Category Archives: Uncategorized

Why we need to give (a little) more.

While many bridle when the tax bill comes, the US is still perhaps the lowest tax country of the rich industrialized nations according to the Wall Street Journal. And the difference is striking. It’s at least 3-4% of GDP less than countries like Canada and Australia (which are also pretty low) and double digit percentages less than Europe and most other countries to which you’d want to be compared in terms of lifestyle.

If you take that high level figure and consider that a much higher percentage of the money we do collect goes to military spending (which I’m not arguing against), you can see at a high level why the government isn’t able to afford the level of social services that these other countries do. Could we make up for it by running better, more efficient programs? Possibly, but what I think is actually happening here is that we’ve effectively “outsourced” social services to the nonprofit sector. And some support is given to this by the fact that the amount of money in the nonprofit sector at large is tantalizingly close to the difference in taxation.

America is the most generous country in terms of charitable giving. Gifts to charity have amounted to approximately 2% of GDP for the last 40 years according to the Chronicle of Philanthropy. That’s about half the tax gap and when you consider the lost tax revenue of those gifts (since gifts are tax deductible) and the gifts that aren’t reported (in kind, volunteer, etc.), you get to pretty much an exact fit between the US and the next tax tier of nations. Figure in our other budget priorities and we’re still pretty far below.

I realize that spending isn’t a perfect proxy for quality of services. There’s also a big philosophical difference between government-run programs (e.g. service consistency, economies of scale) and individual organizations running programs (e.g. competitive markets, new ideas) and, as I said, there’s always room to do things better. But at a high level we shouldn’t expect comparable services for a fraction of the price tag.

In other news, government at all levels is cutting back or withholding funds normally destined for these programs. Illinois is something of a test case in this, having had no state budget for more than 6 months and one of the worst state fiscal outlooks in the country, but others will follow.

In a bizarre sense, this is something of an opportunity. America’s model of charitable giving can also be seen as sort of an “opt in tax” that also allows the payer/donor to have a say in how funds are spent, something you don’t normally get to do with tax dollars. If we don’t do anything, we could be destined for a social service crisis. If we do, we might take this opportunity to learn more about the organizations working on the causes we care about and step up giving even just a little to cover the gap. A higher level of involvement can be rewarding in many ways and if it creates an effective “market” for services, that could actually be a win.

In any case, we should all try to dig just a little deeper this year. Our fellow Americans really need it.

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Let’s Cure Violence

This week, the US had two more mass shootings. While it is possible that the shooting in San Bernardino may be linked to terrorism, it’s still part of a depressing cycle of violence, which, as President Obama pointed out, has no parallel in the developed world. The very fact that the killing of 14 people might not be part of a terrorist act or genocide is a bigger problem than that it might be. And at home in Chicago, we’re still staggering after the release of a video that showed the police shooting of LaQuan McDonald.

These incidents continue to happen with grim regularity. More young Americans die from gunshots than car crashes. But inevitably when one of these events happens, after everyone has had their moments of silence and sworn it will never happen again (which should be a form of perjury at this point), a futile political debate about gun control begins and eventually ends with the same status quo.

I have my own opinions about gun control, which are largely in line with those voiced by former Supreme Court Justice John Paul Stevens in his excellent Six Amendments. While gun rights activists have a point that we haven’t found a control policy that works completely (nor is it likely that gun control alone would eliminate the problem – consider the Rwandan genocide which was done almost entirely with machetes), gun reformers have a stronger point that the second amendment has only relatively recently been construed to block virtually all experimentation with such policies and that the new construction is arguably against the framers’ intent (guns in the hands of a “well regulated militia”).

