The social profit handbook: Setting and achieving mission-driven goals

The following is an excerpt from the book “The Social Profit Handbook.”

Leaders of mission-driven organizations know the benefits of having an “elevator speech” — a succinct explanation of why their programs and services exist. Authors should have their speeches ready, too, if they are asking for the attention of busy people. So let’s imagine we have just entered an elevator on a fifth or sixth floor, heading down, and I manage to bring up the subject of my new book. Perhaps you say, “Good morning,” and I say, “Guess what? I have a new book out.” As we start to descend, you dutifully ask, “What’s it about?”

I’d say, “It’s about changing the way we think about assessment in what people call the social sector. I think the world’s a mess, and I believe that the people who work in nonprofit organizations around the world — and the people who sit on their boards — can lead us out of it. I think they will lead us out of it. But they have to take a different approach to assessment first.”

“Assessment,” you mumble as the elevator opens into the lobby and you move for the door — quickly, I notice. I call after you, “I say we should stop even using the word nonprofit. We should call these organizations by what they are instead of by what they are not. We should call them social profit organizations.”

In my perfect world, you would turn back at this point, with considerably more interest, and repeat, “Social profit?”

“Yes,” I would say as we walk through the lobby. “When you hear ‘profit,’ you think about money, right? We all do. That’s because most investments, most activity, most decisions in the world are about creating or preserving financial profit. But what we need is more social profit, from better schools to access to medical care, great art and music, clean rivers, high-functioning public transportation, and empowering young people to take care of themselves — anything that benefits people and their places and the planet we live on.”

“But isn’t social profit hard to measure?” you might ask.

“Yes!” I would exclaim. “That’s why I am writing about assessment. We have to find an approach to defining social profit that gives us the incentives, the motivation, and the confidence to invest in it.”

We would be at the street by now and ready to head our separate ways, but our brief metaphorical encounter has already unearthed the challenge that motivates this book and my proposed solution. We always know what our financial profit is because there is a basic unit of measure: a dollar, a rupee, a euro, a yuan. But we have to approach the reckoning of social profit in a different way. Social profit is about desired social benefits, and so it has to be defined locally depending on what a community of people values and what they need. It will never have a fixed or standard measure, and efforts to create one will get bogged down in endless quibbles and conflict about the measure itself. What we need are better local measures of both short-term and long-term social profit — and measures of a certain kind.

That’s why I propose a different approach to assessment as a way forward. There are indeed metrics, numbers, that are important for measuring outcomes; we call that quantitative assessment, and we do it reasonably well. But to really and fully capture social profit — and, I would argue, to create the social profit you have in mind — you need qualitative assessment, too. You need to be able to measure things that can’t be expressed in numbers. You need to bring people together around your best collective vision of what success looks like in the areas that matter most to you. That’s what qualitative assessment does and that’s what this book is about. In the pages ahead, I will show how to measure success in a way that helps you achieve it, illustrated by examples of organizations that have done exactly that.

I think we are all aware of a big problem — a world awash in financial profit, or at least the pursuit of it, when what it needs is social profit. Yet my approach to the problem involves a relatively small change in the way staffs and boards of social sector organizations — and the new breed of socially conscious businesses — define and assess their successes in creating social profit.

We might ask, with some justification, whether it should be governments that we primarily entrust with the creation of social profit. But with the exception of some cities that have managed to translate a vision of quality of life for all residents into public policies, governments seem to be missing in action in this regard. Few people in the United States seem to expect our federal government to solve problems anymore, and my friends in other countries say the same about their national governments.

That is why I focus on the social sector, sometimes called the civic sector or the third sector, to differentiate it from government and business. Its whole reason for being is social profit. The sector is fragmented and cash-strapped, but collectively it can have enormous influence on the other sectors not only through its good work but also through its influence on voters and consumers. In short, I believe that social sector organizations can elevate the concept of social profit through the ways they define, pursue, and achieve the social benefits implicit in their missions. And after years of leading a grant-making foundation, and more years of consulting with organizations to strengthen their performance and measure their outcomes, I think I can help them do a better job.

Both the specific problems that social profit organizations address and the various benefits social profit organizations seek to bring about are substantial, even daunting. Yet I would like to focus on a smaller, more manageable problem. It is as if we are sitting in Pittsburgh and need to be in San Diego in a few days to give an important speech we have not yet written, and we have no travel plans. We know we have to write the speech, but let’s do something we can manage first, like getting a plane ticket.

For me, the problem we can actually tackle is that organizations in the social sector, along with their funders, have not embraced the theory and practice of formative assessment — assessment practices whose primary purpose is to improve outcomes rather than judge them. They are far more likely to be familiar with summative assessment, which judges outcomes at the end. As assessment expert Paul Black explains, “When the cook tastes the soup, that’s formative assessment. When the customer tastes the soup, that’s summative assessment.” Most people in the social sector would not even consider the widespread lack of formative assessment a problem, because they have not paused long enough to think about it and learn how to do it. But I believe that if we can make progress with formative assessment, we can make progress on the measurement dilemmas inherent in the nature of social profit and, most important, we can do a better job of producing social profit.

Compared with the changes in the world that social profit organizations seek to bring about, embracing a new approach to assessment seems modest. But as any artist or designer knows, a small change — a few brushstrokes, a larger window in a dark room — can make a big difference. The organizations portrayed in this book all faced particular challenges — both in measuring their performance for funders, and in improving their programs’ effectiveness. The groups profiled range from large, national nonprofits to small, regional ones, and the obstacles they sought to address vary widely. But in most cases the eminently manageable changes and experimentation this book describes had a profound influence on their organizational cultures and their effectiveness in the areas that mattered most to them. My goal in this book is to help you — whether you are a board member, grantor, employee, or otherwise affiliated with a social profit organization — understand how the process works so that you can help your organization make the world a better place.

