Why Outcomes, Not Output, Is the Key to Nonprofit Sustainability

On this episode of Bloomerang TV, Jamie Levy, President and Chief Vision Officer at JDLevy & Associates, joins us to discuss why outcomes, not output, are the key to nonprofit sustainability.

Full Transcript:

Steven:Hey, there. Welcome to Bloomerang TV. Thanks for tuning in. I’ve been thinking a lot about sustainability and outcomes as it pertains to nonprofits. It seems like it’s kind of a topic that’s on the tip of everyone’s tongues these days. I thought I would bring in someone who knows a lot about that. He’s kind of my go-to guy for all things organizational development. He’s been a guest on Bloomerang TV already and I’m glad to have him back, Jamie Levy. Jamie, how’s it going?

Jamie:Very well. Thank you.

Steven:Yeah. Thanks for being here today. I know you’ve already been on an episode with us, but just so people can learn a little bit about you if they don’t already know you – they should, by the way, but that’s okay – tell us a little bit about what you’re into these days and what things you’re up to.

Jamie:Sure. Just a simple overview of that, my full-time role is president of our company, JD Levy & Associates. We’re an organizational development firm that really works on two parts of one equation. On one end of the spectrum, we work specifically with long-term sustainability of charitable agencies. That can look like organizational impact evaluation, board leadership, long-term fundraising planning, organizational evaluation, strategic planning, etc.

And then the other of the spectrum, we work with individual philanthropists and grant makers and family foundations in that mix to help them understand and define the kind of social change that they want to drive and then to build the structures to enable them to do that. Both of those worlds obviously come together because they’re in the same sandbox. And then my side hat is I do teach as well in a university on a number of these topics as well and have for quite a while.

Steven:Very cool. I knew you were the guy to talk to about sustainability. Speaking of sustainability, what does that even mean? It seems like that’s a buzzword kind of phrase that people throw around. It seems like there are a lot of different definitions or pre-suppositions about what that means in terms of a nonprofit. What to you is sustainability as it pertains to a nonprofit organization?

Jamie:It’s a great question. To your point, the definitions are a dime a dozen, it seems, on what this word means. I think when we talk about sustainability, we have to look at first what matters to a charitable agency and is our highest priority whether or not money comes in the door or is our highest priority whether or not we’re creating community value.

Sustainability, in my perspective, has to be defined in accord to the greatest truth of the organization, which is whether or not we’re creating community value and community change. If that’s our focus, then sustainability are those elements that become renewable and regenerating in the organization such as are we creating life advocates around the cause?

Are we engaging donors in deeper relationships? Are we seeing revenue increase because of that volunteer engagement and renewal and impact in how we’re creating value in the community? That’s very different depending on who you ask. There are a lot of sectors or subdivisions within our overall sector or schools of thought that would have a perspective that sustainability is simply whether or not money is coming in the door.

I can give you a lot of examples of organizations that are raising money every year and are completely stagnant and I would argue are really not creating community value. But if we go with a linear definition of revenue, then that organization would be considered sustainable. So, I believe, as well as my company does, that if we’re going to talk about sustainability, we have to talk about sustainability in the reference point of what matters to a charitable agency, which is whether or not we’re creating a common good in community value.

Steven:So, you use the word “impact.” When I hear words like “impact” and “community value”, another word comes to mind that’s “outcomes”, right? Is that what we’re talking about, that an organization that creates outcomes, measurable outcomes for their community, that’s what’s sustainable? Is that kind of what you’re saying?

Jamie:Correct. I would make the argument that every organization creates an outcome because an outcome is simply change.

Steven:Right.

Jamie:It’s whether or not that change is in line with the vision and whether or not that change is productive with the constituency that they’re trying to serve. Many organizations are creating negative outcomes to constituencies they serve and we see this in the media a lot, as well as positive outcomes.

So, I think there’s a further definition on this topic of outcomes, which is the question of do we understand vision and what the ultimately destination of the organization is about. And then are the outcomes being drawn in to drive that vision? Again, outcome different than an output, an outcome just being are we creating change, whereas an output is a simple deliverable. We served 500 people, but did it matter that we served 500 people and what was the change that occurred positive or negative because of the output that was provided?

