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This episode and the following transcript were originally published by Stand Together Foundation.
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Evan Feinberg
Hey listeners. My name is Evan Feinberg, executive director of Stand Together Foundation and one of your hosts for the Stand Together Podcast. Every time you hear my voice in the show, we’ll either be talking about the history of the social sector or paradigms that are shifting within it.
While I’d like to fancy myself an expert on the history of philanthropy, in reality, I’m really a good student at best, one who loves to opine on how where we’ve been continues to affect where we’re going as a social sector. But fortunately, I’ll be joined by a great friend, Becky Endicott of the We Are For Good Podcast, who is something much more akin to an expert on the subject. Together, we’ll attempt to present you a 10,000-foot view of philanthropy, past and present, as we all look to a better future. This is A Brief History of Good, Part II.
I am so glad to welcome Becky Endicott back to help me co-host this Brief History of Good podcast. As a reminder, Becky is the illustrious host and founder of the We are For Good podcast, which is doing a phenomenal job exploring issues like those that we’re talking about today, with some of the very finest nonprofit leaders, and philanthropists, and fundraisers that are out there in the nonprofit sector. I am so delighted to get to spend time talking to you about this Becky, whether we were hitting record or not, this is what I’d be doing with my afternoon.
Becky Endicott
Same, any time I can wax philosophical with you is a great day. And you are the most repeated guest on the We Are for Good podcast. So this seems very natural.
Evan Feinberg
You got it. Okay, so we left off our last conversation together, A Brief History of Good, Part I, by talking about the fact that we are known in the nonprofit sector as by what we’re not: that we are not-for-profit or we are nonprofit. And we were talking about why that is. So just like we’re starting every one of these conversations off Becky, can you start us off with a story?
Becky Endicott
I do have a story today. And as we were kind of laying the groundwork for this discussion on the last episode, one came to mind that we’d had on our podcast. We have a wonderful organization on the east coast that came on as a guest on our podcast. And they were bemoaning the fact that they have a wonderful engaged board—was not bemoaning that—but they have board members who know just enough about philanthropy to be dangerous.
And for all you nonprofit listeners out there, I want a show of hands of how much this story resonates with you, because what our guest was talking about was the problem with something like Charity Navigator, something like the overhead myth, and what it does to really restrict the mission’s vibrancy, its success and its impact. And the story specifically that she shared with us, is she had a well-meaning board member who came to her and said, “I noticed that we don’t have a gold star Charity Navigator emblem on our website. That must mean that we are not in the upper echelon of fundraisers…of impact investors. And we want to aspire to be that. How do you get that for us on our website?”
And the reality is something like Charity Navigator, something like GuideStar, something like these systems that have—to your last point in the last episode—professionalized the sector, have also weakened the sector in many ways. And today we’re going to be unpacking what those tools, what these information sources have done to ultimately grow our impact in this world.
Evan Feinberg
Well, that is a story that I’ve heard a bunch from the nonprofits that we support, Becky, at Stand Together Foundation. This idea that the gold standard of whether or not you are a world class nonprofit or not is based on Charity Navigator or GuideStar, and a badge of whether or not you’re a gold star or whatnot on these sites. So what if I told you that this is just an artifact of the history of nonprofits in America that is based on good intentions, but is sort of the history of nonprofits gone awry. We can trace it all back to the establishment of the 501(c)(3) in the tax code through the Tax Reform Act of 1969. And there were some negative consequences that would that be worth exploring today.
Becky Endicott
It would be worth exploring. And I think it also begs the question of “How did we get here?” Explain it to us.
Evan Feinberg
All right. So I’m, I’m going to take our listeners back to this Tax Reform Act of 1969, why we got it, and what some of those implications are today. And if we do our jobs right, hopefully it’ll explain how we got to Charity Navigator being such an influence on our sector. And maybe we can kind of unpack where we might want to make some changes.
So let’s talk about the context, because last episode, we talked a lot about the rise of modern philanthropy and philanthropists, and the professionalization of it, because you know, originally, the way that charitable associations came together—they were pretty informal. And then they began to get more formal, and sometimes they got some state charters and whatnot.
