Skystone Partners Prize for Research on Fundraising and Philanthropy

Each year, the AFP Research council awards the Skystone Partners Prize for Research to the author of a book that contributes substantially to the knowledge and understanding of fundraising or philanthropic behavior. The Prize for Research is made possible by an endowment from Skystone Partners, LLC to encourage advanced research that extends the knowledge of fundraising and philanthropy.

The 2012 recipient of the Skystone Partners Prize for Research is Robert M. Penna, author of The Nonprofit Outcomes Toolbox: A Complete Guide to Program Effectiveness, Performance Measurement, and Results.

To celebrate this occasion, we thought we’d interview author Bob Penna and find out a little more on what made him write the book in the first place, why this book is needed in the marketplace now, and how he has participated in getting the word out. Whether your nonprofit—particularly smaller organizations that do not have the budget for consultants and experts—could use some help with program planning and management or you are interested in what the writing and promotion process is like for an author in this sector, we think it’s interesting reading.

Tell us about your book… how would you describe it?

It is guide to the application of outcomes and results-based program planning and management, primarily for the nonprofit sector.  It is also a workbook, with exercises following every topic discussed so that readers can practice using the ideas that were covered in what they just read.

How did you come up with the concept/angle/idea?

The genesis of the book was the reaction of the William & Flora Hewlett foundation to my last book, Outcome Frameworks [Rensselaerville institute; 2004]. Hewlett was very impressed with what we did in that book, lining up side by side various approaches to the use of outcomes in the nonprofit space, and comparing them, their strengths, their weaknesses, and their best application.  Hewlett was willing to help fund a follow-up.  But they did not want a “second edition.”  What they wanted was a workbook that would help readers actually apply these ideas to their programs and organizations.

As for the “toolbox” idea, that came from my experience in the field.  I realized that while there were a number of organizations and practitioners out there who had developed formal systems for applying an outcomes-based approach to the work of nonprofits –the “frameworks” referred to in the title of my previous book- because these systems were virtually all proprietary in nature, they were all being promoted to nonprofits as the “single tool you’ll need to address all your outcome needs.”  I knew this simply was not true. ALL of these frameworks do something well; several do several things well.  But none does everything well.  I came to the conclusion that just as you would use whatever tools you had available when doing a project at home—you would not refuse to use a Stanley screwdriver just because all your other tools were Craftsman—nonprofit leaders and managers ought to be able to use whatever “tool” fit their need, irrespective of its origin, or “brand.”  So rather than presenting these frameworks as a “package,” I approached it from the perspective of various needs… program planning, program management and outcome tracking… communications and analysis… and set out to demonstrate how, by mixing and matching the ideas already out there in the nonprofits and corporate worlds, organizations could meet the challenges they faced without having to worry that this idea came from Framework A and that idea came from Framework B. My approach was, “consider all these tools to be available in your ‘toolbox,’ and use whatever works for the task at hand.”

Who is your target audience? Who can gain the most by reading this book? You said that it is “primarily” for the nonprofit sector.  Who else could benefit from reading the book?

The book is primarily for nonprofits. But, governmental agencies could also use it to their benefit.  Similarly, those foundations that are moving to an outcomes-based approach to their grant-making could benefit from it; and, I’d hope, make it available to their grantees. Finally, that portion of the academic community involved in teaching nonprofit management should also use it. They are producing the next generation of nonprofit leaders, and those people should be aware of the concepts and ideas presented in the book.

Why was this book needed?

To understand the need for the book, you have to appreciate a few of the biggest hidden “secrets” of the sector. What most people don’t know is the sheer size of the sector: there are over a million and a half nonprofits in the US… and about a trillion dollars a year goes to the sector. But what most people don’t know is that after you take out the money going to religious, educational, and health care entities, 85% of the remaining money goes to only 1.3% of the nonprofits in the country.  More to the point, a full 60% goes to only .02%, or about 3000 charities in the US.  What this means is that we have a small number of very well funded nonprofits in the country, but a massive number of under-funded and under-resourced ones.

The largest nonprofits, for example the American Red Cross (budget: $3,354,177,445), World Vision ($1,205,887, 020), and the American Cancer Society ($1,003,781,897) are, needless to say, able to attract the best and the brightest and afford virtually any training or expertise they need. But a full 50% of the charities in the country, at the same time, have budgets under $25,000 a year.  These organizations, the vast majority of the nonprofits in the country, are under-resourced and usually cannot afford the expert guidance they need in a host of areas.