Steven:So, what would be some examples of that? Let’s say your output is feeding a certain number of people in your community. What’s the outcome? Is it reduced crime? Is it higher civic engagement among those people? What are some examples of those outcomes that you’ve seen successful sustainable organizations be able to point to?

Jamie:So, it depends on the purpose of the organization and how we define that. A simple kind of process of understanding the difference between relief, rehab and restoration and an organization that may be feeding hungry individuals on the streets or an inner city community shelter, there’s a part of that population that will always be in relief and that’s their end game with that constituency.

It’s not to move them into rehab or to restoration, it’s simply to be there to provide relief. If that’s what I’m doing, the positive outcome is whether or not those immediate needs are being met. But then for a different part of that constituency, I may have a focus of moving them from just relief into rehab and into restoration. In that case, my relief work is simply the bridge that allows me to help that individual come to a stable place so that we can then understand what is actually happening and begin to develop them and restore them.

So, the outcomes would be different depending on what the focus of my organization is. It’s a real issue with the general population and how they perceive things like hunger serving organizations because some organizations are designed specifically to provide immediate relief service. Others are designed to provide that in addition to a continuum approach of service. In some organizations they do both.

So, for a donor or someone who cares, it’s important they understand from the organization what is the end result that we’re trying to achieve so that if I think that feeding 500 individuals has an outcome as a donor that looks different than what the organization is providing, I need to understand why as opposed to make my own assumption as to whether that’s good or bad.

Steven:It seems like a lot of organizations don’t even get that far, right?

Jamie:Correct.

Steven:You know that I’m kind of a retention guy and that’s what Bloomerang is all about. From all the data that I’ve seen on donor loyalty and donor retention, it seems like one of the major things that lapsed donors didn’t get that they wanted was reporting on those outcomes. What do you think is going on here? Why do you think the nonprofits aren’t communicating? Even the output doesn’t seem to be getting out the door, never mind the outcomes. What’s going on here? Why are nonprofits not reporting on these things and communicating that back to the people that support them?

Jamie:Great question. To answer that, I think we have to go a step backwards in your question in that at least all the research that’s been out year to date shows that the number one driver on giving is emotional and value connection to the cause. Also, the number one driver if we put a word around it of why donors stop giving is a word called “indifference.” They either believe the organization didn’t value their relationship, there was no communication, etc.

This plays into then why the donor is not receiving outcomes. So, if the organization isn’t able to become truly donor-centric, as Bloomerang talks about all the time, and really engage mutual value relationships, then it becomes even harder as an organization for me to think about the things that you’re asking, Steven. So, why would I give you information on my impact and your being a part of that equation if I’m still seeing you as an ancillary input to my theory of change or how I create change? So, I have to move from viewing the donor as some side equation into being part and parcel to how we create change. When I do that, then I’m going to prioritize the relationship and ensure that I’m speaking into it.

This is a real disconnect in the field. I’ve interviewed either through phone survey or face to face, we have donor data on over 100,000 donors. A common phrase that I hear in face to face interviews are donors that tell me they feel like they’re two ships passing in the night with the organizations they’re supporting. They love cats. They believe the organization they’re serving loves cats, but somehow they never get on the same boat together. So, they’re leaving not because they don’t love cats anymore, but they have to go and find another place to love cats.

Steven:Yeah. If you care about major gifts, this is a really big problem, right? It seems like as you go up the pyramid, these things become even more and more critical. If someone’s going to write you a big check, these things have to be communicated, right?

Jamie:Absolutely. A donor wants confidence. Once I have emotional value connection, then confidence is the currency that we have to secure that relationship. If I don’t have confidence in outcomes, if I don’t have confidence in leadership and the vision, there’s a great saying in fundraising, the mission gets the donor on the boat, the vision is what keeps them there and vision is all about outcomes. If I can’t show what the destination looks like and we’re somehow approaching in the right vein of the destination and the vision, it becomes very hard, to your point, for any kind of real major gifts work to develop.

Steven:So, how can an organization improve this? They believe everything they’ve heard over the last ten minutes or so. Is it strategic planning? Is it cultural? What are some real tangible things that an organization can do to start turning this whole thing around?

