Non Profits & Buying Locally – Good For The Community vs Bad For Overhead Ratio

Back in September, Non-Profit Quarterly (NPQ) pointed to a new research study which has found overheard ratio is not a valid measure of organizational effectiveness. In fact, it there is a slight negative correlation between overheard ratio and commonly used measures of efficiency.

“…but our work is the first to approach it using efficiency theory—and we were able to demonstrate the problem using real-world data.”

….“In short,” Coupet says, “this demonstrates that not only is the overhead ratio bad at assessing efficiency, but also that using it to assess efficiency may actively mislead donors. We argue that nonprofit scholars, managers, and donors should move away from concepts and measures of efficiency based on financial ratios, and toward ones that embrace maximizing what nonprofits are able to make and do.”

NPQ says according to the study, overhead ratio is a poor measure of effectiveness because it doesn’t reflect what organizations are doing with their resources or what they “are accomplishing with their non-overhead spending.”

In other words, like I have written so often before, the value of what a non-profit does is not reflected by transactional data, economic impact numbers or test scores.

This being said, another part of the article raises the intriguing idea that if a non-profit is supposed to be working for the benefit of their community, shouldn’t they be focusing on buying locally rather at chain stores or wholesale warehouses? If so, the higher cost of buying locally would raise their costs a bit and impact their overhead ratio. But it may be worthwhile to do so.

Should we stop looking for cost savings that benefit our bottom line but lead to purchasing that harms the greater community? In other words, should nonprofits be considering (and be supported to pursue) their own “buy local” policies?

‘Nonprofits should be shouting about how much of their spending happens at locally owned, minority-owned, women-owned, veteran-owned or disabled-owned businesses. There is a multiplier effect in spending locally that shows that for every $100 spent at a locally owned business, $45 of that is re-spent locally, while national chains only spend $14 of that sale locally.’

This is an intriguing idea that has this author (a nonprofit executive who manages purchasing) feeling the financial pinch of a cogent ethical argument: If buying local supports healthy communities, and the mission and values of my organizations are tied to relevant healthy community outcomes, why am I doing my shopping at big box (including online) retailers?

This broadens the scope of what it means to be a non-profit in service to the community. Touting how much is being spent at locally owned business won’t necessarily smother the use of overhead ratio as a standard, but it has the potential to blunt the ratio’s use in an argument of a non-profit’s worthiness.

Are You Persistent or Consistent In Your Pursuit of Excellence?

Seth Godin made a post earlier this week comparing Persistence with Consistent wherein he starts with the statement “Persistence is sort of annoying.”

He goes on to talk about the way in which consistent is the desirable opposite side of the coin,

Consistent with your statements, consistent in the content you create, consistent in the way you chip away at the problem you’re seeking to solve.

Persistence can be selfish, but consistency is generous.

And the best thing is that you only have to make the choice to be consistent once. After that, it’s simply a matter of keeping your promise.

In this context,  persistence seems to be about performance of a specific action whereas consistent is policy. In this sense persistence is approaching a challenge in the same way until it is worn down to the point you can pass. Whereas consistent is more about dedication to finding a way past that obstruction.

While both approaches never falter in achieving a singular goal, the latter entertains options regarding the methods by which this can be accomplished. In fact, consistent may be better equipped to recognize that surmounting the barrier isn’t the goal but rather getting to the place beyond the barrier and therefore there may be no reason to engage with this particular barrier at all.

What actually drew my attention to Godin’s post was that last line about keeping a promise. Working in the non-profit arts sector is often such a struggle that we feel like we can only survive with dogged persistence. Perhaps what is really needed is a focus on consistency.

If our promise to the community we serve is to provide a certain experience, a persistent approach may keep you locked into executing an approach and methods which have decreasing relevance. A determination to offer a consistently valuable experience can lead you to place more importance on needs of those you intend to serve rather place importance on the methods by which you accomplish it.

