the power of the story, one which is so compelling we really want it to be true. Lets consider the impact of the story itself.

If we were to look at the raw data on his organization’s programs at the Central Asian Institute (if the data existed or was ever actually tracked/monitored) we’d likely find a moderate rate of failure of his schools and other projects, which is somewhat common - though rarely mentioned - in development projects. The truth is a lot of these things fail, or barely succeed, regularly.

Based on our hypothetical data, lets tally up.

  • Impact of Greg Mortenson’s Story = Unquestionably Large.
  • Impact of CAI = Questionably Small.

However, I think that this ‘scandal’ illustrates a much larger dynamic that is in play in charity / nonprofit work.

  1. Donors are in charge of funding projects.
  2. Donors are usually poorly educated on how to make a difference with their dollars.
  3. Donors rely on stories to make inspired decisions when giving.
  4. Inspired stories are not the same as organizations that change lives.

This is about is donor behavior, and the truth is that stories motivate action very well and data on impact is pretty boring.

This is the reality of the social sector: We want to believe in heroes. We want compelling stories to attach our ideals to. We use them as vessels to project moral context upon the world. This does not make them any better at doing actual fieldwork on a large scale. That work is hard. It requires data, foresight, and tremendous diligence. It does not lend itself to fundraising or even storytelling very well. That is the larger problem with the way we do business in this sector: “success” is rarely complete success, regardless of how much we want it to be.

For the record: Greg Mortenson’s books are factually incorrect. That is wrong. Based on the hyperbole around his life it’s likely that his charity has not done a very good job at administering its projects. He should have done far better, and not let his personal star shine above his organization’s accomplishments. NGO’s and nonprofits as a whole should do better. But we need something more, because it’s not simply about the principles, it’s about how the machine is built to break.

A Better Way

We are missing a good system for distributing funds to good projects. The charitable sector is the only industry in which we pay upfront for services and accomplishments that we never ask to see. This can be done better - much better.

I propose a system of funding programs that focuses on results. Forget administration ratios. Forget more IRS reporting and regulation. Instead, build a cash-on-delivery method of “see your success”. Establish guidelines for evaluation up-front, agreed upon by the organization and the donor. Pay out operating costs. Track benchmarks over time, then pay out a bounty for success of 25% or more depending on what metrics were agreed upon. The result will be actual data, and an incentive for the organization to perform.

This model may be for foundations as I am describing it, but individual donors should have buy-in as well. Considering the uproar over Three Cups of Tea, I think there’s a market opportunity for adoption.

Our desire to make a difference is one of the noblest things about being who we are. Giving is a fantastic impulse, and if done well can actually make a significant impact on people’s lives. Considering how smart we are, I think we can agree that our good intentions deserve better systems.