The dot-edu sector isn't yet connecting the dots

A consulting firm has just attempted to do to doctoral universities what US News and World Report famously does to American colleges: use various quantitative data to arrive at easily-understood rankings. Inside Higher Ed has a thorough writeup posted.

The consulting firm's chosen headline for their data (that public universities are falling behind private ones in their productivity of PhD-level research) seems highly debatable for a number of reasons covered in that article. Well down in there an administrator from Arizona State, after blurting the usual silly cliche about how "you can say anything with statistics", actually does a nice job detailing core flaws of the specific data being used here. The response from the consulting firm is quite unpersuasive.

For me though this small tempest fits into a broader storyline about this country's educational institutions and experts. Like charitable foundations, that sector still seems mostly to think that 21st-century America is still happy with its 20th-century social contract. There are lots of signs to the contrary, such as the growing public interest in some way to compare institutions' actual productivity other than just taking their word for it. The educational system's customers, which is everybody, are less and less willing to do that and the sector itself continues to fail to offer any other robust way to measure and compare its own output.

Hence we see the current standardized-testing mania that has infected our primary and secondary schools, which everyone agrees has tons of drawbacks -- but so long as educators offer no practicable alternatives that would measure educational results on a wide scale, the parents will keep voting for politicians who impose standardized testing. Looking at colleges and universities its clear that a similar dynamic is underway: the educators insist that their output cannot be measured objectively and respond to college and university rankings mainly by deploring the very idea.

That "trust us to know what's best for your children" attitude will not wash in today's world, and a good thing too. Moreover this society's expectations about transparency have moved way past what the .edu sector gets -- 15 years ago Congress had to pass a tough federal law just to get universities to admit how many young women were being date-raped on their campuses. If colleges and universities don't feel like getting serious about identifying measurable, transparent, regular ways to document and compare their output, it will be done for them. Slowly, erratically, clumsily and who knows how intelligently -- but it will.

The Congressional spotlight is being focused

The Washington DC Examiner reported the other day that a Congressional Philanthropy Caucus is being organized in the House, co-chaired by North Carolina Republican Robin Hayes. The Democratic co-chair was not identified, and the newspaper didn't name its source for the story. Some quick poking around just now didn't turn up any denials, and the Chronicle of Philanthropy appears to believe it.

Such a move seems inevitable given the various non-profit and philanthropy related issues that have in recent years been the subject of Congressional bills or hearings, and the general increase in public awareness due to things like the Gates and Buffett philanthropies and some non-profit scandals. And it does seem clear from kludgy messes like last year's federal Pension Reform Act that a lot of Congressmen and Senators are not yet up to speed on what this sector does and how, and a defined caucus ought to help with that learning curve.

Nonetheless I can't help thinking of the prediction Joel Fleshman is going around making (out loud and in his book) about foundations: that if they don't define and adopt a new more-transparent version of the charitable-foundation social contract, Congress will eventually define it for them. I think he's right about that -- our society slowly but continuously becomes less tolerant of secrecy from all its public or civic institutions, including publicly-held companies, and there's no reason to expect foundations to be exempted from that.

And I would apply Fleishman's logic to the not-for-profit tax-exempt sector as a whole: the statute of limitations on permission to be a young industry is not yet defined but it's also not open-ended. In some ways we perform our role in society better than other sectors do and some ways we don't, at all; and we won't be allowed to avoid that fact forever.

Moore learned something, and Gates is being silly

I sat down this evening to write some complimentary things about the Bill & Melinda Gates Foundation based on an "announcement" from the Chief Operating Officer that was posted on their website a few hours ago. Cheryl Scott made, I thought, some good counterpoints to the nasty L.A. Times articles as well as pointing out how notably transparent the foundation is with both its grantmaking and its investing, which is true and they deserve credit for. Broadly Scott pointed out that choosing pure investments is a lot harder in practice than it seems to people who've never tried to do it, which I have no doubt is true, but I won't try to re-create her words. That doesn't make the issue of investing being aligned with mission go away, nor did Scott suggest that it does.

But now that reply has vanished from their website, gone without a trace. I can't find any cached copies of it online either, wish I'd thought to save it -- if anyone sees a copy, a pointer would be welcome here. This was, earlier today, the URL.

I suppose some public relations expert convinced somebody atop that food chain that any public response to the slanted newspaper articles simply dignifies the latter, or maybe somebody whose last name starts with a G didn't like what Scott said? If so then I think they're wrong but it's their party and they can cry if they want to. Seems a shame though, why not be the adults in contrast to the L.A. Times' adolescent cheap shots?

