Kelly Brown examines what foundations and nonprofits can learn from successful businesses, and how they can use data to increase effectiveness.
As the director of an organization that works with foundations across the country, I get to see remarkable examples of foundations working together and learning from each other about how to be more effective.
But sometimes we need to look beyond the field to get ideas of how to tackle our biggest challenges. I agree wholeheartedly with philanthropy’s well-placed skepticism of exhortations to be more “business-like.” Philanthropy has different goals and different ways to measure effectiveness than business. When it comes to the power of diversity, however, the business sector can provide important lessons from which philanthropy can draw inspiration to achieve our sector-wide goal of advancing the common good.
First, businesses are proving that greater diversity leads to success. Earlier this year, McKinsey & Company, the global management consulting firm, released a study of 366 public companies that found that “when companies commit themselves to diverse leadership, they are more successful.”
The numbers don’t lie. According to the study:
- Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to outperform their respective national industry medians.
- Companies in the top quartile for gender diversity are 15 percent more likely to outperform their respective national industry medians.
Second, successful companies are making the decision to be more transparent with their data, recognizing data as a tool for tracking progress in order to improve their success. Last year, some of the biggest names in the tech sector—Google, Facebook, Twitter, Apple, Microsoft, and Amazon—began to publicly disclose data about the diversity of their workforce.
These companies made the decision to release the data because the only way to improve the situation is to understand and confront it. As Google states on its diversity page, “We’re not where we want to be when it comes to diversity. And it is hard to address these kinds of challenges if you’re not prepared to discuss them openly, and with the facts.”
Facebook agrees. Maxine Williams, who Facebook tapped in 2013 to be its global director of diversity, recently said, “For Facebook, diversity is imperative to our future growth. If we don’t get it right, we risk losing relevance in an incredibly diverse world.”
Philanthropy faces a similar challenge. The face of America is changing rapidly. In two states—New Mexico and California—Latinos have surpassed whites as the largest racial/ethnic group. Women make up 51 percent of the workforce. One million more voters identified as LGBT in 2012 than 2008. In order for foundations to serve their constituencies effectively and maximize their impacts, they must change with them.
Foundations and nonprofits have the opportunity to take a page from successful business playbooks and use data to support this change. Clarity on the dynamics of demographic data will help us to understand fully the state of nonprofits and foundations, and shape a path for advancing equity for the people we serve—the impact we are all striving for.
It may seem hard to see how diversity and inclusion that contributes to the bottom line of a tech firm relates to foundations and the social sector, but clear parallels do exist. Recently, after collecting and reviewing the data from several years of applicants, a major national nonprofit organization found it was struggling to increase the number of applications to its leadership program from under-represented communities, a critical need given the demographics of the emerging workforce and talent pool. In response, it developed a clear and explicit commitment to non-traditional outreach strategies, informed by new staff who, in addition to sound skills and broad experience, brought new networks, insights and strategies. The inclusion of the perspectives from under-represented communities transformed the applicant pool in two short years. Now the program more closely reflects the demographic make-up of both current and future leaders, a transformation that is essential to the important leadership development role this organization provides. Just as with business, this development was informed by sound data.
The social sector’s work is even more sensitive to the importance of identity, inclusion and equity. Are outreach efforts crafted in the right language? Are interventions appropriate and reaching all members of a community? Are partnerships and alliances informed by the perspectives all constituents and stakeholders? These are dynamics that can change in a few short years. But without a sound system for rigorous data, how can we know if the programs we invest in are achieving optimal impact on the communities we want to touch?
If philanthropy is to achieve its best ‘bottom line’ it must be informed by the same kind of sound data the business world relies upon. Because if we don’t understand who we’re impacting, how can we know we are really making the most effective impact we can?
Many thanks to Kelly Brown for her latest column piece on what philanthropy can learn from the business world. Let us know your thoughts by commenting below, and be sure to follow Kelly’s work @d5coalition.
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