Following the Tax Reform Act of 1969—the Rockefeller Foundation funds this thing. It was called the Convening of the Commission on Private Philanthropy and Public Needs. It became known as the Filer Commission. So Rockefeller brings this thing together, and they brought forward a bunch of recommendations, because now you’re giving tax benefits to individuals who are giving money to these organizations created by the IRS, called 501(c)(3) nonprofit organizations, and their recommendations were for how to hold these organizations and philanthropy to, quote, “the highest levels of integrity.” Now, Becky, do you foresee, or can you think of anything that would go wrong from saying, “Let’s hold philanthropy to the highest levels of integrity?”
Becky Endicott
I mean, that word “integrity”, the way that it is used, is entirely ubiquitous and subjective and something like “who you are when no one’s watching”. To think that you can put a top-down structure to that already tells me that we’re going to have some very challenging hurdles to overcome at the onset.
Evan Feinberg
All right. So we’re going to get back to some of those hurdles, but let’s first start by talking about where we started. So we’re referring to these organizations that get created in 1969, as…it doesn’t sound nice to call them a 501(c)(3) organization. We don’t walk around talking like, “Let’s build great 501(c)(3)s.” The reason for 501(c)(3), for those that don’t know: it’s in the tax code of the actual law, the IRS provision 501, parenthesis C, section 3. “501(c)(3)” is now what is known as a charitable organization. But we don’t call them 501(c)(3)s and we don’t even really call them charitable organizations. We call them nonprofits or sometimes not-for-profits. And this is different than other countries that call their not-for-profit organizations “non-governmental organizations”. And I have a pretty strong theory for why this is. Do you want to hear it, Becky?
Becky Endicott
I totally want to hear it. Yes. Go. And then I might share mine.
Evan Feinberg
Yeah, please. My theory…and this goes back to something we talked about in episode one, about Alexis de Tocqueville. My theory is that in Europe, people are used to turning to the government to solve problems. You’ve got bigger government programs, larger welfare states. People turn towards the government in Europe to solve problems. They’re trying to make sense of organizations that are doing work that’s kind of like the government, but not government. So they call them non-governmental organizations.
But in the United States, we generally are pretty industrious people. And we tend to look towards businesses to solve problems. We look to the voluntary exchange of goods and services to solve problems. And then we see these organizations that are solving problems among people and they’re not using business to do it. And so we’re like, “They’re like business, but they’re not—they’re this other thing.” And so we’re like, “They’re kind of like for-profit organizations, but they’re not-for-profit. So they are nonprofits.” And I believe that’s how we get the nomenclature of nonprofits versus non-governmental organizations. Do you buy it?
Becky Endicott
I mean, you’re talking to a marketer disguised as a fundraiser here. And so, to me, everything is in a name. Everything is in a brand. And when you start to perpetuate something that talks about the negative attitude toward charitable organizations, then you’re perpetuating that same stigma. I mean, Dan Pallotta, who a lot of us know is this modern thinker in the way that we connect and fundraise, talks about how this is a case of mistaken identity. You know, “Why wouldn’t we be called the humanity sector? Why wouldn’t we be called the impact sector? Why wouldn’t we be called that which we are, because that is what we are perpetuating?” And so, I think that this is just one of those simple things that seemed like it made sense in the moment of time, but we have not evolved to ensure that it’s the legacy we want to keep perpetuating into the future. So, yeah, I’m going to be on this train this entire episode, challenging this alongside you.
Evan Feinberg
Okay. So, alright. That was an important digression, but we were talking about the creation of 501(c)(3) organizations in 1969. What is an organization like that and what is not? And I think that has led to some interesting and troubling debates in our country over the years. But the thing that I want to bring up that you also have to do is, what are the requirements? You have to decide what are going to be the requirements that an organization has to comply with in order to get this tax designation as a 501(c)(3), as a not-for-profit. Does that make sense?
Becky Endicott
Yes. And the requirements are the thing that is most concerning to me. What is that tethered to? How is it penalized? How are things inequitable because of those requirements? So I would love to…let’s dive deeper into them. Where do you want to start?
Evan Feinberg
Well, let’s go ahead and start with the overhead myth. So Becky, I know you know why Charity Navigator publishes data on overhead. But do you think that would be an interesting thing for our listeners to dig deeper on?