Jamie:Your latter comment, cultural, I can do strategic planning and end up with a very tactically-oriented plan that does nothing to drive vision in the organization. We see it all the time. So, unless I’m willing to take strategic plan to a level of outcomes and instead of just identifying a couple of goals and creating some operational tactics, but rather as an organization to say in the next 36 months, “What are the most critical changes as an organization we have to see realized?” and then build strategic objectives behind that, then I can end up with plans that are just basically glorified business plans.

But to your point about culture, that’s where the change happens. When we begin to change the lens of how we view the organization and how a board develops their governing culture, how we engage the people that we serve, now all of a sudden the relationship matters and the things that we’re doing and we’re seeing make sense and have value in trying to capture and translate.

The other piece of that as well – and this is something that probably I’ve been in this field since the early ’90s or so – in the last, I’d say, ten years, we’ve really seen a change in the field of saying, “Okay, it’s not just data that is captured quantitatively. We also have to pay attention to what’s happening experientially within relationships because that’s where change happens. Now we’re finally getting a lot of understanding in the field that the experiential change may be the only evidence that we have of change.

But if we can capture that, even if that’s in simple narratives, we can begin to demonstrate that to the people who are advocates about what it is that they’re a part of, which is a cultural issue. I have to, as an organization, come to a place of saying that matters. That matters so much that I’m willing to not do something else so that I can invest resources to understand the change that we’re actually creating and how we share that change.

Steven:Right.

Jamie:That is a decision point that a lot of our organizations won’t reach to.

Steven:It’s hard.

Jamie:Very hard.

Steven:I’m glad you mentioned how long you’ve been doing this because one of my last questions for you, I thought, would be is the clock ticking on this? It seems like reporting on outcomes is not going to be something that is optional sometime in the future, right? Stakeholders, donors, they’re becoming more savvy. There’s kind of a magnifying glass on nonprofits whether right or wrong. Do you think that this is going to be optional for very much longer or do you think donors are straight up going to demand to be communicated these kinds of things before they even donate maybe once.

Jamie:Yeah. I would make the argument that it’s not optional now.

Steven:Yeah.

Jamie:There’s such a polarization in the field. That starts with an understanding of donor relationship. We see organizations that are being segmented now and donors that are self-selecting where they can engage relationship and that they can understand the value that’s being created.

When you factor that into each successive generation of donors and volunteers now give to fewer organizations, but they’re giving at the same levels, historically, just to fewer organizations because they’re going deeper in relationship. This is tremendously evidenced by the millennials. We see that in their giving behaviors and their engagement behaviors.

Steven:Yeah.

Jamie:Yes, it’s definitely going to continue to increase, but I would say that it’s not optional at this point. I say that from the perspective of I’ve trained over 25,000 people in this field, worked with lots of individual donors as clients in our private family foundations and foundation work as well as with service providers. That’s the world that I love and it’s where I live.

I would say from that experience to your point that I may get on the boat first emotionally and that is why 90% of giving decisions happen first because of an emotional value connection, but once I’m on the boat, I have to understand value. If I can’t see value, I don’t stay on the boat. I would say we’re there. It’s going to continue to be emphasized more and more, but as a field, I think we’re there. But not everyone would agree with that and that’s okay.

Steven:I agree. Well, Jamie, this was awesome. I really appreciate you hanging out with us and sharing your thoughts. Where can people learn more about you, maybe read some of your writings or blog, newsletter, any of that good stuff you can share?

Jamie:Sure. Easiest is just to go to our website. That’s jdlevyassociates.com. So, just jdlevyassociates.com. They can access lots of information and contact us if they have questions.

Steven:Cool. We’ll link to all that. Thanks, Jamie. This was great.

Jamie:Thank you.

Steven:Go on out there. Start reporting on outcomes. It’s important, right?

Jamie:Sure is.

Steven:All right. Well, thanks for tuning in. Be sure to check out other great Bloomerang TV episodes. There’s another episode with Jamie talking about a whole different topic. Obviously he’s super smart, but we’d love for you to watch more. But hopefully you’ll catch us on a next episode. So, take care. We’ll talk to you again soon.