Regardless of that, I spent some time on their website and confirmed that they are more overtly transparent than almost any other foundation around. They not only have their entire list of grants on the web (which a fair number of foundations are now doing including the one I work for) with annual summary statistics, plus all the basic financials (ditto), they also put their full detailed tax return with all schedules up there -- meaning the complete list of their endowment investments. Which in their case is literally thousands of pages (big PDF files) and not a quick or easy read, but the point is, it's there in full. That's a standard of transparency everyone in this sector should aspire to.

Down the West Coast a ways, fellow dot-com billionaire Gordon Moore has by his own admission had some humbling experiences with his big new foundation. Like Warren Buffett and many others he has learned firsthand that doing philanthropy well is not nearly as easy as successful businessfolk often assume, and he says he's found religion with regard to transparency. Benefit Magazine's writeup is fairly long but worth the read.

Shining a light on foundations

Transparency may be the reform theme of our time regarding the booming non-profit sector -- it keeps coming up both generally and specifically and is the primary driving impulse of new watchdog efforts like Charity Navigator. Now a well-known veteran of the institutional-philanthropy realm is focusing the transparency spotlight onto foundations.

Joel Fleishman in his about-to-be-published book argues that "although foundations play a vital role in the country's civic life, they must act quickly to mend their arrogant and secretive ways or risk increased public skepticism and government regulation....The only way for foundations to protect the freedom, creativity, and flexibility they now enjoy — and which they need if they are to serve society to their fullest potential — is to open their doors and windows to the world so that all can see what they are doing and how they are doing it."

That quote is from a Chronicle of Philanthropy article; Fleishman also did a live online chat with foundation and non-profit staff members which mostly seemed to find agreement with his thesis. It will be interesting to find out whether his prediction of agreement from industry-trade groups like the Council on Foundations and Independent Sector turns out to be correct. It does seem logical that the spate of foundation-related front-page news recently will attract or enable more attention from Capitol Hill for good or ill. (And some stories which are primarily about other issues include an element of questionable foundation practices, such as the big Princeton donor-intent lawsuit.)

Fleishman's prediction of full-on federal legislation aimed at foundations seems at least premature and I haven't found any actual political pros who expect it. But the overall direction seems clearly right; his specific ideas sound mostly sensible and if anything overdue. As Elizabeth Keating of Harvard notes when talking about non-profit overhead reporting, broadly the concepts on the table amount to simply requiring of tax-exempt entities the same sort of transparency which is the price of forming a legal for-profit corporation in this country.

Newsweek on non-profit transparency

Newsweek lead columnist Jane Bryant Quinn's current column is preaching to this choir in general, though she's off base on some details. It's about the "budding transparency movement for public charities," and she correctly notes that the better non-profits seethe when they see less-worthy groups (let alone outright con artists) suckering well-meaning donors.

Quinn's overall point is that donors are being more and more empowered to seek out and compare real information about non-profits -- a fine thing for sure. (The true fact that as of yet the only information donors can use is about efficiency rather than effectiveness is not a reason for them to ignore it, rather it is a problem for the sector to solve.) Missing from her column is the reality that when charitable-minded folks choose not to do even minimal investigation about giving decisions, they are complicit in the inevitable bad results like 50% of their check going to a professional fundraiser rather than the cause. Hence I cringed recently upon learning that a relative blindly sends a check to every single group which sends him those pre-printed address labels -- generous in spirit but regrettable in practice. Much better for charitably-minded folks to think and act like consumers with their donation dollars.

Also, readers here know that my favorite current contributor to this sector's improvement is Charity Navigator, which I recently added to our family's list of annual donations. They unfortunately got a mild rebuke from Quinn for a really dumb reason. She thinks the fact that a GAO study claimed 64% of non-profits report zero fundraising expenses on their tax returns must mean those documents are unreliable sources of information, and since Charity Navigator collects its data from those forms she wrote that their rankings "could mislead."

Sigh. The vast majority of non-profits filing tax returns are small volunteer groups reporting zero staff or fundraising expenses for the simple reason that they have zero staff or fundraising expenses. (There are scores of all-volunteer local land trusts for every one Conservation Fund, and they all have to file a tax return if they have just $25,000 in revenues.) I guess Quinn imagined the GAO study to be claiming that two-thirds of staffed organizations reported no fundraising expenses; a shame that she couldn't have been bothered to place one phone call to the IRS or the GAO and ask one or two questions.

That laziness aside Quinn is on the mark overall, and tipped me off to a new site in the works which I think aims to be the home of Ebay-style consumer comment and reviews of non-profits. More on that after it launches.