The reason these facts are important is that the sector is slowly but inexorably moving to an outcomes basis for grant making, a process that has only accelerated with the economic downturn of the last several years: dollars are scarce and increasingly it is going to those organizations that can show evidence of their effectiveness.

For the “Big Boys,” this is no problem. They can afford the expensive consultants and software programs to help them manage and demonstrate their outcomes.  But the vast majority of nonprofits in the country can’t afford it.  Many of them have no clue what an “outcomes approach” is or how to apply it to their work. These organizations are already at a disadvantage in raising money.  As the outcomes movement becomes more ubiquitous, as more and more funders demand evidence of results in their grant-making, these smaller organizations—many of them important to their communities and doing good work- will only fall farther behind if they can’t speak the language of outcomes and show evidence of more than activity.

THAT is really why I wrote this book, and who I wrote it for… the “other 98%”  I believe that just because they can’t afford the high-priced consultancies does not mean that smaller or less well-resourced organizations should be cut off from this major current in the sector.  By using this book—and for a modest cost- they can at least begin to understand and apply to their work the practices that are inevitably becoming the industry’s standard for demonstrating value and seeking funding.

What makes this book “different”?

Two things, I think. The first is the “toolbox approach” I already outlined.  As I said, I ignored brands, origins, or the provenance of the tools presented in the book and took a “if it works, use it” approach to presenting them.

The other thing is that I went beyond the familiar sources in the nonprofit space and looked at ideas that business and industry are using to see what might make sense for a nonprofit to consider using.  So, in here you have cited and discussed, in addition to the “usual suspects” of the nonprofit world, things such as Six Sigma, Value Engineering, and even SERVQUAL, a methodology used in the fast food and retail industries, presented as ideas nonprofits might consider applying to their work.

What kind of research did you do for this book? Did you base it all on personal experience or did you interview nonprofit professionals at other organizations?

The research on the book took well over a year.  I went back to the authorities I had reached out to in writing Frameworks, and was able to get their cooperation in presenting their work in the new book in greater depth. I also went to experts in some of the corporate arenas I just mentioned. I read a lot of books and articles. One of the most challenging aspects was getting the necessary permissions to use some of the images in the book. Most were either copy-righted or were registered trademarks.

Tell us a bit about that.

I wanted the book to be accessible, and not look or feel like a dry text-book or tome.  Realizing that a good number of my readers were probably going to be Baby Boomers, I wanted to use images that they’d find familiar… almost comforting.  So I reached out to everyone from DC Comics to the Topps bubblegum people and the Kurt Vonnegut estate.  I am pleased to say that I eventually won the cooperation of just about every person or organization I reached out to.  But… it was a lot of work.

What are the main obstacles nonprofits face that inhibit the fulfillment of their mission? How does your book help to overcome them? What else is needed?

Most nonprofits face essentially two main obstacles. The first, of course, is funding. As I have already said, the vast majority of the very large amount of money going to the US charitable sector goes to only a very few organizations; so most nonprofits in the country are operating on a shoestring. But beyond that is the fact that, traditionally, nonprofits in the US have operated on either a “problem” or “activity” basis. That is to say that they made their main appeal for funding based on the existence or size of a problem—showing us pictures of hungry kids, homeless people, or abandoned puppies—or on the basis of how much they care, how hard they’re trying, or how busy they are. They literally never thought to tell their audiences the impact they were actually having. Now, to be fair, for over 60 years no one actually asked that question; but the point is that most nonprofits in the US are unprepared to answer that question. The challenge is that more and more funders, from governmental agencies to foundations—and even an increasing number of individual donors—now ARE asking the question.

As for what else is needed, funders, particularly governmental and institutional donors, need to stop just demanding evidence of outcomes, and start providing the resources needed so that these organizations, particularly the smaller ones, can learn how to apply outcomes and result-based methodologies to their work.  It is not unlike the situation the country faces in education: employers demand a trained, work-ready workforce.  So society provides the resources for public education to train that workforce.  In a similar vein, if funders are (belatedly, but rightly) going to demand outcomes, they should provide the resources needed so organizations can comply.

Most writers of professional books also have a full-time job. How did you incorporate writing into your busy schedule? Did you set a daily writing goal?

Well… you’ve heard the old line about making lemonade when handed a bunch of lemons?  That is essentially what happened.  When the economic downturn hit, a large portion of my business evaporated as the nonprofits and governmental agencies who were traditionally my clients cut back and canceled contracts.  I figured that since I wasn’t making any money and had precious little to otherwise occupy me, I may as well use the time to write the book.