Becky Endicott
Absolutely. We literally just did in an episode, a couple of weeks back on the overhead myth and why it’s so harmful to nonprofits, and I am all about socializing this, so let’s dive into it.
Evan Feinberg
All right. So the IRS, when creating these requirements of what a nonprofit was going to be, was responding to this idea that we don’t want nonprofits that are just a racket. Nonprofits that aren’t really spending money on their purported mission or vision. And we need some oversight to make sure that they’re not just saying that they’re going to be charitable, and then just basically paying some people, or their people, a lot of money—because the difference between a nonprofit and for-profit is really just in a for-profit. You can take the profits out of the business. In a nonprofit, whatever money that the organization makes, whatever’s been donated, has to go toward whatever the organization is doing.
And so, you know, a troubling thing that nonprofits could do is basically say, “Oh I’m here to, I don’t know, save the manatees.” And then they spend $1 on saving the manatees, and then they spend the other $5 million on their staff salaries and great trips out to Hawaii and The Bahamas. And so they’re saying they’re spending it on the cause, but they’re just spending all their money on overhead. And I think we can agree that would be troubling, right?
Becky Endicott
I mean, I don’t know a fundraiser in the sector who has not had the overhead myth presented to them by, again, a well-meaning volunteer, a donor, someone who’s challenging their 990. And I think the thing that rubs me the wrong way the most, is that while well-intentioned, these requirements were something like… Charity Navigator does not reward for something like innovation, for taking risk, for doing something that would be very much outside the wheelhouse of a very safe and standard nonprofit. And that in itself is something that we can see tangentially throughout the entire sector, that we are not a progressive sector. We don’t take risks. We are held to that very quick standard, which is so antithetical to what is happening in the business world.
These men and women who are sitting on our boards, who are running very powerful companies, who have the capital and the risk capital to be able to try new things, to innovate, to spread their message, to pour money into overhead… Which is why the fact we think we don’t have to pay for people in this business, like any other business, is an entirely profound mystery to me. And so I think it really is crippling the industry. And not only is it crippling the mindset of the donor, but it’s fracturing and limiting the potential of the fundraiser and of your pet nonprofit.
Evan Feinberg
I completely agree. And so you’ve made the case for why, but the skeptic would say, “Hey, if we’re going to give out these max massive tax benefits for this work, we have to provide some oversight to make sure that nonprofits don’t pretend to be doing good work.”
And then—I don’t actually agree with that perspective, but I can understand why someone would think like that. So they said, “Okay, look, we’re going to publish data. We’re going to require nonprofits to report on the amount they spend on overhead, versus the amount they spend on their program.” And over time, we begin to add things to that reporting: things like, “What is your CEO or executive director compensation?” If any of your board members are getting paid… We don’t want any kickbacks to board members that look out of line, right?
And so we begin to get all this reporting on those things, but whether you agree with those things that the IRS required or not, here’s the really interesting thing: People were so hungry for data on what to give to and what not to give to, to be more effective in their philanthropy. They were so bent on getting that information, that the only publicly available information was what the IRS required on overhead, and staff salaries, and board compensation on what they call their 990s, which is the form that you must make publicly available through the IRS for donors to be able to research. And so, instead of saying, “Hey, that’s an interesting thing of oversight of nonprofits,” it became the economic decision making engine in our sector. Groups that spend less on overhead are therefore more efficiently delivering on their goals, and groups that spend more are inefficiently. And this I think is a profound tragedy. As you described.
Becky Endicott
To me again, the intent was likely so pure. And I think of that just as a natural optimist and an idealist in this world. But I just think they didn’t ask a better question. They should have asked a bigger question, because in my mind, we’re not measuring the right things. When we only focus on the money, we are not going to be measuring the right thing. And that is what that 990 has done.
What we can’t see on there is impact. And to me, that is the marker of, “Are we using this money effectively to move the mission forward, in ways that are real and sustainable and seen?” And so, when you think about the nonprofit sector, I mean, you’re trying to wrap requirements around something that used to be 100% volunteer-led. We’re used to 100% going back to the charity.
And so, we’re already in a poverty mindset with that sort of thinking. And so how do we start to move out of that, and think about how to empower people who want to do good? How do we help them think like businesses? How do we start to shift those power dynamics of, “Oh, I don’t think I can ask for a raise, even though I haven’t been given a raise in seven years?”
