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The Robin Hood Rules for Smart Giving

The Robin Hood Rules for Smart Giving

Michael M. Weinstein
Ralph M. Bradburd
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  • Book Info
    The Robin Hood Rules for Smart Giving
    Book Description:

    The Robin Hood Foundation is a charitable organization focused on alleviating poverty in New York City. Michael M. Weinstein is the foundation's senior vice president. In that role he developed its metrics-based approach, called "relentless monetization," to ensure that the money the foundation receives and grants is used most effectively. Ralph M. Bradburd has served as long-time consultant to Robin Hood on matters of metrics.

    In this book Weinstein and Bradburd show how to implement the Robin Hood approach and explain how any nonprofit organizations or philanthropic donor can use it to achieve the greatest benefit from every philanthropic dollar. Drawing on their extensive knowledge, the authors devote specific chapters to the difficulties most frequently encountered by donors trying to measure the benefits of their initiatives.. This book provides straightforward, targeted advice for funding "smart" nonprofit programs.

    eISBN: 978-0-231-53524-3
    Subjects: Business, Management & Organizational Behavior

Table of Contents

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  1. Front Matter
    (pp. I-IV)
  2. Table of Contents
    (pp. V-VI)
    (pp. VII-XII)
  4. 1 Overview of Relentless Monetization
    (pp. 1-16)

    You’re a philanthropist whose mission is to fight poverty. You’re choosing between two different ways to allocate your charity. One option would have you donate $10 million to teach carpentry to female high school dropouts.A second option would have you donate $10 million to middle schools that serve disadvantaged children to expand their onsite psychological services.Which option do you choose?

    This thought experiment triggers two questions. How can you, as a philanthropist, make the right choice? And what exactly does “right” mean in this context?

    This book lays out a concise framework for answering these questions, a framework by which...

  5. 2 Translating Mission Into Mission-Relevant Outcomes
    (pp. 17-29)

    In this chapter we trace the first four (of seven) steps by which philanthropist put Relentless Monetization (RM) into action.

    Step 1: Adopt a mission statement.

    An environmentalist adopts the mission of protecting the environment. A philanthropist adopts the mission of fighting poverty. A human rights activist adopts the mission of enforcing human rights.

    Step 2: Translate the mission statement into broad goals.

    The environmentalist sets the goal of saving at-risk species of plants and animals from extinction. The poverty fighter sets the goal of raising the living standards of low wage workers. And the human rights activist sets the...

  6. 3 Basics of Monetizing Outcomes
    (pp. 30-43)

    This chapter examines in more detail the principles behind monetizing individual outcomes, the analytical springboard for our concept of smart philanthropy. In subsequent chapters, we take up the challenges posed by estimating counterfactual outcomes (those that would have occurred even without the help of the funder), discounting (the balancing of future vs. immediate outcomes) and monetizing entire grants, which, as flagged in chapter 1, we treat as a combination of outcomes.

    We write these chapters from the point of view of a funder. But the analysis would be the same were this chapter written from the vantage point of nonprofits,...

  7. 4 Those Pesky Counterfactuals
    (pp. 44-52)

    Until now, we’ve elided the biggest obstacle to smart monetization: taking proper account of “counterfactual” information, an essential ingredient for measuring the impact of a philanthropic intervention. We now correct that omission.

    Estimating counterfactual figures is a messy, complicated business, the most challenging part of metrics by far. But if funders are to do their job of estimating impacts on a cause-and-effect basis, there’s no getting around the problem. Anything else is burying one’s proverbial head deep into the sand. The funder’s technique need not be scientifically elegant. Nor, as we’ll show, need the estimates cost a crippling amount in...

  8. 5 The Meaning of Present Discounted Values
    (pp. 53-56)

    Because the notion of present discounted values emerges at several junctures in this book, this chapter examines the idea in more detail.

    Some initiatives yield all their benefits at about the same time that the funder initially spends money. Emergency food is an example, assuming that the nutrition from the meal does not yield a lasting health benefit. Most initiatives, however, generate benefits over extended periods of time, even decades. Job training and early childhood programs come to mind. To choose among long-acting initiatives, funders need a framework that takes systematic account of differences in the timing of benefits and...

  9. 6 Examples of Metrics by Outcome
    (pp. 57-66)

    In this chapter, we set out the equations by which we assign mission-relevant value to individual outcomes generated by a funder’s grant. What is the monetary value of helping ex-offenders graduate high school? What is the monetary value of training ex-offenders to work as drug-abuse counselors? We leave to chapter 7 the discussion of monetizing entire grants, which we take to be a combination of outcomes: Example: what is the monetary value of a grant that both helps ex-offenders earn their high school diplomas and then trains them to work as substance abuse counselors? ¹

    Before we get started, we...

