Friday, April 23, 2010

What Should the Secretary of State Ask?

The Chronicle of Philanthropy flagged this story from Hattiesburg, Mississippi yesterday about a plan by the Secretary of State to review the 38000 nonprofits registered in the State.

The headline and story made me think about Rob Reich's "Anything Goes" research on the rate (98+ %) at which the IRS approves new nonprofits every year. And notice that up to 25% of the nation's nonprofits may lose their tax exemptions this year because of a filing requirement certainly raises key questions about the ecosystem of organizations.

It made me think about the discussion we've had here on this blog about "Crowdsourcing community needs" and peer review as part of the nonprofit (and some would add, foundation) approval process.

It made me think of the efforts by the folks at to map the number of nonprofits and then get the AGs offices in each state to release the data in a way that anyone could access it.

Which, of course, got me thinking about Open Data and philanthropy - which always gets me excited - and about which we have a fun announcement coming out on Monday (stay tuned).

And it really made me wonder "What is the Secretary of State's survey going to ask?" The story in the Hattiesburg American doesn't answer that question. All it says is:
"... the secretary of state's office in the next few weeks will mail letters to the nonprofits to ask questions about their fundraising and their activities. "Mississippians are the most charitable people in the country. We need to know these groups are doing right by them," Hosemann said."
Ooh, that is so intriguing.... What would you ask of nonprofits in your state if you could survey them to find out if they are "doing right by [the people of your community]?" What a great opportunity to crowdsource questions from the people of Mississippi (and elsewhere) to inform such a survey.
  • What do the people want to know?
  • What should they want to know?
  • What do they have a right to know?
  • What do you want to know?
Go ahead - add your questions for the Secretary of State in the comments below - AND - send them directly to Secretary Hosemann on this form. Here is the direct page for the Division of Securities and Charities at the Secretary's Office.


Who Counts? said...

Lucy, thank you, this hits my sweet spot. Here is what I sent to Secretary Hosemann:

Dear Delbert,

I applaud your outreach for thoughts on this important question. I am an American working in the nonprofit sector now for 30 years in many countries.

6 years ago I founded Keystone ( to explore a closely related question: What is the best way to measure and communicate social change? Our lead hypothesis: ask the people meant to benefit from the charity. I refer you to our website for a full explanation of where we have arrived in that exploration.

What I recommend to regulators is to begin to operate according to what we call the feedback principle of public reporting. The principles states, “Report your results alongside what those who are meant to enjoy those results say about that report.” We have identified cases of organizations that do this on our website.

To begin, I suggest a very simple requirement that charities report on what their beneficiaries say about their work. Once this practice is mandated, an industry will grow up to rate the practice, which will drive the nonprofits to do it more systematically, eventually evolving independent auditing/assurance, as has happened for for-profit corporate social reporting.

Here is how I see the rating of feedback principle compliance evolving (once you have created the legal requirement to do it!) using a 10-point scale:

a. (2 points) Beneficiary/primary constituency group or groups identified clearly
b. (2 points) Documented policy to report back to constituents
c. (2 points) Report on the efficacy of actual reporting back practices. (This could be a simple finding that shows that 60 percent of beneficiaries have received an annual report or have attended a meeting where there was a report back or have accessed the website where the report back is published.)
d. (2 points) Constituency group feedback on organization’s work reported on the website
e. (2 points) Those constituency group feedback reports are prepared or assured/audited by an independent agency.

To translate this into questions to ask nonprofits in the state in a lead up to new regulations, I would ask:

• How do you listen and respond to the people who are meant to benefit from your work?
• What formal systems, if any, do you have in place to be accountable to your beneficiaries?
• How do you reflect their views in your public reporting?

Mazarine said...

Dear Lucy,

One thing I've been talking about lately on my blog is the idea that nonprofits need to model equality to truly make changes in the community. If a nonprofit is modeling equality, then they have a better position to stand in when telling the community what to do. This means that the nonprofit should not be paying its executive officer more than 10x what the lowest paid worker makes. There also need to be merit-based pay increases, to help people get motivated to do even better in their jobs.

Nonprofits also need to collaborate more, and look into Lean development and apply these principles. This will cut down on nonprofit waste.

They also need to make sure the board and ED are fundraising constantly, and that the rest of the staff chip in too. This will keep the nonprofit afloat.

If the nonprofit doesn't fundraise constantly, and look for ways to constantly improve and collaborate, and institute merit-based pay, put money towards fundraising, towards advertising and developing the nonprofit as a business, then it's going to stagnate and die.