P.S.: that’s true about me, you know. In my last nonprofit job I was redlined. And why? Because I asked to go home at three o’clock and spend time with my child, and my salary got capped. And they said, “Your sacrifice of this time will be that you’ll never get paid anything more than you are today.”
And for me, I took that as a trade-off, because I wanted to be a mom. But that’s the kind of thinking that is burning out our employees. There are people who want to go and change the world who are unable to, because they can’t earn a living wage, because there are incredible systems of structure and power that are oppressive that don’t lift those voices.
And it’s just unbelievable and shocking to think that it really did start a lot with this tax filing form. It’s just fascinating.
Evan Feinberg
All right. Well, yeah. I feel like I’ve been beating up on Charity Navigator and GuideStar a little bit. And so I actually want to make the case for them first, and actually talk about some of the positives before we get back to our huge concerns with what they’re reporting on, how they’re reporting on it today.
So let’s talk a little bit about the history. They’re trying to come up with some standards and whatnot, and then over the next handful of years, the next few decades, we get a huge proliferation of these tax advantaged, nonprofit organizations. So get this—this number I think is breathtaking. There are 1.7 million human service nonprofits in America today.
Becky Endicott
I mean, I want to say it was 1.2 when I entered the sector maybe less than 20 years ago. So the growth is just incredible. It is just truly a shocking number and just speaks to the growth of this industry.
Evan Feinberg
Yeah. I mean, I, when I first heard that number, I was just blown away. I mean, there are only like 330 million Americans. Of those, only like 200 million are adults. And there are 1.7 million registered 501(c)(3) organizations with the IRS that are working on some form of human service work. It’s a huge proliferation.
And I think this is interesting, because some of these became highly sophisticated organizations very quickly, and today—think about it like this—are universities are hospitals. These are massive organizations that have a 501(c)(3) distinction, and people are getting paid a lot of money from these organizations.
So you get a ton of money. And hundreds of billions of dollars every year in donations. And that doesn’t even count all of the revenues of those hospitals and universities. There’s just a lot of money in this sector.
So you get individuals and philanthropists that start saying, “I can’t work through all of these nonprofits. I need information. I can’t travel and visit them and look over all of their paperwork myself and ask for a bunch of documents.” So it stands to reason that people would create clearinghouses that would pull together the best available data to help create a bit of a marketplace. That sounds reasonable. Right?
Becky Endicott
It sounds entirely reasonable. And I think that, again, we’re seeing more structure around this, more formalization, and while the sector’s becoming more professionalized, I think people are becoming more savvy. Philanthropists…even just asking those questions, “I can’t go through all of these filings.” So talk about what happens next and how, you know, the chapter keeps unfolding.
Evan Feinberg
Well, yeah, I mean, I think a big thing that was happening in the nineties when you first get… You know, GuideStar came on the scene in 1996, Charity Navigator just a few years later, in 2002. Some of the most ubiquitous nonprofit names out there, American Red Cross, United Way… Many of their chapters and even the national organizations, at times, became embroiled in scandal. And people were asking how money was being spent. And you might remember, more recently, Wounded Warriors was the hot veteran’s nonprofit, and then all these news stories about the junkets, and the spending on lavish hotels, and meals, and all kinds of other things. It both led to this rise in these clearinghouses—they wanted to know how money was being spent—and they wanted these organizations to serve as watchdogs over nonprofits.
Now, I think this was based in good intentions, but I said I was beating up on them earlier. I want to get back to my critique of this approach, because now these sorts of clearinghouses become one-size-fits-all approaches to serve as watchdogs of these nonprofits.
And it gets back to what you were saying earlier, Becky. It begins to stifle innovation. Nonprofits begin to care more about whether or not they get a gold star on the amount of money they spend on overhead, rather than investing maybe upfront for overhead to then deliver on new and better results. And so instead of bringing the needed oversight of the industry, it sort of created discipline toward a metric that had nothing to do with creating value for people. And instead, disciplined to how efficiently and effectively are you delivering the services that you deliver today. It doesn’t matter whether those services make a difference or not. So I think it got us to a pretty difficult place pretty quickly.