But putting that to the side, there are other things we can and should do which have a provable effect on violence reduction. One such idea comes from Dr Gary Slutkin, the visionary founder of Cure Violence. His organization uses approaches from the field of infectious diseases to treat violence as a public health problem rather than a matter of criminal or even economic justice. While it sounds a bit far out, his results are dramatic, bringing down violence in neighborhoods by 40-70%. And his approach can be applied to police violence as well. It is also endorsed by mayors, police chiefs, and communities leaders around the country and around the globe. His TED MED talk is here:



Other approaches, including investments in mental health, after school programs, and early childhood education also pay tremendous dividends in reducing violence and none of these should be as controversial as gun control (some of my Chicago favorites include UCAN, Erikson Institute, and Off The Street Club). Virtually no one would argue against these kinds of programs. The only real question is are we willing to pay for them.

As President Obama said, it’s unlikely that we’d see a nation with no violence (especially when some of that violence is potential a result of extremism imported from abroad), but by supporting organizations like Cure Violence and other strong neighborhood programs we could make a mighty dent in it. I’m making a pledge today and I hope you will join me.

Literacy in Chicago

I was listening to NPR on my way to work this morning and there was a story about how difficult it is to get a good job when your basic literacy skills aren’t strong. While that may seem obvious, what was striking about the piece was that they reported that more that 13% of the working population of Chicago falls into that category. If, like me, you feel like literacy is a basic human right, then I invite you to do something about it by clicking the button below.

Do Public Good

If we all take action instead of just linking and tweeting, maybe we can live in a city where everyone has the basic skills they need to thrive.

Charity Tickers

When you are thinking about investing in a public company, something you often think about is the news coverage surrounding the company. Are there insights about CEO? How is the public responding a product? How is the company responding to any issues that have surfaced about them? This information isn’t quantitative, but it often provides useful guidance.

I’ve been wondering if a similar idea could be applied to public charities. They often have the same considerations: there is robust coverage in the media of management teams, response to services, etc., and that same knowledge could be helpful to inform donors or potential donors.

In the for-profit world, this data can be crawled/aggregated using a unique, easy to read text string that works for both humans and computers: the ticker. For example, in an article about Google, you’ll might see the company name displayed as Google (NASDAQ: GOOG) or just as a hyperlink with the ticker embedded. Those article get picked up and included in research sites like Yahoo! Finance. Tickers have become so ubiquitous that no one even thinks about them any more.

Why wouldn’t something like that work in the public charity world? Like public companies, there are comprehensive data sets available to make finding tickers trivial and aggregating the media mentions useful. That kind of aggregation would be helpful in providing context to any given article as well as in evaluating the organization over all.

In some cases, it may be possible to do without tickers, for example “Red Cross” is a reasonably unique phrase that may be possible to parse out of articles automatically, but most organizations don’t have that luxury. Take Open Books, for example, which could refer to my friends in River North, but could also be Open Book in Minneapolis (dedicated to literary and book arts) or Open Book Players, a performing arts organization in Maine, to name but two. Even Red Cross isn’t as unique as it at first appears: there are hundreds of regional chapter organizations (e.g. Red Cross of Greater Chicago) among other potential false matches.

If instead an article said something like “Open Books (OBOO) is doing amazing things…” that ambiguity would go away. There would be no doubt that the amazing things being done were by a Chicago-based literacy organization rather than a Maine-based theatrical one (or vice versa). For media outlets, it could result in more impressions for archival content as well as a richer user experience as well.

Social Media Conversion – The Wrong Question?

During a talk tonight I was asked why charities tend to be bad at converting social media relationships into concrete support and donations (aka combating clicktivism.) It seems to me that this is actually the wrong question: generally, social media is not so much a way for finding new customers as it is for developing existing relationships with your supporters. It isn’t the top of the funnel, it’s somewhere further down.

Take this as a for-instance: I support a local dog shelter in Chicago and I tweet about my experience there, asking my friends to support it. You might favorite the tweet because you want to support me and I’m doing a good thing. But if you live in California and are a cat person, the chances that my tweet will suddenly convince you to support the shelter are low to nil. (Of course so are the chances that we are friends.)

My contention is that much giving is local and all meaningful giving is cause-based. I might briefly support a charity I don’t really care about because a friend is running a marathon in support, but that will not result in a real and lasting relationship with the charity even if I like, favorite and rebroadcast my friend’s posts.

