Can Government Play Moneyball?

The Atlantic Monthly‘s annual July/August “Ideas Issue,” which hit newsstands this week, features an article that could help the nascent performance movement go mainstream.

Can Government Play Moneyball?” was written by the high-powered bipartisan duo of Peter Orszag (former budget director under Obama) and John Bridgeland (former director of the Domestic Policy Council under G.W. Bush). It’s a provocative article that is sparking debate—and even some anger—about how little the federal government pays attention to performance and results when it allocates precious taxpayer dollars. Here are some representative quotations:

  • “Based on our rough calculations, less than $1 out of every $100 of government spending is backed by even the most basic evidence that the money is being spent wisely.”
  • “Less than $1 out of every $1,000 that the government spends on health care this year will go toward evaluating whether the other $999-plus actually works.”
  • “Both parties have signed up to reduce non-defense discretionary spending to its lowest level on record…. We should not do this blindly.”

We encourage you to read the article and share it broadly with your networks through Twitter, Facebook, LinkedIn, blogs, e-newsletters, etc. If you disagree with some of the authors’ tough assertions, by all means say so. The point is to get this out as widely as possible and fuel the kind of debate that could lead public and private funders to allocate more resources based on reason and results, rather than tradition or blind faith.

And now, here are some brief updates from around the Leap of Reason community:

  • Dovetailing nicely with the “Moneyball” article, Results for America (RFA) unveiled a simple, user-friendly scorecard, the “Investing in What Works Index,” to track how well federal agencies use data and evidence. RFA started with the Department of Education and Department of Labor, two agencies leading the federal pack. Both Education and Labor scored well for creating special offices, designating senior staff for evaluating results, and making user-friendly data available to the public. But as their overall scores show (23 and 12 out of 35, respectively), there’s plenty of room for improvement. RFA will add additional agencies to the scorecard in the coming months.
  • Former Gates and Walmart Foundation executive Sylvia Mathews Burwell, Obama’s newly confirmed budget director, is already sending strong signals she will expand the use of evidence-based budgeting during her tenure. During her Senate confirmation process, she wrote, “With all federal programs under increasing pressure to maximize benefits to the taxpayers, the extension of an evidence-based approach to more programs and decisions would be in everyone’s interest, and would certainly be a priority for me…. I would work [toward] adopting more evidence-based structures for grant programs, building evaluation agencies, making better use of data within government agencies, and developing tools to better communicate what works.”
  • I commend Guidestar’s Jacob Harold, BBB Wise Giving Alliance’s Art Taylor, and Charity Navigator’s Ken Berger for coming together to condemn the use of “overhead” as a measure of nonprofit performance. In an open letter, they declare, “Focusing on overhead without considering other critical dimensions of a charity’s financial and organizational performance does more damage than good. In fact, many charities should spend more on overhead, [including] investments in training, planning, evaluation, and internal systems….” (Many of you have read or heard my rants on this topic.) I encourage you to sign the pledge to end the Overhead Myth. I have.
  • Hudson Institute scholar and gadfly Bill Schambra offers a different, constructive take on the same topic in “Why Can’t We Get Over Overhead?” He, too, argues that focusing on overhead ratios can cause damage to nonprofits. But he takes sharp-tongued issue with the “metrics mafia” and elitist philanthropic experts who fail to understand the heartfelt reason why citizens embrace overhead ratios: “because it enables us to express skepticism about the role experts should play…. In its most literal sense, the program/overhead distinction claims to enable a donor to steer more dollars directly into program and to bypass the professional intermediation implicit in the overhead figure.” As they embark on their head-driven Overhead Myth campaign, Guidestar, BBB Wise Giving Alliance, and Charity Navigator would be wise to take Bill’s insights to heart.
  • Leap of Reason is now available in Italian. Grazie mille to our friends at the Milan-based Fondazione Lang Italia for taking the initiative to bring the book and its message to Italy’s social sector. Serendipitously, the Italian version came out on the anniversary of my mother’s birthday. I have to believe my late parents (Emma and Tony) and their siblings, who all emigrated to the States at a young age and endured major hardships to give our family the opportunity we now enjoy, are smiling from on high with arms and hands waving wildly!
  • In other news from Europe, we got a great report from the Municipality of Esbjerg, Denmark. Using the unique approach he shared in Working Hard—and Working Well, David Hunter has been helping Esbjerg’s civic leaders bring all social services into a single, integrated system that cuts across categorical funding streams. Lise Willer, who is heading up this work, reports, “Today about 800 citizens are now participating in the [performance-management] system. The rest will follow during this year…. I am very optimistic.” David also has been helping the Danish Board of Social Services strengthen their pilot projects, testing ways to address a wide variety of societal concerns. He is doing so by helping them develop robust theories of change for their projects and advising them how to build performance-management practices into the projects to isolate the testing of model elements from the separate challenges of implementation and replication.
  • Ellen G. Bass, director of the Black Ministerial Alliance of Greater Boston‘s Capacity Tank, wrote to share details of her efforts to spark a performance-management revolution among small and mid-size community-based organizations. “I [have] just helped 15 youth agencies in Boston build their performance-management systems over the last two years, working under David Hunter‘s tutelage,” she wrote. In the words of an independent evaluation, the initiative “achieved transformational results for some of the organizations and dramatic changes in programmatic thinking and action for just about all of them…. There is compelling qualitative evidence that the organizations have become more focused on outcomes and committed to using data to improve them.”
  • Congratulations to donor, educator, and author Laura Arrillaga-Andreessen for going open source! Laura has made all of her research, case studies, and teaching materials available for free on her website. Laura’s gift to the field will make philanthropy educators feel like “a kid in the candy store,” in the words of former Hewlett Foundation CEO Paul Brest. Next up: a MOOC based on Laura’s scholarship and leadership at Stanford’s Center on Philanthropy and Civil Society. We hope this is a harbinger of how innovators will use MOOCs and tools of e-learning to help small and large donors combine their head and heart to give effectively.

Upcoming Events for Raising Performance:

A final note: next month, you’ll see a new name alongside mine on the signature line of this update. It’s about time Lowell Weiss, my friend, colleague, and co-editor of Leap of Reason, gets some much-deserved credit for writing these updates with me. In fact, he probably deserves a Purple Heart for putting up with me in the process!

My best,