The one thing any author will tell you is that you can’t write a book on an “every-now-and-then” schedule. You have to make it your job, every day, to either do such research as might be necessary, or to write.  For all the books on the shelves of Barnes and Noble, there are probably more than twice that number that never got finished because the authors got sidetracked or just never stuck with it.  It is hard work.  It is tough, grueling, isolating, and often frustrating… particularly when the muse isn’t with you and the next set of words won’t come.  But, there’s no other way to do it.  Even if you don’t manage to produce 10 pages of sterling prose, you should make it your goal to at least produce something each day.

What do you see as the most important issues facing the nonprofit sector?

There are several. The first, which I have already mentioned, is the disparity between the large nonprofits at the top of the heap, and the vastly more numerous majority barely getting by.  It would be one thing if the most well-funded were clearly better and doing a better job than the smaller guys, but it is often an issue of name ID and public profile: the most well known get the lion’s share of the available funding.

A second, related issue is that we have to foster a whole new mindset among donors.  We need to move them away from the idea of “giving” and toward the notion of “investing,” because that is really what they are doing, making a “social investment.”

Why is this important?  Because “investors” don’t just give money away… they expect a return on their investment.  For our sector, that “return” should be some demonstrable impact or set of results.  In other words, individual donors need to focus more on outcomes than the emotional appeal a charity might make or the emotional ties they may have toward an organization or cause. What we need is to develop the notion of the “informed donor.”  As was recently pointed out in Time Magazine, because people are not well enough informed of how to truly assess a nonprofit and what it is doing, way too much money is going to organizations that simply don’t deserve it,. This has to change.

A third issue is that we, as a society, need to do a better job of policing the sector.  The endless stories of scandals involving nonprofits that we see in the papers hurt the entire sector.  This is a major problem in countries like India and China, where the public sees most nonprofits as a rip-off or a scam.  Things are not that bad here; but almost any week if you look in the papers, there is a story, most recently involving politicians, who used a nonprofit to enrich themselves. We have to get better at enforcing the laws we have and enacting whatever new is needed to put an end to these situations.

The fourth thing I’d mention is what has developed in this country as a system of “government-by-contract.”  For reasons having much more to do with politics than common sense, in the US nonprofits administer and deliver many of the services provided by government in other countries.  Of course, in the US government is still paying for those services, but it does so through contracts with one or more nonprofits. This has created a large number of nonprofits that rely upon government dollars to stay afloat.  When, as we now are seeing, governments at all levels are cutting back because of the recession, a large number of nonprofits are in danger of going under. This is interesting, because the actual dollar amount of individual contributions to charity has not appreciably gone down during the recession: Americans are, to their credit, as generous as ever.  But the fact is that an awfully large number of charities, particular smaller, local ones, get by each year on government dollars.

Now, it may be that we simply have too many nonprofits in the US: 1.6 million IS a very large number, and vastly more than most other countries have.  Maybe some of them will and maybe even should close or merge with other organizations. But either way, the dependence upon government for the dollars necessary to stay in business is not a sustainable model…particularly when we consider the likely financial outlook for government at all levels in the US.

Finally, a fifth thing the sector (and the government) needs to tackle is the blurring line between what constitutes a “charity” and a business.  When you look at how large some “nonprofits” have become, the multi-billion-dollar Red Cross or some of the largest “nonprofit” hospitals, they are virtually indistinguishable from large corporations.  The only difference is that they don’t distribute dividends to stockholders.  If, for example, I told you that the NFL is a nonprofit, you’d probably be stunned; but it’s true.

The problem is that in this country we have come to call all tax-exempt entities “nonprofits,” no matter what their size or budget. Many people are familiar with the status of 501 (c) 3 that most “nonprofits” have.  But that “3” indicates that the familiar charities we all think of are only one class of 501 c corporation… there are actually something like 28 such categories.  We need to rethink the whole structure so that we have a better way of differentiating between the large businesses some of the organizations really are and the traditional, familiar entity most people think of when people hear the word “charity.”   Unfortunately, now, when people hear of the CEO of a “nonprofit” getting a million dollar salary or more, it is all too easy for them to think that someone is getting unduly, unfairly, or illegally rich at most nonprofits.  We need a better system that the public can understand.

Who, either a person or organization, is doing work now that you think is important for the sector as a whole?

