December 11, 2008 | Read Time: 5 minutes
As a grant maker — and a former charity watchdog — I am often asked to pick the best organization in the United States.
Making such a pick is pretty easy: I usually choose Direct Relief International, in Santa Barbara. The organization, which provides medical assistance and supplies to needy people in developing countries, uses smart approaches and is both efficient and effective. The group’s work after the Asian tsunamis in 2004 saved many people’s lives. Had Hurricane Katrina happened on foreign soil, Direct Relief International might have led the relief efforts, and the victims of the storm might have avoided many of the bureaucratic failures that caused so much suffering.
What makes Direct Relief so great? It does not do anything revolutionary or that no else one has thought of. It simply helps poor people get health care. It does not have a star-studded board, or celebrity spokesmen, or a budget comparable to the largest groups in the nonprofit world.
Its success can be traced directly to Thomas Tighe, the organization’s leader.
When he joined Direct Relief in 2000, fresh from helping run the Peace Corps, Direct Relief was a competent and ethical organization, yet fairly mundane in its accomplishments. Under Mr. Tighe’s leadership, it has become an organization that every group — no matter what its mission is — should emulate.
Mr. Tighe is better than his peers at doing the things charities need to do to succeed at the highest level: setting audacious goals, raising money, solving problems, inspiring people, and running a tight ship.
An unassuming and preposterously modest man who usually wears jeans to the office, he sees solutions to problems before others have even noticed the problems.
In the corporate world, successful leaders are rewarded handsomely and write pretentious tomes detailing their specific management strategy (“Get to work early. Stay late.”). But I’ve found that it is in the nonprofit world that great leaders, like Mr. Tighe, are usually the difference between success and failure for their organizations.
The lure of big salaries and big glamour undeniably pulls a lot of talent to the for-profit world, but when exceptional managers are able to resist the financial temptations and ply their trade at nonprofit groups, their presence alone leads not just to nice dividends, but also a world made better.
Nonprofit groups are usually leaner than their for-profit peers, and this makes it extremely unlikely that they will survive with an ineffective leader. No one is there to pick up the slack. Good nonprofit organizations are almost always the byproduct of good leaders. As a donor, I would always prefer to invest in an organization with average programs and an amazing leader than an organization with amazing programs and average leadership.
With leadership an integral component of any organization’s success, why does it matter so much at charitable organizations?
Here are a few reasons:
- Since virtually no barriers to entry exist in the nonprofit world (pretty much everyone who applies gets tax-exempt status), and it takes next to nothing to prove that a charity deserves to continue to exist, America has far too many nonprofit groups. In the for-profit world, lousy organizations with lousy leaders close their doors. In the nonprofit world, that happens very rarely. As a result, charities are run by an inordinate number of people who might be good soldiers, but should not be generals. Hence, the difference between good leaders and bad ones is highly magnified.
- The product being created by charities is usually indistinguishable from that of its competitors. If a business builds a better mousetrap, consumer dollars usually follow. With charities, what they provide to the customer — for donors, a tax deduction; for recipients, basic human services — varies little from one group to another. The difference between success and failure comes down not to product differentiation, but to convincing others that your indistinguishable product is better. This is all about leadership.
- Most people who work at nonprofit organizations are underpaid. They take their jobs because they seek the psychic compensation of making the world a better place. Since there is no profit-sharing and bonuses are rare, leaders must find ways to motivate their employees without added compensation. This is done by inspiring people and making them believe passionately in a cause, not a paycheck. Visionary leaders are able to best harness their most precious resource — their employees and volunteers — through inspiration and morale-building.
So, if good nonprofit groups are direct byproducts of their leaders, and the person in charge is actually a more reliable predictor of success than any other factor, that means donors need to stop letting their hearts, not their heads, dictate where they give.
Picking the best leaders, not the best causes, is the way to get the most from a charitable donation. Ideas and causes are a dime a dozen, but good leaders are scarce. Instead of being swayed by a charity’s glossy annual report with pictures of the starving children a nonprofit group seeks to serve, ask to see the résumés of those who drive that organization’s work.
And when an effective leader leaves the charity you support, donors must consider abandoning the group financially. This is hard for donors who have become invested in the charity’s work. But if donors really want to make a difference, they have no choice.
Trent Stamp is executive director of the Eisner Foundation, in Los Angeles. He was previously the chief executive of Charity Navigator, a watchdog group.
