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intended effects all of which undermine effectiveness it starts with the ed eds prioritize revenue because a fundamental job of any ceo is to ensure their organization has the money it needs to achieve its goals that means fundraising is necessarily the top priority for a nonprofit ed that s why the head of fundraising normally reports to the ed and it s why i d say from my observation and reading the average ed probably dedicates about 70 of his or her energy to fundraising optimizing for fundraising distorts how the ed behaves to the extent eds optimize themselves for fundraising they tend to spend time outside their organization being interviewed attending conferences publicly demonstrating wisdom and thought leadership an ed must hone his or her self presentation and diplomatic abilities even at the expense of other attributes such decisiveness or single mindedness because that s what donors see and respond to there s an obvious opportunity cost as well spending 70 of your time on fundraising leaves only 30 for everything else that s why in a different context paul graham argues that start ups should have only one person designated to handle fundraising to preserve the bulk of organizational resources for other stuff the second effect optimizing for donor experience promotes a general emphasis on appearances rather than realities appearing effective rises in importance relative to being effective here s how the mature nonprofits i know self present everyone is very polite and the offices are quiet their reception areas display racks of carefully designed marketing materials one i know has gorgeous brushed stainless steel signs attached to its conference room doors engraved with an exhortation to be silent in the hallways typically the staff dress like academics the women wear interesting jewelry with the men in shabby suit jackets and corduroys by contrast i noticed in my early days running the wmf we were quite different our staff were young and messy and wore hoodies they were smart and blunt sometimes obnoxiously so the office was often half deserted because everybody worked all the time often while travelling or from bed i m pretty sure at one point we had a foosball table in the middle of the room and later there was a karaoke set up and a galaga game what if donors think we re erratic undisciplined slobs i found myself worrying what if they ve never met programmers before most nonprofits it seemed to me optimized to self present as competent sober and diligent i think if they optimized to get stuff done they might look different the third effect nonprofits are generally conservative in their approach to regulatory compliance administration finance and governance practices why partly it s because the core work is complicated hard to do and hard to measure so people drift towards stuff that s simpler also the nonprofit sector is too small to support a diverse array of service providers and so the services provided by consultants tend to be extremely generic boilerplate recommendations on term limits and that kind of thing optimizing for donor experience makes that worse why it s easy to describe for donors the core problem a nonprofit is trying to solve but explaining the work of solving it and how impact can best be measured is hard far easier to show that the 990 was filed on time that the org got a clean audit letter and that the ed s compensation was determined according to a highly responsible process and donors seem relatively willing to accept the proposition that administrative effectiveness is a good proxy for overall organizational impact even though such a proposition is actually pretty weak a whole industry has developed around this supporting good compliance and measuring it as a service for potential donors this effect is amplified by the presence of major donors who are typically wealthy retired business executives that s because major donors like to feel their advice is as useful as their money and they have decades of experience of people taking their opinions seriously but they can t necessarily say much that s useful about the specifics of helping victims of domestic violence or rehabilitating criminals or protecting endangered gorillas in the congo so many nonprofits create opportunities where they can help they are put on the investment committee they are asked to help with the audit firm selection process their advice is sought about when to launch an endowment campaign this has the effect of focusing the ed s attention in those areas because the ed of course wants to make sure the major donor s experience with the org is a positive one more unintended consequences providing a good donor experience becomes an unstated job requirement for the head of finance a great head of nonprofit finance needs to not just be a person who s financially and administratively competent he or she also needs to be credible composed tactful and likable so a major structural flaw of many nonprofits is that their revenue is decoupled from mission work which pushes them to focus on providing a positive donor experience often at the expense of doing their core work that s bad what can we do about it i believe the problem is to some degree newly now solvable i know that because we solved it at the wikimedia foundation here s what we did from 2008 until late 2009 the wmf played around with various fundraising models we applied for and got restricted grants we cultivated major donors we made business deals that brought in what s called in nonprofitland earned income and we fundraised online using what we grew to call the many small donors model after two years we determined we d be able to be successful using any of those methods and an important study from bridgespan had persuaded us to pick one and so we picked many small donors because we felt like it was the revenue model that best aligned with our core mission work today the wmf makes about 95 of its money from the many small donors model ordinary people from all over the world giving an average of 25 each it s awesome we don t give board seats in exchange for cash foundations priorities don t override our own we don t stage fancy donor parties well we do stage one a year but it s not very fancy and people who donated lots of money have no more influence than people who donate small amounts and importantly no more influence than wikipedia editors donors very rarely visit the office and when they do they don t get a special dog and pony show i spend practically zero time fundraising we at the wmf get to focus on our core work of supporting and developing wikipedia and when donors talk with us we want to hear what they say because they are wikipedia readers that matters i remember in the early days spending time with major donor prospects who didn t actually use wikipedia and their opinions were unsurprisingly not very helpful the many small donors models wouldn t work for everyone mainly because for it to succeed your core work needs to be a product or service that large numbers of people are aware of understand and want to support about a half a billion people read wikipedia and we get on average 11 cents a year from each one which is not much i know a couple of nonprofits that ve backed away from the many small donors model after doing that math but i think the usefulness of the many small donors model ultimately will extend far beyond the small number of nonprofits currently