I’d point to Charity Navigator and the new rating systems they are implementing. They recently introduced CN 2.0, their attempt to add transparency and accountability to the basis of their ratings, and next year plan to roll out CN 3.0, for the first time factoring in real evidence of a charity’s impact.  This will finally begin to give donors an easy-to-access way to compare the effectiveness of some of the nonprofits asking for their money.

What advice would you give other professionals who’d like to write a book of their own?
Well, presuming you are not talking about fiction here—but even for fiction, come to think of it—the first thing is obviously the idea. You have to have an idea.  But it needs to be more than a vague notion.  It has to have, as they say about wine, “legs.”

The second thing is to challenge yourself to find other things out there like the book you have in mind.  Unless your idea really has something special about it, it probably isn’t a good idea to continue with it.

The third thing is to think about readers…not just who would the book “appeal” to, but also who would plunk down good, hard-earned money for it… AND who will actually READ it. If you don’t have a good idea of who these people may be, it is time to rethink the whole notion.

The fourth thing is sustainability.  Any story, even the “story” a nonfiction book tells—and the good ones, the readable ones, do tell a story—needs a beginning, a middle, and an end.  The question any would-be author has to ask is whether his or her idea can be carried out to the length of a book.  If not, then maybe he or she should think about doing an article instead.

Now that you’ve written a book and gotten it published, would you do it again? What would you do differently?

Well, this is, in fact, my third completed book… and the fourth I actually wrote.  The first, a work of fiction, got side-tracked by life.  So I learned Lesson #1 right there… don’t start it if you’re not going to finish it.

On my second book, I was the paid ghost writer for someone who self-published it under his name.  Lesson #2 was to not do that if you want the credit or any voice in what happens to the work.

My third book was published by the organization that paid me to write it.  Lesson #3 was similar to Lesson #2: if you want a voice in what happens to your work, try to get it published yourself.

With the publication of the Toolbox, I have learned a lot… a lot about the process, and a lot about the mistaken impressions I had.  I definitely think I have at least one more book in me, but if I do it again, I don’t think I will undertake an effort that will take 4 years to complete!

Talk to us about promotion.  What are you doing to promote the book and your work?
If it isn’t something you have done before, many authors could be under the impression that all you need do is publish, and copies will go flying off the shelves. Unfortunately, unless your name is Steven Covey, Stephen King, David Brooks, or John Sandford, that probably isn’t going to happen.  What I found is that I had to get smart about how and to whom I was marketing the book.

Since my primary audience is the nonprofit sector, my original thought was to promote the book directly to nonprofits; but I got virtually no response.  It was time consuming and costly.

What I have been doing lately with some success is promoting the book to statewide and national nonprofit associations.  I learned that many of these organizations are looking for articles for their newsletters, and even for speakers.  I also learned that the imprimatur of a sponsoring organization –if one is sponsoring an event at which an author appears- can be a great help.

The audience is overwhelmed with new books to read at any given point.  The trick is to make your book somehow stand out.  One good way to do this is by being the invited guest of an organization to which your intended audience may belong.  You will get attention; and, if you are lucky, sales.

What advice would you give other authors in the nonprofit space regarding promotion?

Know your audience.

While the author is thinking of 100 reasons why people should want to buy or read his book, the audience needs only one or two good reasons not to buy it.

Cost—any cost—is very often a primary factor, particularly for nonprofits watching every dime.

Time is another factor: will they have the time to read it if they buy it? For harried nonprofit leaders this is an important consideration.

The third is what they’ll get out of it. The more you can couch your message in terms of what your book will do for them, (as opposed to being merely interesting or something they should read) the more likely you will get the response you are seeking.

If you can find a forum to give your audience a taste of what is in the book, you are more likely to get them to buy it.

Finally, the author has to remember that his or her time is valuable, and every conference to which he or she might be invited is not necessarily worth the time it will take to attend.  If you want to sell books, make sure that the audience you speak to is:

•    Composed of not just likely readers, but likely buyers. If the book is on personal performance, for example, you are a lot more likely to benefit from impulse purchases by individuals than if it is on organizational performance… in which case many people will not think it their responsibility to buy it for their organization.
•    Composed of as many decision makers as possible. The lower on the totem pole the people in the audience are, the less likely they will be to purchase the book.
•    There to see you. You are a lot more likely to get a good response if you are the main speaker, or one of only a small few.  Being one of 15 speakers on the day’s agenda, and giving a one-hour, brown bag talk on your book while people are eating lunch and searching on the floor for that pickle they dropped, rarely results in the degree and type of attention you want… or sales.
Congratulations, Bob! We’re so proud of this book and we thank you for all the work you’ve put into it!

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