Nonprofit Chronicles

Journalism about nonprofit organizations and their impact

Inyeneryi rural customer cooking w_2 Mimi Moto stoves

Inyenyeri customers

Thousands of words, including many on this blog,  have been written about the so-called clean cookstove sector. But the fundamental problem with cookstoves has been captured in a single sentence by Kevin Starr of the Mulago Foundation.

“The cheap stoves aren’t good enough,” Starr says, “and the good stoves are way too expensive.”

Yep. Cheap cookstoves–sometimes described as “clean,” “improved” or “efficient”–can save users money, reduce carbon emissions and slow down deforestation, at least when compared to open fires. But they don’t burn cleanly enough to keep users from breathing unhealthy air into their lungs, with terrible consequences for the health of children and adults. If the primary purpose of a cookstove is to prevent disease, then it’s ethically questionable, in my view, to put philanthropic or taxpayer dollars behind “improved” or “efficient” cookstoves that fall well short of World Health Organization standards.

How, then, can philanthropy deliver truly clean cookstoves to the poor?

Inyenyeri has a bold plan. A small company in Rwanda founded by an expatriate entrepreneur named Eric Reynolds, Inyenyeri leases high-quality stoves to poor people for a nominal fee, then recovers its costs and makes a profit by selling wood fuel pellets to its customers at a cost that is less than what they now pay for charcoal. The business model is ingenious, if not original. After all, you can buy a printer for just $29.99 because the profits are all in the ink.

“It’s the razor blade model, right? You make your money from the blades, not from the handle,” says Louis Boorstin,* managing director of the Osprey Foundation. “Because it’s run that way, Inyenyeri can use the best available cookstove. That gets you a health benefit, an environmental benefit and a social benefit–and a more viable business model.”

Mulago and Osprey both have supported Inyenyeri. They want the company to succeed. So do I, for at least three reasons. Continue reading

bg-janah-aboutSocial entrepreneur Leila Janah is a regular on the do-good circuit: She’s been to the Clinton Global Initiative, the Aspen Ideas Festival, the Fortune Global Forum, SOCAP, BSR, SXSW and Tedx. She’s a media darling. She’s got a new book out.

But what has she accomplished? Let’s have a look.

There’s lots to admire about Janah, a 35-year-old graduate of Harvard who is the founder and CEO of Samasource and LXMI, two social enterprises that provide work to poor people in Kenya, Uganda, Haiti and India. By all accounts, she is well-intentioned, energetic and, importantly, committed to measuring the impact of her work.

Samasource is a nonprofit outsourcing company that recruits young people to do digital work for such clients as Google and TripAdvisor. A for-profit business, LXMI — it’s pronounced “luxe-me” and evokes Lakshmi, a Hindu goddess — sells luxury beauty products that are sourced from shea nuts in Uganda.

Both capitalize on opportunities created by globalization to alleviate poverty.

In her new book, which is called Give Work: Reversing Poverty One Job at a Time, Janah writes: “Give work–dignified, steady, fair-wage work–and you give the poorest people on the planet a chance at happiness.”

Well, sure. Wasn’t it Ronald Reagan who said that the best social program is a job?

So what’s not to like?

For starters, the book. Give Work is a mush of well-worn ideas and fuzzy thinking.

Sometimes it reads like a college admissions essay: “We all agreed that our time in Ghana had been transformative.” Continue reading

3642179597_2ccb2dd44e_m (1)We’re gradually learning more about the investment performance of foundation endowments.

The news is not good.

The Chronicle of Philanthropy yesterday published my story about foundation endowments. [Paywall] The peg was the Ford Foundation’s decision to publish the investment returns of its $12.1bn endowment for the first time in several years. Ford has done well–its endowment generated 9.2 percent in annual returns for the five-year period ending December 31, 2016.

Most others who manage foundation endowments were not as smart, or as fortunate.

A new analysis of more than 5,700 foundations finds that they generated a median return of 7.72 percent over that same five year period. Most of those foundations employ active asset managers–that is, investment advisors who engage in stock-picking and market-timing, or look to hedge funds, private equity funds or real assets like land, buildings or timber to improve their returns.

Most would have done better to buy a simple mix of low-cost index funds, with 70 percent of their portfolio invested in stocks and 30 percent in bonds. A sample portfolio put together by Vanguard, the index-investing giant, found that the 70-30 mix returned 9.1 percent over that same five years, just a notch behind Ford but well ahead of the median foundation. Continue reading

Why is meat so cheap? McDonald’s sells a McDouble burger for less than $2. A rotisserie chicken costs $4.99 at Costco.

Government policy comes into play. Farmers get low-cost water. Cows, pigs and chickens eat federally-subsidized corn. The USDA and the Small Business Administration guarantee loans to farmers, including owners of CAFOs (Confined Animal Feeding Operations). Animal agriculture benefits from federal commodity checkoff programs that fund marketing (“Beef, it’s what’s for dinner”). They take advantage of taxpayer-funded research at state universities. Prison inmates raise cattle in Kentucky, and they process ground meat and poultry in Florida.