Becky Endicott
It’s so true. And I think the great irony of the story is that it twisted us into a pretzel, trying to meet requirements for a value set that didn’t necessarily serve the mission at its heart. And, there’s a great nonprofit coach and disruptor, Mallory Erickson, who has a great quote about this. And she says, “Don’t tell me what you care about, show me what you track.”
And that what we need to be looking at is not just the dollars and how we’re following the dollars, but you know, this whole rise of trust-based philanthropy, being led a lot by MacKenzie Scott, is really challenging the way that we have valued these old variables that quantify where we should be at. And they get us back to what I call the heart of mission work. And it’s about, “What do you need to do to be successful?” We’re seeing more unrestricted giving come in, which is helping nonprofits immensely, but it just seemed so incredible to me that the way that we set up structures to track us ended up creating the scarcity mindset that we are trying to unwind to this day.
Evan Feinberg
So Becky, I’m so glad you brought up trust-based philanthropy, because I think it is one of the modern evolutions of philanthropy. And since we’re talking about A Brief History of Good, we’re talking about what led to GuideStar in 1996 and Charity Navigator in 2002… these were all an evolution of trying to get more sophisticated in bringing resources to the right organizations that were going to deliver the most value.
But I think that pretty much everyone serious in philanthropy now agrees on this idea, that the overhead myth is driving all kinds of problems. It’s starving. There’s this idea of the starvation cycle, that we’re starving the right nonprofits of resources. They need to invest and innovate in new and better ways to deliver programming and create more value. So everyone’s kind of acknowledging this, but now there’s sort of two—and I think both misguided—schools of thought that have come up.
One is effective altruism. The idea that we just need to research and study things that work, and then require nonprofits to not only not spend too much of their money on overhead, but to spend money in a way that complies with some previous evidence-based best practice. And that’s how they’re going to do their work. And we’re going to measure success based on compliance with a study that says this will be effective. And, news flash, none of that tends to work. None of the results ever get replicated.
And then the other one is this topic we’re bringing up today of trust-based philanthropy. This idea like, “Hey, all of this stuff about thinking we know what to do with nonprofits and how much can go to overhead… Why not? We don’t really know. So, we should just trust that the nonprofit will know, and that the philanthropists shouldn’t exert any power or influence over what’s being spent.”
And I think this is also misguided, because donors and philanthropists often do have insight and they do have perspective. They aren’t just giving to one nonprofit. Just like an investor that invests in multiple companies, donors and philanthropists see lots of different organizations and they see which ones are working and what’s not. And some interesting things they’re doing. So it’s my perspective that this move toward just trust-based philanthropy is perhaps a counterproductive overcorrection for the overhead myth, and where philanthropy is at, but I’d love your perspective on it.
Becky Endicott
Well, it may disappoint you, but I agree with you. You know, I believe in many of the tenants of trust-based philanthropy, because they’re bringing in levels of accountability. And even MacKenzie Scott, she is creating her own requirements and her own variables about what’s important to her. And what I love about it is the due diligence it creates on the backend, because the variables she’s created is yes, financial solvency and good organizational health. But she’s also looking at things like, “How well do you treat your employees? How are you paying them? What’s your diversity makeup? How are you serving your local community?” And there’s all of these things that we don’t see within the Charity Navigator, GuideStar lexicon, that we want to see—those of us that are in the profession. We want to be honored in those ways. We want those values to be a part of what we do.
But I agree with you that it can’t just be pay and walk away, because the very ethos of philanthropy is community and many hands coming together. And the notion that everybody has something to give, whether it’s knowledge or the actual gift. I mean, I believe MacKenzie Scott has a lot that she could teach us about what she’s learning, because this is nothing more than another social experiment. It’s a giving experiment. One that I’m very excited to see. We’ve had many people on our podcast who’ve been the recipients of her generosity. And I think on the backend, it provides relief for nonprofits. So whether trust-based philanthropy is—you know—the tenants of it are part of a way, or if it is the way, what I think we’re seeing is it’s giving an exhale to the nonprofits.