On the other hand, if you’re motivated about a cause – you just moved to Chicago and you’ve had a soft spot for our canine friends – then my support of a relevant charity will serve as proofing – as an indicator of which organization might be good to support.

It’s a bit of a stretch, but an analogy is Trip Advisor. My friends may tweet all day long about the amazing places they go to eat in New York and San Francisco, but I don’t care and won’t engage until I go there myself. On the other hand, if I’m on my way to New York and Trip Advisor shows me my friends’ favorite spots, I’m going to make an effort to get a reservation.

My point here is that thinking of social media as the top of the funnel is wrong for charities in a lot of cases. List building needs to begin with the cause that motivates someone. Social media’s strength is in the consideration phase of supporting an organization. This is the approach we’re pushing at Public Good Software and I think it more accurately models how people really thing about giving. 

The Future of Higher Ed – A Hybrid?

I was interested to read the Economist’s take on the future of universities, but I was a bit disappointed by the content. After stating the obvious with extreme rigor (costs are sky-rocketing and financial support is plunging), there were few interesting or intriguing ideas. Instead it seemed to come back to MOOCs, MOOCs and more MOOCs.

In fairness, the piece lays out many of the short-comings of MOOCs like poor completion rates, the challenge of testing and credentialing, etc., but it then kind of leaves the issue flat. My dad has been a professor at Northwestern for some 40 years so I asked him for another view. His point was an intriguing one – MOOCs recreate online the least important part of the college or university experience. In a sense, they are little better than open-source textbooks. They don’t have a social element, teach critical thinking, provide networking opportunities or have any kind of brand affiliation. They are useful for self-motivated learners who want to increase their knowledge, but they do very little for an average college student.

So how could this be better?

I propose a hybrid approach. First off, what’s driving up the costs of college tuitions? It’s primarily faculty and amenities ranging from fancy dorms to gleaming athletic facilities. But there are parts of the university experience that still work very well and at a quite reasonable price. So here’s how a hybrid would work:

First, a university would set up a separate, virtual college. This is not dissimilar to having an executive MBA program coexist alongside a traditional MBA program. Both are part of the university, but they have slightly different branding, requirements and admissions guidelines.

Second, students apply to the virtual college the same way they would to the traditional one. The expectation is that students would either be within transit distance of the university or be willing to relocate there if they get in. There would still be academic requirements and even an application fee (though a marginal one) to apply.

Once admitted, the student would register for the classes they want to take just like traditional students, but they would attend the lectures online, via MOOCs. Study groups could be created by geolocating users and picking a central point (like a Starbucks) and a regular time for meeting. This begins to solve for the social aspect of the experience.

Where they hybrid part really kicks in, however, is with office hours and exams. These would actually be delivered on the university campus, but typically off-hours from traditional lectures. The office hours would be overseen by TAs rather than professors (not uncommon in many universities anyway), incidentally creating more work-study opportunities for traditional students (in fact traditional students in those same classes could attend as well, providing some additional value.)

Also, exams, though taken online, would be administered on campus. TAs can check IDs or do other basic identity verification. Many exam sessions could be made available for flexible scheduling, since the students in the room can be taking exams for all different subjects. The point of being in the room is only to verify who is taking the tests.

By using cheap resources (TAs, unused lecture halls after hours), the university can make up for many of the short-comings of MOOCs without burdening students with the most expensive line items. The goal would be something like an 80/20 value split – 80% of the educational value of a traditional degree at 20% of the cost.

It used to be a big no-no for tech companies to try to leverage real world assets since they were seen as non-scalable. However, as Uber, Airbnb, OpenTable, Groupon and so many other have shown, leverage the excess capacity of existing assets is a beautiful business model that scales wonderfully.

If an approach like this worked for higher ed, it would have many ancillary benefits: a bigger donor base for the sponsoring universities, greater credibility for online degrees with employers and more. And while charging some tuition may put some people off, generally people don’t value something they got for free (often for good reason.) I’ll certainly wager that the drop-out rates from a hybrid program would be far lower than for a fully online degree. There are also opportunities to customize such a program in many ways: virtual college students could be offered access to campus services ranging from libraries to sports centers for incremental fees.