Taking on the problem

Imagine an executive director of a social profit organization. She is working late the night before a board meeting, completing a proposal to a local foundation, one to which she has applied before. The proposal form asks, “By what measurable outcomes will you determine the success of your work?” She repeats the metrics she reported on last year: numbers of workshops offered; number of people served; scores on evaluation forms at the end of workshops. But she can’t help but feel something is missing. She would like to describe the biggest change the organization made that year, but that would mean describing the big mistake that caused it as well. Maybe not.

Imagine a new board member of that social profit organization. He is driving to the meeting the next day and glancing at the materials for the meeting, which he has just printed out. He meant to do that earlier but ran out of time. Luckily, he knows, the major points will be repeated at the meeting in the various reports, and he can pose questions if he has any. If you asked him how the organization measured its success, he might say, “Let me check the packet.” If you asked him how the board measured its success as a board, or his success as a board member, he might say, “What?”

Imagine a foundation officer receiving the latest proposal from this social profit organization and re-reading the report submitted on the previous year’s grant. It says the organization served 1,200 people, a 20 percent increase from the year before. But Is that good? she thinks. Should it have been 30 percent? And how well were they served? She reads the report, which says in effect that social problems are getting worse but everything is going better than ever with this organization and the foundation should continue in its wisdom and generosity with ongoing funding. The foundation officer thinks: This feels more like a dance than an evaluation.

These people deserve a better assessment system. And so do the people this social profit organization serves.

Let’s keep going and imagine an organization whose chief funding source is government contracts. Let’s say it is a shelter for abused woman and children. The contracts are based on numbers of bed-nights per month, and that metric is the one that becomes synonymous with success. The higher the occupancy, the better job the organization is doing in the eyes of its funder. But then picture the executive director saying, “Our long-term job is not housing abused women and children; it is ensuring that no woman or child is abused.” She and her colleagues help create violence prevention programs at the local high schools and the army base down the road. Fewer women and children come to the shelter for help. There are empty beds. And funding for the organization starts to diminish. This executive director — and those women and children — need a better assessment system.

I believe that how practitioners in the social sector think about measurement and assessment, and how they act upon assessment and evaluation, are the keys to increasing not only their effectiveness and impact, but also their satisfaction and pleasure in their jobs.

I want to acknowledge that when confronted with the urgent problems of the world, assessment is not the first thing that would come to mind as the key to success. For many of us, the stomach roils when the subject even comes up. Thinking about assessment feels a little like going to the dentist: We know we should do it, but it’s not what we would choose to do on a sunny afternoon.

But the world around us is demanding we take a stance. We live and work in a time when there is increasing pressure to measure the results of our efforts, because money is scarce and societal needs are growing. Calls for “metrics” and “outcomes measurement” are everywhere. How should we respond? This book will make the case that it is not by being more “scientific” or “business-like.” In my opinion, we should not focus our efforts on trying to create valid and reliable measures that “prove” the efficacy of what we have accomplished. For one thing, the social, political, and economic systems in which we operate are too complicated for us to prove anything. Even more than that, I worry that by concentrating on the measures themselves, we run the risk of taking our eyes off the real prize, which is the work itself — the social profit that is the reason we exist.

I will not suggest we ignore measurement — far from it. I will argue that while quantitative measures can certainly help us, qualitative measures in addition can help us even more. I will advocate for creating homegrown and even idiosyncratic assessment tools with your colleagues that unite everyone in your organization around a clear, shared vision of what it is you are trying to accomplish together. And I will advocate that you regard assessment not as an occasional chore but as a daily mind-set that will affect a number of behaviors, including how you spend time with one another, how you talk about your success, and how you react to setbacks.

Why would it matter? For starters, the social sector, as fragmented and undercapitalized as it is, is surprisingly large and has enormous potential for increased impact. In the United States alone, in 2007, there were over a million and a half tax-exempt organizations serving the public, employing close to 13.5 million workers (with volunteers swelling the workforce by 4.5 million full-time-equivalent workers) and generating over $1.7 trillion in revenues. (If your jaw just dropped, remember these figures include universities and hospitals, foundations and religious congregations.) The vast majority of social profit organizations are small, but they have an enormous impact on the lives of those they serve.

The real reason it matters is that the world desperately needs the social benefits these organizations individually and collectively produce. In our first conversation in the elevator, I said the world’s a mess. I don’t want to be glib about that or particularly political. I am talking about the challenges of the 21st century that The New York Times and The Wall Street Journal agree about: military conflicts; religious extremism; spread of diseases; persistent racism; growing income and education gaps; lack of faith in governments; extreme and destructive weather events. There is for many a sense of unraveling, a feeling that the ways we are organized to deal with problems, react to challenges, and make decisions are not sufficient to meet these challenges. And partly as a result, there is also a growing, global effort that asserts that part of the problem is that we are measuring the wrong things. I agree.

When I said in the elevator that I thought the civic sector could lead us out of this mess we are in, I was not suggesting that the sector has the power, wealth, and influence of the corporate and government sectors. It does not. But I am saying that by expanding their approach to measuring success, social profit organizations have the best shot at defining a better world for us all, because social profit is their reason for being.

The public and corporate sectors are full of good people who care about others. Yet in the end, social aspirations notwithstanding, those in business, particularly big business accountable to shareholders, must focus on financial profit, and those in politics must focus on power, or on staying elected, or on simply functioning in a system compromised by conflict and bureaucracy. It is those organizations whose missions are about social profit that have the chance — and the responsibility — to bring other purposes and values to the forefront.