"In fact, those surveyed ranked overhead ratio and financial transparency to be more important attributes in determining their willingness to give to an organization than the demonstrated success of the organization’s programs" (p.12)
I found this quote in the Bridgespan Group article disappointing because I think that it is equally if not more important that an organization is successful in implementing and providing effective programs compared to overhead ratio and financial transparency. However, the article attributes funders and donors decisions on why they donate based on overhead ratio and financial transparency to what people outside of the organization such as the IRS or Charity Navigator have conveyed to be the basis for an effective organization. I mentioned this in class a couple weeks back when we talked about our project with Charity Navigator and rating the transparency of an organization. I had expressed that I felt it wasn't fair for a group of people to decide for the rest of the world what makes an organization effective and that focusing on transparency and financial effectiveness can be somewhat misguiding for a funder or donor. I understand why we focus on these areas as it is easier to measure effectiveness this way. I also understand that we need to take small steps to encourage nonprofit organizations to be effective, but when we do this do we lose sight of the people who are being served by the program? Shouldn't funders and donors consider donating because X organization saved 150 people from starving to death or developed the medicine to fight cancer? If people donate to an organization based on purely transparency and financial effectiveness will they really be donating to the organization who is providing the best service?
What do you think? What is more important, overhead ratio, financial transparency, organizational transparency, or whether or not the program is effective at serving its population?
Like you, I do not think that there is one correct answer to your question. All of these measures should be important to an organization, and I think that the Bridgespan Group's main qualm is the same as yours. That is, there is severe problem with program or financial ratios being the "end all" measure of organizational effectiveness. Indeed, I am in Public/Nonprofit finance right now, and we are always hearing how important infrastructure and management can be for an organization to be effective, and that investments need to be made towards these ends if an organization wishes to be expand or improve its impact.
ReplyDeleteI do think its problematic that organizations are now skewing their numbers to conform to an unrealistic program/administrative ratio, but unfortunately better alternatives need to be developed to challenge this leading measure of nonprofit effectiveness if anything is to be done. Hopefully, our project can help this process.