On Friday, June 11, the Nashville Business Journal ran a story about the conclusion of a recent study by Charity Navigator entitled “Nashville nonprofits get low marks for efficiency.”
CNM President Lewis Lavine issued a retort which ran on page 33 of the June 18th edition of the Nashville Business Journal:
Last month, more than 250 nonprofit leaders attended a conference sponsored by the Center for Nonprofit Management. The keynote address was delivered by the author Dan Pallotta, who connected intellectually with his audience by stating that nonprofits should be evaluated by their outcomes rather than by a set of contrived financial indicators.
After hearing his arguments, I was discouraged to read a local headline last week “Nashville Nonprofits Get Low Marks for Efficiency.” The accompanying article was quoting a new study by Charity Navigator, a New Jersey-based evaluator of nonprofits.
Charity Navigator selected only 30 large Nashville nonprofits for its study. From these 30, it concluded that Nashville’s charitable community ranks 26th among the thirty selected cities nationally. A key indicator in the study was that this Nashville group spent 12 cents to raise $1 in contributions, while the national median was 10 cents. Another indicator was the level of the salaries earned by these charities’ CEOs.
Nowhere in the statistics used by Charity Navigator is any measurement of the results or outcomes of the labors of our nonprofits. What these nonprofits accomplished in our community is not relevant to these evaluators.
Pallotta, in his Nashville speech, told a tale of two soup kitchens. The first was dirty, poorly run, served barely edible food, and catered to a small group of needy souls. Its CEO was poorly compensated, and it had very little expense in its fundraising program. The second was a clean, modern facility, efficiently run, with excellent programs and nutritious food, and a large number of clients whose lives were changed through its outreach. The CEO received a fairly high salary and performance compensation. It spent money on its fundraising campaigns, but was successful in its efforts.
According to evaluators like Charity Navigator, the first soup kitchen would receive a higher rating.
We have just witnessed the largest flood in our history. Our nonprofit community has gone above and beyond its means in caring for those in need. An example is the Community Resource Center that was itself destroyed in the flood. It continued to provide goods to those whose homes were destroyed. Another is Hands on Nashville that made 15,000 placements of volunteers within days after the disaster. Neither was included in the Charity Navigator study.
So let’s evaluate the performance of our charitable and nonprofit organizations. But let’s do so using indicators that matter – let’s example what they accomplish every day in our community.