Monday, April 22, 2013

Which Comes First, The Money Or The Outcomes?

By the latest IRS figures, there are 1.7 million nonprofits in the U.S. Of that number, 100,000 (6%) take in over 90% of the revenue …with just 3,000 getting 6 out of every 10 dollars. Of the $1.5 Trillion in annual revenues pouring into the nonprofit sector, nearly 70% comes from government and the rest from philanthropy.

Five decades ago, education organizations received just 5% of the philanthropy pie while  religion received 60% with the rest dispersed to a grab bag of other charities. Today, human service charities receive less than 10% of private giving, and education with 15% is now second only to religion at 35%. Of course, much voluntary action and charitable giving in America takes place ‘off the books’ and out of sight. We don’t have a good handle on the size of it all as these tend to be private matters of the American heart.

In his recent book,
Charity Case, Dan Pallotta points out that charitable giving in the US has remained virtually flat for four decades amounting to 2% of GDP per annum. Despite the explosion in the number of nonprofits, the emergence of sophisticated fund development offices within these organizations and the endless series of high profile ‘causes’ endlessly flogged by popular culture, we’re still stuck at 2%.

As has been noted by many in the current debate, increasing giving to 2.5% or even 3% would result in a great expansion in the revenue of nonprofit organizations. The question remains if that new money would produce better outcomes. For despite a tidal wave of taxpayer money flooding into human services since the days of LBJ, we’re still stuck with a poverty rate in the 12-15% range. 

So I understand the need to discuss $$$, but let's not lose sight that for the people we serve, it's outcomes.

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