In her article on Dan Pallotta’s crusade to persuade donors to focus on nonprofit organizations’ impacts rather than their overhead (“Debating the costs of providing help”), Sacha Pfeiffer neglected one important part of the story. The nonprofit field has developed very effective ways to measure impacts and the return on donors’ support.
Jewish Vocational Service and other nonprofits have undertaken studies of social return on investment that measure and monetize specific client outcomes and create a ratio of those dollar outcomes over expenses. More recently, nonprofit organizations, including ours, have begun using creative new funding mechanisms, such as social impact bonds, which not only measure outcomes, but link public and private funding to those outcomes and the savings they create for state government.
The nonprofit field is moving well beyond the traditional tension between charity and overhead that Pallotta is fighting.