The blurring lines between government, nonprofit and for-profit sectors have led to innovative vehicles to fund interventions that address society’s most intractable problems. Social impact bonds (SIBs), also known as pay for success programs, are not actually bonds. They are a way for the private sector to finance social interventions with an acute focus on achieving results. The Vera Institute (2015) offers this definition of social impact bonds: “In a social impact bond, private investors fund an intervention through an intermediary organization—and the government repays the funder only if the program achieves certain goals, which are specified at the outset of the initiative and assessed by an independent evaluator.” 

There are less than 40 known SIBs across the globe (Gustaffson-Wright et al, 2016). Despite this small sample size and lack of evidence for success, the concept has captivated politicians and Wall Street alike. In June 2016 a bipartisan bill passed the House of Representatives to allocate $300 million for state and local SIBs over ten years (Wallace, 2015). Several prominent corporate entities, like Goldman Sachs, have launched SIBs as part of their corporate social responsibility campaigns. These finance models rely upon nonprofits to deliver their programs, yet there is a dearth of guidance for nonprofit leaders to understand the opportunities – and risks – they represent.

In July 2015, two of the earliest SIBs in the US…

Governing boards are the backbone of many nonprofit organizations. When a board is effectively fulfilling its responsibilities, an organization will be more efficient and more successful. According to a study of 202 organizations in the Los Angeles and Phoenix areas, organizations that reported higher board effectiveness also reported higher perceived organizational success (Brown, 2005). 

Despite the importance of governing boards in the success of an organization, nonprofits consistently struggle to create an effective and engaged board. While most nonprofit directors report being satisfied with their board, in a survey done by researchers Larcker, Donatiello, Meehan & Tayan, (2015), nearly all nonprofit participants also reported some sort of serious governance-related problem within the previous calendar year that has negatively affected their organization. Shockingly, two-thirds of organizations surveyed are not confident in the board’s experience level and half are unhappy with the board’s engagement level. 

Researchers Chait, Holland and Taylor (1991) identified six characteristics of strong board leadership:

1. Contextual Dimension - The board understands the organization’s mission, goals and values. They make decisions based on their understanding of the organization.
2. Educational Dimension - The board takes care in ensuring all stakeholders understand the boards role and…

“Huff, puff, puff” says “The Little Engine That Could...”

Do you remember reading this classic children's storybook as a kid? This story is a life lesson about a little engine that was lacking confidence in its ability to successfully climb up a steep hill. After all, the risks facing the little engine were unmanageable, or were they? The story relates how with fortified determination and relentless effort, “The Little Engine That Could” faced the risks head-on and accomplished this feat. It's a lesson for nonprofits not to give up on their passionate and committed pursuits in fulfilling their mission. The lesson of this classic children's story can also carry the heading of  “The Little Board Committee That Could...” for the sake of nonprofit leaders and managers. How can nonprofit board committees manage risks?

Each little board committee, similar to little engines, will undertake complex matters of its nonprofit. Applicants who accept a position on a nonprofit's general board will have been selected their skills, expertise, knowledge, and a passion for the mission of the nonprofit.  For example, a retiree may apply for a board position with a nonprofit that trains dogs to be service dogs to disabled persons. The application of this retiree shows that he has accounting and audit experience, along with some insight on insurable risk. The nonprofit would most likely ask him to accept a position on the board with the intention of placing…

It is no secret that nonprofits struggle to make ends meet when it comes to costs that cannot be directly attributed to a specific program. These costs, referred to as “indirect” expenses, “general and administrative (G&A)” costs or “overhead,” include such outlays as salaries and employer related expenses, utilities, rent, computers, and information technology (IT). Many funders, including individual donors, are averse to funding these indirect costs, preferring to support direct program expenses: food for hungry people, medical care for the sick, and childcare for working parents. However, these services could not be delivered if it were not for the trucks that move the food, the computers used for patient records, and the electricity that powers lights and heating at the daycare center.

A study cited by Nobel (2015) showed that individual donors are averse to funding organizations with high overhead rates. “The higher the level of overhead associated with a donation to charity…the lower the percentage of participants who chose to donate to it.” Grantor agencies also eschew funding these necessary expenses. As reported by Knowlton (2016), “…only 7 percent of nonprofits report that foundations always cover the full cost of projects they fund.”

Building the infrastructure needed to properly support an organization as a whole is vital to the entity’s sustainability. In their 2007 Action Guide, Grantmakers for Effective…

To borrow from the song: “Art is a many splendored thing.” Difficult to objectify and quantify. Art is also very subjective. Again borrowing: “One man’s trash is another man’s art.” So, what is the value of art?

Recently, I attended a conference on arts education. At the plenary panel discussion, a woman from the audience, an arts teacher, asked, plaintively, “Why do we have to justify the arts in school? Math doesn’t have to be justified. Science doesn’t.” No one on the panel had a decent answer for her. Her question stayed with me for a long time. I think we have been telling the wrong story. Or more accurately, we have been telling the story wrong.

Impact evaluation in the arts, and its broader use for leaders of any nonprofit, can drive results. Qualitative yet empirically-based impact evaluation bridges the gap left by other evaluative methods providing the context of mission fulfillment for a nonprofit organization. Armed with such data describing the value of the arts for its participants, arts leaders can change the perception that art is merely a luxury to show that, instead, it is a vital necessity to human beings. Only within the last decade has research on the efficacy of evaluating the effects of art on audiences been realized (Brown & Novak, 2013). 

Telling the wrong story

For the past forty or so years, to ‘prove’ the value of the arts, arts leaders, funders and…