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Generous To A Fault? Nonprofits Must Align Efforts

Editorial By TOM CONDON

February 10, 2008

Ever wonder how much money is spent each year trying to solve Hartford's problems?

One agency alone, the Community Renewal Team, which runs more than a dozen programs in housing, early childhood, senior services, alternative incarceration and other areas, has an annual budget of $55 million, according to its annual report. Dozens of other nonprofits receive millions from philanthropic organizations and corporations. The city and state invest heavily in social services for city residents.

And yet the city has a poverty rate of 31 percent, a high school graduation rate of 29 percent and as many homicides last year as Stamford, New Haven, Waterbury and Bridgeport combined.

Are we getting the optimal bang for the buck? With all of these resources, shouldn't we be demanding better results?

I wish I'd thought to pose this question this way, but I didn't. I extrapolated it from one Robert Egger asked about his hometown of Washington, D.C., in his book, "Begging for Change" (Harper Business).

This is a rarity — someone from the inside writing critically about the nonprofit sector. The United Way of the Capital Area brought Egger to Hartford a week ago to share some of his ideas.

Egger was a nightclub manager who volunteered to serve on a food services truck called the Grate Patrol two decades ago. He wondered why the same people were in line night after night. Where were the services to get them back on their feet?

He was also surprised to learn that the food on the truck came from an expensive market in Georgetown. Eggar well knew that the restaurants in the nation's capital threw out tons of fine food every day.

After some soul searching, Egger founded the D.C. Central Kitchen in 1989, which has become one of the most respected, honored and emulated nonprofits in the country. The Kitchen, which has expanded several times, produces and distributes more than 4,000 meals a day and trains former homeless people and drug addicts for jobs in the food industry.

What he found over the years were that there were too many nonprofits, sometimes duplicating each other's services and fighting one another for funding and supplies. Some nonprofits that started with fire and zeal settled into hidebound bureaucracies. Some nonprofit CEOs settled into well-paid complacency.

This continues on because "there are no market forces or governing bodies to oversee, organize or streamline the operations of nonprofits." If there were, tens of thousands of social service agencies would have "merged, consolidate or more likely gone out of business," and the money focused on the most effective entities.

But the public hates to see an organization with a worthy cause go under, so "we are perpetually helping perpetually failing nonprofits."

Of the many reasons to end this institutional inefficiency, the most urgent is that resources are getting scarce. Egger said when he started his kitchen in 1989, 25 percent of all the food produced in the country was being wasted or thrown out. Restaurants now understand that discarded food is lost profit, and are getting more efficient. With an impending recession, monetary resources are likely to tighten up as well.

Thus it becomes imperative to separate the wheat from the chaff.

This isn't so easy, he says: "No one has been able to come up with a reliable set of metrics to judge nonprofits."

So, Egger says, donors often judge nonprofits by what percentage of the money goes to the cause, and not overhead or management. But that's not always a good indicator. It doesn't show how well the cause is being served. And, some nonprofits need to spend money on research, training and management, just as private companies do.

There need to be metrics. Donors and others need to judge nonprofits by how well they are doing the job, and the job must be worth doing. Egger likes nonprofits that move people toward self-sufficiency. New York's Greyston Bakery, a nonprofit started by a Buddhist priest, has become the largest supplier of brownies for Ben & Jerry's ice cream products. Greyston has gotten people into the food business and developed housing for them.

He also likes nonprofits that connect their constituencies. Habitat for Humanity is among the best at this, Egger writes, with volunteers working right next to prospective homeowners.

The idea is to look beyond the obvious. Yes, by all means feed the hungry and shelter the homeless, but also ask why people are hungry and homeless. Then marshal the community's resources to do something about it.

Egger said if we ever looked at how much money was pouring into Hartford, we'd be shocked. I think he's right. It isn't all being wasted, by a long shot. A couple of no longer useful nonprofits have been weeded out in recent years.

Thanks in part to a very good training program from the Hartford Foundation for Public Giving, most nonprofits are run with reasonable efficiency, and are doing a lot of good. That the United Way brought Egger to Hartford signals a strong interest on its part in real results.

But are we anywhere near peak efficiency? I strongly suspect not. Egger suggested holding a community forum with all of the players.

The idea would be to establish a goal, determine who would do what to meet it and set benchmarks. I know it sounds much simpler than it would be, but it makes sense. There are redundant efforts that could be streamlined and brought into better focus. We've had essentially the same problems for several decades. Let's try something new.

And, the nonprofit sector may be the greatest available resource out there. Nonprofits garner $250 billion in donations and have 80 million volunteers, Egger said. Get this effort a bit more focused, partner it with government, and it could solve some big problems.