Philanthropists are changing how they interact with nonprofit organizations (NPOs) or established foundations. “Twenty five years ago,” says Richard Mittenthal, president and CEO of New York-based TCC Group, philanthropists would give money to “museums, the opera, the United Way [or] Girl Scouts.”
Now, the number of nonprofits has “exploded,” with “1.6 million in the U.S.,” alone, a number that has doubled in the past several years, Mittenthal said in an interview at his New York office with AdvisorOne.com.
At the same time, new philanthropists often come from entrepreneurial, business and Wall Street backgrounds, Mittenthal says, and performance metrics and strategic thinking inform their philanthropic endeavors. Mittenthal’s TCC Group works with wealthy individuals or families who wish to set up a foundation or giving program, and nonprofit groups that want to be more effective organizations.
Often, donors’ attorneys refer them to TCC so that Mittenthal and his team can help them “think through starting a foundation—the board, strategy,” programs and other considerations. TCC also consults with already-established foundations on their giving programs, staffing or other needs. This can include evaluating which nonprofits are most likely to use the foundation’s grants to get the fullest effect and how to get family members, including next generations, involved.
Five family foundations are actually housed in TCC Group’s offices. TCC does not manage the foundations’ endowments and the firm is not an investment advisor.
Since many NPOs work toward very long-term goals—breakthroughs in medical research or fighting to put an end to genocide, for example, can take many years—many NPOS strategically plan their process using a “logic model,” Mittenthal notes. It is very much like modeling the long-term strategy for a business. He illustrated his point by showing the model for a large NPO that charted its “resources/inputs, strategy, short-term and long-term outcomes and impact.”
TCC helps the NPO evaluate its “awareness, knowledge, attitudes, motivation, skills opportunity and behavior,” he explained. Like a roadmap, the model provides the NPO with direction for its long-term journey, something that is useful for the organization’s staff, donors and, of course, beneficiaries of the NPO’s cause.
Measuring Nonprofits’ Effectiveness
TCC Group also consults with nonprofit organizations to “measure their effectiveness,” build the NPO’s capacity and plan their strategy. The firm uses its “Core Capacity Assessment Tool (CCAT).” This online tool measures “effectiveness in relation to four core capacities—leadership, adaptability, management, and technical,” and provides a report that shows the NPO its own score, as well as benchmarks against peers in the TCC Group’s database of NPO evaluations.
Many of these metrics borrow from the types of performance measurements and program assessments that are used by businesses. They can help an NPO’s executives understand where to apply resources to be more efficient and effective and understand what is necessary for the organization to become sustainable. Whether a philanthropist intends to build an enduring institution that lasts beyond generations of family involvement or to give away all of their wealth within a generation, adopting business strategies and modeling can provide a clear path and help them achieve their goals.