Think about it this way. If you want to keep a promise to provide excellent customer service do you do the same thing today as you did five years ago? Do you use the same approach for small groups as large? Kids as for elderly? Film audiences as for Broadway musical audiences? 2500 seat theater as for 150 seat theater?

Sure you will still make bad choices, but a consistent approach to great customer service is likely better able to take the differences of time, place, environment and expectations into account than a persistent approach.

If you are like me, Emerson’s line, “a foolish consistency is the hobgoblin of little minds,” might have come to mind when you first saw the term. In that context consistency has a negative connotation. After reading and pondering Godin’s post I wondered if it might have been better said as “a foolish persistence.” Though I learn toward consistency is a better word choice.

It should also be noted, Emerson never mentions what the characteristics of wise or non-foolish consistency are. Consistency is not necessarily negative in and of itself. Persistence isn’t either, but it does have implications of a single-mindedness that can quickly become problematic.

You may have noticed I didn’t make definitive claims about persistent being one thing and consistent being another. Ultimately, of course it isn’t about what word you use as much as what practice you embody.

Which Came First, Creativity or Dishonesty?

With today being Election Day you may be thinking about the need to keep dishonest and problematic people out of office…or at least keeping the more dishonest and problematic people out of office.

Creative and arts oriented people may see their vocation/avocation as a relatively virtuous one compared with that of politicians and other pursuits.

However, four years ago The Conversation wrote about how creativity and dishonesty can have a pretty close association. In some cases, it is almost a chicken and egg relationship as some studies have shown feeling entitled to special treatment can actually boost creativity.

They cite the famous story about the development of Post-It notes as an example of successful dishonesty:

Seeing potential value in the product, Fry reintroduced it to his superiors. They panned the idea, and ordered that he cease working on the project.

Nonetheless, Fry defied those orders and continued with the project. He built a machine to produce the Post-it notes, distributing the prototypes to 3M’s secretaries, who loved them. Fry ignored his managers’ requests, used company property without permission, and bypassed the established protocols of the company – all to pursue his idea.

The author of the article, Lynne Vincent, says that her research has shown that people who aren’t objectively creative, but think they are can develop a sense of entitlement based on the feeling that their ideas are worthy of notice, rule bending, and reward.

As I suggested earlier, what can be somewhat amusing is that dishonesty can actually result in creativity,

The irony is that these negative behaviors may spur more creativity. Francesca Gino and Scott Wiltermuth, a professor at USC, found that being dishonest can actually promote creativity. In this study, participants who cheated on a math and logic task by looking at the answers performed better on a subsequent creativity task than participants who did not cheat. When someone is dishonest, it often requires he or she to break a set of rules; yet this rule-breaking may promote creativity because it allows people to flout convention and expectations

Of course, if you have worked for any length of time in a creative field you know that the willingness to break convention and move counter to expectations is a hallmark of creativity. There can be a fine line, however, between coloring outside the lines and crossing the line where your actions deplete the value of something for others.

More Augmented Reality ARt Than You Know

Last month Mural Arts Philadelphia unveiled their first augmented reality mural,  “Dreams, Diaspora, and Destiny.”

Just like with my post last week about actors being  preserved digitally for eternity, I wondered about the implications of this technology.

While the physical mural has permanence, there is a lot that can be done with augmented reality to either enhance or degrade the experience of any work of art or physical location without the permission or awareness of creators/owners/caretakers.

But beyond that, I thought the capacity to do this sort of thing was pretty cool. In the process of trying to find additional video depicting the augmented reality experience of the Philadelphia mural (I never did) I came across a number of similar projects and discovered the concept wasn’t as new as I thought it was.  Just the same, the potential is wide open.

By the way, lest you think the title of this post was mistyped, the term being used is ARt emphasizing A(ugmented)R(eality).  (Though I suppose there is some redundancy in the title).

There is even an app that helps you paint murals on surfaces with the use of your phone, apparently the higher tech version of overhead projection. (I think your arms would be less tired using an overhead projector.)

This is one of my favorite uses among those I found:

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