  10. 7 Examples of Metrics by Grant: Multi-Outcome Interventions
    (pp. 67-75)

    Chapter 6 assigned a single monetary value to individual outcomes. This chapter extends the framework by monetizing combinations of outcomes, the type of combinations that grants routinely generate. That’s why we call this chapter metrics by grant.¹

    Let’s review the distinction between a grant that generates a single outcome and a grant that generates multiple outcomes, which is frequent in practice. Recall the example from chapter 1 of a grant to a middle school that covers the cost of providing psychological services for the purpose of helping more students earn their high school diplomas. So far, this is a single-outcome...

  11. 8 Completing the Analytical Traverse: Small-Bore Benefit/Cost Analysis
    (pp. 76-85)

    Over the past several chapters, we described the all-important process of monetizing interventions. Now we complete the analytical traverse that we call Relentless Monetization (RM), showing how to use the estimates to make smart philanthropic decisions.

    Specifically, this chapter explores the use of benefit/cost ratios to rank the relative impacts of philanthropic interventions—what we call small-bore benefit/cost analysis. The ratios capture the collective mission-related benefit that individual grants create per dollar cost to the funder. In the case of Robin Hood, benefit/cost ratios capture the extent to which a particular grant raises the collective living standards of poor New...

  12. 9 Key Generalities: Q&A
    (pp. 86-94)

    The previous chapters demonstrated the ability of Relentless Monetization (RM) to drive funders toward smart, often nonobvious decisions. This chapter draws out key generalities by answering questions often posed by funders, donors, and nonprofits seeking funders and donors.

    1.For funders who choose to practice RM, are benefit/cost ratios the sole basis for making grants?

    No. No. A thousand times no.

    The ratios are useful guides, but they are imprecise. They amount to one of several tools in a funder’s tool kit. Smart funders would no more make grant decisions based solely on the arithmetic of benefit/cost ratios than smart...

  13. 10 Six Purposes
    (pp. 95-98)

    The importance of Relentless Monetization (RM) ranges far beyond ranking of grants. Below we discuss five other purposes.

    First, shared vocabulary for internal deliberations

    Subjecting grant making to the rigor of RM changes the nature of grant-making discussions. Rather than loose talk about inspirational executive directors or creative missions, staff relies on a shared vocabulary that centers on outcomes-based evidence. A program officer who proposes making a grant for grantee AAA knows that the conversation starts, though not finishes, with a recitation of its likely quantitative impact on mission-related benefits. Internal politics, favoritism, habit, difficult personalities never disappear altogether, but...

  14. 11 Prominent Metrics Systems
    (pp. 99-109)

    This chapter draws brief comparisons between several prominent alternative systems of metrics and Relentless Monetization (RM). We do not make fine-grained comparisons. Instead, we rivet on four large-picture questions.

    First, do the metrics systems tackle the hard problem of measuring mission-relevantoutcomes, or, do they, instead, track simpler to measureinputfocused variables such as costs or numbers of participants?

    Take the mission-related value of job training programs to a funder whose mission is fighting poverty. To do metrics right, as we’ve described, the funder needs to measure the impact of training on future earnings by tracking actual future earnings...

  15. 12 Reflections on Risk
    (pp. 110-127)

    In our discussion of Relentless Monetization (RM), we have so far taken no explicit account of risk, the fact that philanthropists cannot know for sure the impact of their interventions. This chapter makes amends with the following broad points.

    Funders, to best fulfill their missions, need to take account of the risks that their decisions impose on the intended beneficiaries. We label this obligation the “good steward” responsibility.

    Funders when addressing issues of risk might well resort to simple rules of thumb. We offer our own to guide decisions about small, modestly risky grants.

    For large grants that impose sizeable...

  16. 13 Conclusion
    (pp. 128-130)

    We hold the following propositions to be self-evident:

    1. Fulfilling philanthropic missions matters.

    2. Philanthropic resources are limited.

    3. Maximizing philanthropic success requires comparing the value of one philanthropic option to that of others.

    4. The benefits produced by philanthropic initiatives come in many different forms; therefore, there is no natural measuring rod that can be used to compare the value of one philanthropic option against all others.

    We hold the following proposition to be true although not self-evident:

    5. A strategy that we’ve dubbed Relentless Monetization (RM) provides a straightforward and transparent way to compare the value of one...

  17. Appendix A: Counterfactual Complications: Shared Responsibility
    (pp. 131-133)
  18. Appendix B: Choices Between More and Less Risky Initiatives
    (pp. 134-142)
  19. Appendix C: Calculating a Program’s Expected Well-being Impact
    (pp. 143-146)
  20. NOTES
    (pp. 147-152)
  21. INDEX
    (pp. 153-164)