funded by it why people are slowly getting used to the idea of voluntarily giving smallish amounts of money online to support stuff they like look at kickstarter and donors choose and indiegogo these are not self interested transactions made after a careful evaluation of what s in it for me they re people funding stuff because they think it s great meanwhile the online payment processing market is maturing with an increasing number of providers supporting an increasing number of currencies and countries and fees are starting to drop and note that donations to the wmf have risen steadily every single year we ve been named the nonprofit with the fastest growing revenues in the united states which probably actually means in the world even though the wmf s fundraising is deliberately restrained eleven cents per user per year is nowhere near a ceiling for wikipedia or for anyone the advent of the internet has given ordinary people access to the means of production and now they we can easily share information with each other on sites like wikipedia that s been playing out for more than a decade and its effects have included the disintermediation of gatekeepers and middlemen of all types i think we re now seeing the same thing happen more slowly with the funding of mission driven work i think that among other things we re going to see the role of foundations and major donors change in surprising ways and i think the implications of these changes go beyond fundraising itself for organizations that can cover their costs with the many small donors model i believe there s the potential to heal the disconnect between fundraising and core mission work in a way that supports nonprofits being overall much more effective notes this post is written from the vantage point of somebody who thinks many nonprofits do good work in difficult circumstances please read it from that perspective lots of people think nonprofits are lazy and inefficient and woolly minded that s sometimes true but no more so in my experience than at for profit orgs the world has no shortage of suck i also want to thank some of the people who ve influenced my thoughts in this area although the views expressed here are my own erik moeller and i have talked a ton about this stuff over the past half dozen years he was the first person to point out to me the absurdity of overheard ratios and has written about them extensively and publicly starting back in 2009 afterwards he and i discovered the good work of dan pallotta and also the urban institute investigating overhead ratios and explaining why they re bunk i ve also benefited from reading jim collins s monograph good to great and the social sectors as well as two books from michael edwards just another emperor the myths and realities of philanthrocapitalism and small change why business won t save the world i was helped by a conversation about difficulties facing new nonprofits a few years back at the aspen institute as well as by dozens of less structured conversations with fundraisers including particularly zack exley as well as with my fellow eds including ones on whose boards i serve david schoonover has done some analysis of u s non profit funding models that has influenced me and he and i have talked extensively about challenges facing the nonprofit sector including this one the folks at omidyar have also been helpful including pointing me towards the very useful bridgespan study linked above because i ve been working lately on issues related to grantmaking and wikimedia movement entities it might be tempting to assume my arguments here are somehow aimed at informing or influencing those conversations they re not to the extent anything here is useful to those conversations that s great but that s not why i wrote this tags bridgespan dan pallotta donors choose erik moeller foundations grants indigogo kickstarter major donors many small donors michael edwards non profit nonprofitland omidyar online fundraising overhead ratios revenue social sector strategy wikimedia foundation zack exley categories fundraising nonprofits patterns revenue wikimedia foundation how wikipedia got it wrong on chelsea manning and why september 4 2013 34 on august 22 the soldier formerly known as bradley manning announced she wanted to be called chelsea and recognized as female within an hour the english language wikipedia had renamed the article and changed its pronouns that kicked off a week long often acrimonious debate among wikipedia editors which resulted over the weekend in the article title being reverted back to bradley manning for further context here s a news story and some detailed analysis this disappointed me i think wikipedia did the right thing in promptly responding to manning s announcement and i feel like reverting the change was for many reasons a bad call and i m dismayed by subsequent on wiki discussions that look like they may result in revisions to editorial policy that would support in the future similar bad decisions on trans issues the purpose of this blog post though isn t to argue why wikipedia should respect that chelsea manning is a woman i ve already done that extensively this past weekend on wiki as have others the purpose is to talk about the underlying factors that i think led wikipedia to make a bad decision and point to where i think solutions might lie first i want to question some of the frames people are currently using to understand what happened here some editors have been characterizing the debate as political in a narrow sense with left leaning wikipedians favouring use of chelsea and right wing wikipedians favouring bradley others are framing it as accuracy versus kindness saying that editors who support using chelsea are motivated by a desire to not hurt her feelings and are prioritizing that goal over truth i think both those frames are wrong i think what the debate is actually revealing is a blind spot that wikipedia has about gender last summer i drafted a blog post about wikipedia s coverage of rape i haven t published it yet and at this point i think i probably never will its moment may have passed but the similarities between what i observed in our discussions about rape and what i ve observed over the past few days as we talked about trans issues are i think instructive in both cases a non negligible chunk of our editing community all of whom ordinarily value accuracy and knowledge and expertise seem instead to be going on gut feeling and knee jerk assumptions we aren t applying our normal judgement and standards on rape and trans issues the typical editor probably doesn t have much expertise that s not at all unusual people edit on topics they don t know much about all the time we fix typos we smooth out writing styles we dig up and add citations what s unusual here is that rather than deferring to people who had read and thought a lot about the article topic as we normally do instead a substantial chunk of the community seemed to let itself be swayed by prejudice and unexamined assumptions to be clear i do not mean that a large chunk of wikipedians are themselves prejudiced i mean that they let prejudiced ill informed people establish a tone an overton window if you will of what was acceptable to think and say here s what s normal when pluto was declared to not be a planet wikipedia deferred to the experts and reflected what they said in the article here s what s not normal when dominique strauss kahn was accused of having raped a hotel cleaner a...