We talked to Ana Marie Argilagos, who’s the president of Hispanics in Philanthropy. And she was talking about what they were doing to try to get aid, and housing, and food sustainability to their frontline Latinas that were battling through the COVID-19 pandemic. And she said, “We had so many people that said, ‘I want it to go directly to the frontline,’ that we had almost exhausted all of our operations. And then MacKenzie comes in, and all of a sudden, not only are we able to do what we want to do operationally, but we’re able to dream.”
And that capital, that risk capital, is dream capital. And it allowed that nonprofit, which is Hispanics in Philanthropy, to try some programming that they could have never undertaken, without restriction. So I definitely think there’s good and bad to it, but I love that we’re having the conversation, because it’s really going to try to work to uphold that standard of excellence that I think philanthropy can bring to communities.
And I gotta say one more thing, because I gotta put a bookend on this story about Charity Navigator. But when I was talking about that story at the onset of this episode… We were talking about the individual in the nonprofit who is battling against her board member, who wants to have this Charity Navigator seal on their website. And I want to give everybody a little hack that they used that I thought was fantastic. She used it as a teachable moment, and she went back to her board member and said, “Actually, this is what GuideStar measures. And here’s why it’s restricting to us as a nonprofit and to our mission. So what we’re going to do is, we are going to apply. We are going to get our bronze star from Charity Navigator, and we are going to put it on our homepage and say, we proudly represent the bronze section of the Charity Navigator world. Which means that we commit to innovation. That means we commit to paying our people well. And these are things that give us a distinction of excellence within this sort of measurable platform.” And that’s the way we see, not only nonprofits working around it, but also educating their board about how these tools and systems can be very scarcity-based for us.
Evan Feinberg
I love that story, Becky, and I think it’s a really great hack. And essentially what it means is, courageous leaders, both nonprofits and donors, will lead us beyond the overhead myth that the IRS tax status and what they required as oversight have done. But I came armed today with some ideas, to take us forward, because I think this is an important point about the history of philanthropy in the United States. This moment when you get the 501(c)(3) embedded in the tax code meant you made it a pretty high stakes game with government policy and whatnot, and all of the money that’s flowing to nonprofits. And you get this rise and a desire to hold nonprofits accountable.
And now everyone realizes— I mean, most people realize—we need to get the word out there more. But people are realizing that that wasn’t really helpful in delivering more value. So now we’ve got these ideas, like you mentioned, the social experiment of what MacKenzie Scott’s doing, this idea of trust-based philanthropy. I mentioned the effective altruism piece.
And there are various, iterations today. There’s a been a merger where GuideStar and Foundation Center formed a new group called Candid, that has a huge market influence. But these sites will never be able to offer true oversight of nonprofits. And so you get these other ways of trying to discipline nonprofits—effective altruism or trust-based philanthropy, that says, “We just want to make sure that we just let nonprofits do their thing without oversight.”
I think that everyone’s going be unsatisfied with those approaches, because it’s not going to achieve the real goal, which is: “How do we make sure resources flow to that which helps people to improve their lives the most? What helps people to find meaning and purpose in their lives? What helps people to thrive and helps people to flourish?”
And so I came armed today with ideas. A strategy that I think would be worth talking about. And that would be that we do what happens in the for-profit industry, which is that the discipline in the sector comes not from the funders, but from the customers. That customers know what they need, want, and desire. And then they can make good decisions with their time and their resources. And that when more value is created for them, the organization’s rewarded more, and so on and so forth.
So I believe we need a total transformation in the sector towards a customer-first mentality, and that we need to start measuring using individualized and survey-based metrics: the reported impact of an organization’s value on the people they serve. So we ask simple questions. Tell me what you think about this, Becky.
We ask a simple question: “On a scale of 0 to 10, I feel empowered to overcome barriers in my life. On a scale of 0 to 10, this organization transformed my life for the better. On a scale of 0 to 10, you’re living your worst possible life. On a scale of 0 to 10, you’re living your best possible life. How would you rate yourself?”
These are just a handful of the questions that we’re experimenting with, but how amazing would it be if organizations published the data on whether or not they’re transforming the lives of the people they serve, rather than publishing the data on how much money they spent on their staff salaries?
