Social change work is hard and frustrating and wonderful and terrible; it is also, at times, funny, quirky and just plain fascinating. With this blog we hope to capture all that goes into what we do at Capital Good Fund, and we invite you to join the conversation!

Friday, February 27, 2015

Why We Need a Rating and Review System for Nonprofit Services

Information Asymmetry
When you want to try a new restaurant, you can use a service like Google, Yelp, or Urban Spoon to read reviews, check hours and menus, and decide on a place to eat. Thanks to online rating services you’ll be able to make an informed decision about where to enjoy a nice meal.

Now imagine you are struggling to manage your debt and want to sign up for financial counseling. You Google 'financial counseling Rhode Island' and a number of options pop up: Money Management International, Rhode Island Housing, Consumer Credit Counseling Services, etc. A little more digging might direct you to Capital Good Fund, Amos House, or one of the handful of other nonprofit financial coaching organizations in the state. What you won't find, however, is what our dinner goers were seeking: ratings, reviews, and comparisons.

In almost any other interaction in the economy--going to the movies, finding a contractor, buying a car, shopping for clothes--the customer can arm herself with knowledge and find the best deal or service. In contrast, for those seeking nonprofit services this concept is almost nonexistent; nonprofits don't compete on price or service, and clients aren't expected to demand much of them. Instead, there is an implicit assumption that people should be grateful that the nonprofit exists; to want more would be rude or ungrateful.

The low-income individual may, in the course of a week, visit a food pantry, financial counselor, welfare office, and job training class, and they will do so without knowing their options. Is there a welfare office with shorter wait times and more knowledgeable staff? What financial counselors get the best ratings? What percentage of the graduates from a job-training program finds employment upon graduation?

Because nonprofits tend not to think of those they serve as customers, they rarely strive to improve customer service. Instead, they focus on outputs--number of people served, volunteers engaged, and funds raised. What's missing is the quality of their offering. Even worse, nonprofits aren't penalized for having poor outcomes for their clients. This is due in part to the lack of mechanisms for rating and reviewing nonprofits. 

If we are to effectively change people's lives, we must be held accountable to them. Absent a Yelp or Rotten Tomatoes for nonprofits, it is hard for the poor to "vote with their feet" by frequenting the organizations with good services and boycott the ineffective ones. Compounding the problem is the fact that funders and boards of directors don't ask for this information, so even if fewer people attend a nonprofit's training program, the ramifications will be minimal.

In short, it is time for us to recognize that nonprofits are businesses too; we have incomes and expenses, and we have customers to whom we are supposed to deliver value. If anything, it is incumbent on us to be more focused on the needs of our clients than, say, a gym. Unfortunately, we in the sector may not change our ways until someone forces our hand. Our boards of directors and funders should be asking these questions, but the best approach would be to empower the consumer; a rating system for nonprofit services would be a great start.

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