“Foundations” is an occasional series of informal question-and-answer sessions with employees of The William and Flora Hewlett Foundation to give them an opportunity to explain their work.

Susan Bell, vice president of the Hewlett Foundation, also directs its Philanthropy Program, which works to improve the Foundation’s grantmaking and makes grants to improve philanthropic practice and the effectiveness of nonprofit organizations. A key element of that work is to improve the information available to philanthropists when making decisions about where to give. With the assistance of the consulting firm McKinsey & Company, Hewlett’s Philanthropy Program currently is exploring how to create such a “social marketplace” of information.

Before joining the Foundation, Susan Bell spent more than fourteen years in strategic planning, development, alumni relations, and communications for Northwestern University, the Sierra Club, and Stanford University. At Stanford, she also helped direct the Environmental and Natural Resources Law & Policy Program.

How do philanthropists, large and small, currently make their decisions, since the most helpful information often isn’t available?

Unfortunately, philanthropists who are thoughtful about the changes they’d like to make happen don’t have good tools to guide them. So they make decisions based on word of mouth, gut feel, or where they already have existing affiliations. It’s pretty clear when they come to us for advice that they don’t have an easy way to make sound decisions.

Generally speaking, do they have any ideas about what they would find helpful?

Yes and no. Those that know enough about the kind of information that could be made available would like more. But many haven’t even thought of that. So as we go about building some kind of repository of information about nonprofit organizations, there are two kinds of questions we’re trying to answer: What type and quality of information could be put in it? And, if we build it, will they come?

What do you mean when you say there needs to be a “social marketplace” of information for the philanthropic world?

It’s analogous to the business world, where you have information and people that you can turn to, essentially, to shop. In the business world, access to information lets investors make sound decisions about which enterprises deserve their support. We’d like to see something similar in the world of charitable giving. It would be helpful to people who want to give to know what options exist and what options are best, based on their interests.

But at some point the metaphor breaks down, doesn’t it? In business, you essentially have a widget that you want to invest in. It’s not so simple when you’re trying to solve social problems, as varied as they can be.

Right, a nonprofit’s widgets tend to be people doing good things by trying to make change happen. So philanthropists aren’t investing in products; they’re investing in people doing work. Making the most effective investment presents some incredible difficulties because it’s hard to attribute change to the actions that someone in a nonprofit takes, and it’s hard to compare one kind of change with another to know which one might be having more impact on a problem.

Your choice to give is very values laden. It’s not based on objective information in the same way you might decide to fund a business. It’s based on what interests you as a donor. But that’s also the beauty and excitement of philanthropy. You get to invest in what you really care about by investing in people who are doing good work on that issue.

Still, given two organizations doing the same kind of work, it stands to reason that one might be more effective. And we’d like to create tools to help that one get more support.

Whom do you see this marketplace of information primarily serving? Are we talking about people who give $100 to the United Way, or to wealthy prospective donors who may give tens of thousands of dollars?

We’re in the process right now of working with McKinsey and Company to determine who would be the best audience. It’s probably major individual donors or family foundations more than large professional foundations, where the donor or a person handling his or her finances would be readily able to get the information needed.

But we’re not ruling out smaller donors. Anyone might do an Internet search and welcome landing at a Web site with a helpful tool for decisionmaking.

More specifically, what kind of tool does the Hewlett Philanthropy Program envision creating to help with this?

It’s probably some kind of technology-based application. We don’t know what it looks like yet. But if you take DonorEdge, the great resource site that the Greater Kansas City Community Foundation created, and amplify it, that’s what we’re considering. You as a consumer could go online and be able to see an easy-to-use form with information on a variety of nonprofits that goes beyond financial information to describe a group’s work, what its goals are, and whether it’s reaching them. You’d want to see its strategic plan, how that’s being implemented, and what effect it’s had.
Like DonorEdge, there might also be some consulting services. Most people need help to think through what it is they care about and what they are trying to do before the tool really becomes effective.

How long will it be before this tool is developed, and how will we know we’ve arrived at your goal?

Right now we’re just launching the study of what motivates people to give, if they will use a tool if it’s available, and what kind of information would be available to put into it. We should know in the next few months what the possibilities are and what form the tool should take.

Then we have some decisions to make working with a lot of partners-other funders, other nonprofits already are working on these kinds of tools-to decide where to go next. I’d say in the next year we should have some real progress on the design of something if it looks like it’s feasible and helpful. We’ll either put people together to work on the project, or create something, or both.

Are other foundations interested in this?

The reason Paul [Hewlett Foundation President Paul Brest] focused on this in our most recent annual report is we hope very much to have partners on the funding side. The number of donors interested in funding things in the field of philanthropy unfortunately remains relatively small. But when we have some more detail, we hope to present the idea to other funders and see if they will join us. We’ve had some early interest.

What will the world of giving look like in five or ten years if you succeed?

If we’re successful, there will be more funders of nonprofit organizations who will be making better decisions so more money flows to the higher-performing ones. That might mean that there is some fallout in the marketplace. There might be some nonprofits that are not as strong that don’t make it. But the silver lining of that is that more money would then be focused on the best organizations.