Becky Endicott
Okay. I am so geeked out about this concept. It is a similar one that we have in the We Are For Good community, and this is a total power shift. It puts all of the power back in the hands of the average person, which I absolutely love. And it hearkens back to that original story that we talked about in our first episode, about the history of philanthropy with Dolphin Garler. I mean, imagine before jumping into the water to save a young boy, he would’ve walked to the courthouse and asked for permission to help, or ask how he could help, or what would be the metrics for something like that. No philanthropy is an innate act. We feel it inside. And I mean, just as a storyteller, I think about asking those questions… The stories that could come out of that, socializing those stories to tell the impact of who’s getting help, how lives are changed.
That would be a magnet to organizations. Not the 990, not the GuideStar seal of approval. It would be the story. It would be the human-to-human connection. And you’re also talking about an idea that we talk about within our community, which is the flipping of the donor pyramid, and this whole concept of giving the power back to the base. And for anyone that’s been in philanthropy for any length of time, you have your biggest funders at the top, and your smallest funders at the bottom. And yet we spend so much time in nonprofits cultivating, stewarding, identifying, and prospecting those top echelon—the peak of that pyramid—that we forget that the people at the bottom, their voices, their heart, that collective spirit of wanting to get together and be a part of something bigger, is the thing that even probably launched a lot of our nonprofits. So I just want to say I am here for the Feinberg style of reiterating the value in nonprofit, and I am here to help in any way that I can.
Evan Feinberg
Well, I guess the last point I’ll make on this is you can see the history of good through nonprofit staffing since 1969. So in 1969, we formalize it. People are making sense of it. They begin to build. The first thing that they do is they build boards of directors that have, you know, phenomenal human beings on them, and very well-connected individuals, to start building operations that can maximize this tax benefit that they now get.
And so in the first iteration you get growing boards of wealthy philanthropists. Then, after we get the rise in GuideStar and Charity Navigator, you see a real focus on keeping staff costs down and programmatic costs high. You start to see stifling innovation, but you don’t see a lot of staff changes. But people start to realize this is problematic. And you get the rise of venture philanthropy organizations and funders that are funding growth. And they say, “It’s okay. You know, we’re going to be less beholden to this overhead myth.” And you get the sort of modern advent of a chief operating officer at a nonprofit. Before 30 years ago, most nonprofits could not afford to bring on a chief operating officer alongside their CEO, because they couldn’t have that kind of overhead in their organization.
Becky Endicott
That would be unheard of.
Evan Feinberg
Yep. They just had the CEO and the program officer. And so now you’ve got the rise in professionalized leadership over the last decade or so, the last couple decades in particular. Here’s my last thought for the day. I think that the next big iteration in nonprofits—much like what we’ve seen in Silicon Valley—will be the chief customer success officer, the head of user experience for the organization. The person who’s in the C-suite of the nonprofit dedicated to the customer experience of the nonprofit. I think that’s where we’re going next.
Becky Endicott
Well, I hate to be a lemming, but I agree with you. And I will tell you, anyone who’s worked in a nonprofit, who’s worked in that donor relations and stewardship category, of making somebody feel really great about their gift, making somebody feel like they have truly made a difference… That is a high that we are all chasing. And if we can move some of our work and some of our mindsets into what you just expressed, which is this servant leading. And this is such a democratized grassroots approach to actually offering the customer the thing that they desire most, which is wanting to know that they made a difference. I think honestly, it could flip the entire sector and I’m here for it.
Evan Feinberg
I’m so glad that you’re excited about it because I’ve got lined up for the next episode of the Stand Together Podcast, an incredible guest. His name is Dr. Todd Rose. We’re going to be talking… He’s got three books out there which will all shed a lot of light on what we’ve been talking about. Collective Illusions, The End of Average, and another book called Dark Horse. We’re going to talk about ideas that we’ve been discussing for quite a while with Todd. About how we could totally transform how social sector measurement work is done. And so I think our listeners are in for a treat on how we’re going to take this history lesson on the Brief History of Good and turn it into a discussion about how these paradigms can shape how people think about nonprofit work more broadly. So Becky, thank you again for such an illuminating conversation, a wonderful history lesson, and walk down how we got where we are. And I couldn’t be any more excited to get back with you in just a short period of time to continue our discussion on the history of good in America.
Becky Endicott
Thrilled to be here. Thanks Evan.
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