Getting Something for Nothing

Sometimes relatively insignificant measures can assume an absurdly disproportionate importance.

For decades U.S. News and World Reports has been ranking the country’s top universities and colleges. These rankings have taken on great importance to college administrators, who routinely crow about moving up in the lists and who stay awake at night worrying about dropping down a notch or two. One of the qualities the magazine measures in compiling these lists is “selectivity” – that is, how hard it is for high school seniors to get admitted. The more selective the college, the better. And one of the dominant methods by which U.S. News and World Reports calculates selectivity is tracking the percentage of total applicants who are admitted.

Consequently, one of the easiest ways for schools to move up in the rankings is to do whatever they can to attract more applicants. Having more applicants lowers the percentage of acceptances and makes the school appear to be more selective, which in turn attracts a greater number of (status-seeking) applicants the next year, which reduces the percentage of those accepted once again, all of which which raises the institution yet higher in the rankings. So a single, easily manipulated measure affects an important (if deeply flawed) ranking system, which then feeds back to influence that measure and the ranking system still further.

Manipulation of these rankings came to mind when a report recently hit the internet about how a remarkably high percentage of nonprofits, including those raising lots and lots of money, report spending nothing – zero! – on fundraising expenses on their IRS 990 tax forms. Continue reading

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Why Mergers Make Sense… On Occasion

With funding cuts and rising demand for services, nonprofits are in a bind. One reaction – which sometimes makes sense, but often doesn’t – is to consider merging with another organization. After all, if the combined organizations paid only one CEO instead of two, and one CFO instead of two, and if they merged their back shop operations, there would presumably be efficiencies.

Funders love encouraging mergers, partly to improve these efficiencies, partly to avoid confusion in the community about who is providing which service, partly to cull the weaker nonprofits, and partly, I assume, so they have fewer potential grantees to choose between. And grantees, at the very least, have to pay lip service to what their funders are saying. But do nonprofit mergers really make sense? It depends. Continue reading

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Front Seat, Back Seat

A few weeks ago I was in California on business, and my last evening there I visited the home of my high school friend Dori, now an English professor at a major university. Dori started telling her 12-year-old daughter about our adventures nearly forty years ago sharing a bicycle built for two. “It was so fun!” Dori said. “It was totally terrifying!” I added.

Our experience, you see, depended on where we sat. Continue reading

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Learning From Warren

I am pleased to discover that I have a few things in common with Warren Buffett.

(Unfortunately,  being fabulously wealthy is not one of them.)

Like Warren, I’m not one for formalities, and I’m known to appreciate a bargain. So I got a kick out of hearing the details of his 2006 marriage to his wife Astrid. They had a simple ceremony with immediate family at the home of Warren’s daughter Susie. Then the family celebrated with a meal at the Omaha Bonefish Grill, where Warren made a point of ordering off the Seniors Menu.

Truly, that’s the kind of wedding reception I could get behind. Why waste money, even if you’re one of the richest men in the world?

I also find that Warren and I agree about the inefficiencies inherent in creating a perpetual charitable foundation. Continue reading

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