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PHILANTHROPY 2173 - Reality revealed by a scorecard
Lucy Bernholz

February, 2013

I highly recommend reading Mark Rosenman's opinion piece in The Chronicle of Philanthropy about the new College Scorecard. He argues that the scorecard is bad for all nonprofits because it represents an individualistic definition of value, not a societal one. As he writes:

 

"We seem to be falling for the idea that we should measure nonprofit programs only for how much good they do for individuals, not for how our larger society benefits. Colleges, hospitals, arts institutions, international aid groups, and others will be valued based on how much they better and enrich the relatively few people they serve, not society itself."

Especially in light of our recent #RecodingGood discussion on philanthropy in democracy, I think Rosenman raises an important issue - there is a value to the sector itself that is lost when we focus on the instrumental and individual outcomes of each enterprise. Colleges are an interesting example  - perhaps no other field has been as fraught with the need to "justify" its value than that of liberal arts education. At the same time, the most well endowed and longest lasting (i.e. sustainable, in today's philanthropic parlance) institutions in the U.S. are not-for-profit liberal arts colleges and universities. Colleges are also an interesting "test case" for this scorecard use of public data as there are countless other "Best of" lists of colleges, geared toward almost every conceivable point of view and measures of value.

But the most interesting thing about the scorecard - in my opinion - is that it puts for-profits on the same footing as nonprofits and allows them to be compared on equivalent data. What could be a clearer acknowledgement that we are in fact operating in a social economy - in which every type of social good from education to healthcare to eldercare to cultural expression to volunteer mobilization - is available from either a nonprofit or a commercial enterprise or a hybrid of the two? This is the key "reality check" for nonprofits - in most cases they no longer are the sole purveyors of the "good" they provide. Rosenman argues that comparing nonprofits to each other on the basis of their individual outcomes is bad for colleges and bad for nonprofits - but his article misses the bigger picture - college education is not just a nonprofit "good" anymore (if it ever really was).

What is particularly notable about the scorecard is that it reflects the reality of higher education choices. Unlike any of the dozens of nonprofit comparison sites or ratings agencies that have emerged over the last decade, from GuideStar to GiveWell, the scorecard reflects the real choices we make when it comes to using our private resources for public good. We are choosing among different kinds of providers. Whether we are a potential college student or a large foundation seeking to decide whether to make a grant or an investment we are comparing enterprise options in pursuit of a mission.

The Scorecard's use of comparative data is what others are seeking when they ask, "Why can't we mashup impact investing flows with philanthropic grants, or see social enterprises and nonprofits on the same map?" The Department of Education accomplished this because it provides revenue  - student loans  and federal funding - to all providers. Those dollars then became the data that the Department used to reveal the real landscape of college choices. Health care, conservation, arts and culture, international aid - all can be shown this way (and probably will be, very soon).

More so even than Rosenman argues, this reality requires that we consider the value of an independent sector, an associational and expressive space. We use many types of institutions to support our desires to assemble and act as private citizens for a public interest, separate from the market and the government. It is no longer reality to describe this "space" as the nonprofit sector, for those shared public interests that have long been provided primarily by nonprofits are available from a mix of vendors. In some cases, the nonprofit vendors will be deemed to provide greater value (see my post on the College Scorecard comparing Yale (a nonprofit) to the University of Phoenix (a commercial college). In some cases, they may not.

But that won't answer our question - what is the purpose of this independent space? Does democracy need a space separate from the market and government where people do things together for their own definition of a public benefit? I think the answer is absolutely yes. But we shouldn't conflate the need itself with the most familiar provider of the need. We need ways to act together as individuals, free of market or government pressures, using our own resources in pursuit of shared public interests. While this has been the primary purview of philanthropy and nonprofits, it isn't anymore. It is the realm also of social enterprises and impact investors, crowdfunding and informal networks, B corporations and flash mobs.

The new constellation of actors providing these shared social goods already represent new forms of enterprise and new rules and regulations to guide the use of private resources for public good. I don't think we're done yet. We will see more enterprise forms emerge, we will need modifications of the forms (nonprofits) that we already have and we need, as Rosenman argues, to think about the value of the whole, not just the value of the pieces.

Learn more from Lucy Bernholz at http://philanthropy.blogspot.com/



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