It’s just an idea, but I haven’t seen anything like this yet. Have you?

Charities: outputs, outcomes and resolutions

On my recent trip to Africa, I was reminded about the level of poverty and suffering that can exist immediately adjacent to verdant, gorgeous landscapes and bustling, thriving cities. We planned to drive from Cape Town to Franschhoek, in wine country, where my sister-in-law Kate was getting married the next day. As I wedged myself into the overburdened car with bags under my legs and on my lap there was a knock on the window. A man was begging for money with his small son perched on his shoulders, a boy who was only a little older than my own sons, Ari and Leo. I could barely move so I didn’t reach into my pocket to give him anything, but I regretted for weeks afterwards. I can’t imagine not being able to provide for my own boys.

Franchhoek

So beautiful, it’s easy to think about just that.

Later on the drive, I asked Kate, who runs an amazing organization called Africa Health Placements, if she could recommend a well-run charity that was making a difference in poverty relief in South Africa. She thought about the question and answered that the best places to donate to were those making a lasting impact, for example those engaged in health issues and education.

At one level, I think Kate is completely right. In the long term, that father and son in Cape Town only have a future if one or both of them can get an education, learn skills to get a job and ultimately provide for themselves. However, to paraphrase Keynes, it doesn’t help if in the long term they’re dead.

This brought me to further questioning some common wisdom about charities, that it’s outcomes that matter. As I understand it, the effort to differentiate outputs (something like a meal served to a hungry person) from outcomes (getting the hungry person a job so they don’t need food support) is an effort to try to focus more resources on programs that are more than a bandaid on a wound. But I think that sometimes bandaids make sense. People don’t learn skills when they’re hungry and they don’t do anything when they’re starving.

In less acute circumstances, outcomes can take a very long time to measure. For example, I’m on the board of Open Books, an outstanding literacy organization. Many Open Books programs are focussed on engendering a love of words and reading rather than purely on improving technical reading skills. I know this makes a difference in the long term, but Open Books works with very young kids and it can take a few years before the measurable results (improvements in reading level, etc.) are in. If no one supports the programs in the meantime, they won’t be able to do them. This is an example of where a focus on outcomes over outputs can stifle innovation. So for me, in this case, outputs are good enough.

More broadly, in my own giving, I’m trying to move towards more of a portfolio approach: some outputs, some outcomes. In Africa, I’ll make a donation for direct poverty relief and also make one to AHP. 

I thought I’d found a comfortable mix until I was reading the news this week and saw an article about India being (or nearly being) free of polio. It now strikes me that in addition to the two categories of outputs and outcomes there’s a third: resolutions. In some areas, there are moonshot projects that hope not just to make things better for individuals or communities, but which have the potential to eliminate problems altogether, like India’s vaccination program. Resolution focussed projects have the longest time horizons and the largest risk of failure, but beat even outcomes in terms of making things better.

By the old outcomes vs. outputs argument, that would mean that in areas where there are possible resolutions all resources should be brought to bear on finding those resolutions at the expense of any programs for relief. For example, stop worrying about AIDS prevention or education and just spend all the available dollars on finding a cure or a vaccine already!

I don’t believe that’s right, but I do believe that potential resolutions, where they do exist, definitely belong in the portfolio.

I think that if donors focus on a mix of outputs, outcomes and resolutions, we have the most ability to affect real change in the causes we care about. Unlike in a traditional market, this balance of “products” doesn’t happen naturally based on supply on demand. That’s in part because donors are the “buyers”- in that we foot the bills – but are infrequently the recipients of the “products” for which we’re paying. Using a simple filter like a portfolio may help keep resources distributed where they can do the most good. And hopefully, rather than having to choose, that boy and his father can get a meal, an education and ultimately live in a country where they can get those things without needing any more donations.