What are the costs of all these policies, and what, if any, are the benefits? A new nonprofit organization called The Greenfield Project aims to find out. Launched last spring by Liz Hallinan and Ashley Allen Carr, with a $500,000 grant from the Open Philanthropy Project, The Greenfield Project will conduct research, do regulatory and legal analysis and education, and connect farmers to consumers, all with the goal of cultivating “a more joyful and resilient food system.” It hopes to support small and mid-sized farms that treat their animals and the environment well.

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Liz Hallinan

“We’re going to push for rules and policies that we think will help animals—and consumers, their health and the environment,” Hallinan told me when we met last week in a D.C. coffee shop. Carr, who is based in Austin, Texas, said by phone: “We feel strongly that improvements in animal welfare are tied to improvements in sustainable farming. We want to take a more cohesive and comprehensive approach.”

It’s not clear that the animal-welfare movements needs another nonprofit. The Humane Society of the U.S. has a big Washington operation that deals with Congress, and the low-profile Animal Welfare Institute works on federal and state legislation and produces research on farm animals. Continue reading

Thousands of donors visited Charity Navigator in the wake of hurricanes Harvey and Irma, looking for charities to support. They got some help, but not enough–the Harvey page of the Charity Navigator website lists about 50 organizations, the Irma page another 25 or so. They include the American Kidney Fund, to help dialysis patients in distress, First Book, which is shipping books to affected children, and the much-maligned American Red Cross. Huh?

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Michael Thatcher

People ask Michael Thatcher, who runs Charity Navigator, where to give. “How can you answer that?” he wonders. The fact is, you can’t, you can’t even know which organizations are effective and which are not, and that’s a problem: A list of 50 choices is only marginally better than no list at all.

This week, though, Charity Navigator, which is the most popular charity evaluator in the US, and GuideStar, which is the world’s largest database about nonprofits, said that they will work together for the first time to share more information about nonprofits and their effectiveness. It’s a small step in the right direction for both organizations.

Who knows? Maybe the two organizations, whose missions are aligned, will merge someday. It’s been discussed, Thatcher and Jacob Harold, the CEO of GuideStar, told me, although nothing is imminent, they say.

Here’s how the new collaboration will work: Beginning on Giving Tuesday in November, Charity Navigator (CN) will publish information about goals, progress and results that charities have provided to GuideStar. It will also note whether charities have achieved Gold or Platinum status on GuideStar; charities achieve status by providing qualitative or quantitative information about their outcomes. This moves CN closer to reporting on what matters about nonprofits: their impact.

If nothing else, the new information should put another small dent in the overhead myth — the misbegotten notion that nonprofits should be judged by how much they spend on programs versus overhead. Continue reading

Central Carolina Community Foundation is in most ways a typical community foundation: Based in Columbia, SC, it supports social service organizations, colleges, churches and arts groups in the midlands of South Carolina.

In one important way, though, Central Carolina foundation stands apart: It invests most of its investable assets, which are worth about $94m, in low-cost index funds from Vanguard that track the markets, rejecting, for the most part, the lure of Wall Street asset managers who claim they can do better.

This iconoclastic behavior has proven to be good for the endowment, and thus for the citizens of central Carolina served by the foundation. Central Carolina Community Foundation’s investment performance is superior to the average performance of other community foundations, of small and mid-sized private foundations and even of private foundations with $500m or more in assets, most of which turn to well-paid chief investment officers, consultants, hedge fund operators and investment banks to manage their money.

This should not come as a surprise. Numerous studies — here’s one from mutual-fund tracker Morningstar — demonstrate that actively-managed funds, taken together, lag index funds that track a market benchmark. This is because index funds typically charge lower fees than their actively-managed counterparts, and because most stock-pickers can’t consistently beat the markets or, for that matter, monkeys that throw darts at the stock pages.

“The only thing you can control with your investment is its cost,” JoAnn Turnquist, the president and CEO of the Central Carolina Community Foundation, told me by phone the other day. Continue reading

Racial+Justice+Actions+for+White+FolksYou’d think that nonprofits would lead the way when it comes to diversity. After all, many serve the downtrodden, including people of color, immigrants and the poor.

But no.

A new survey of more than 1,500 nonprofits found that 90 percent of their chief executives, 90 percent of their board chairs, and 84 percent of their board members identify as white. Some 27 percent of boards identify as all white. The survey, published in a report called Leading with Intent by a group called BoardSource, found that boards are less diverse than they were in 2015, when the research group conducted a similar survey.

These is nonprofits, mind you, not foundations. But foundations, it appears, do little better. A recent Chronicle of Philanthropy analysis of the 20 wealthiest national foundations found that 72 percent of trustees are white. Non-Hispanic whites account for about 61 percent of the US population.

Does this matter? Absolutely, says Doug Stamm, the chief executive of the Meyer Memorial Trust, which lately has been engaged in what it calls an equity journey. It has put the issues of diversity and inclusion front and center for the Meyer trust and, increasingly, for the nonprofits that it supports.

“It is not an overstatement to say that delving into equity profoundly changed me and Meyer’s direction,” Stamm says. Continue reading