A little book has a big impact on how to run a charity

Mario Morino wrote a little book that's had a big effect – urging nonprofit groups to prove that they're really doing what they say they're doing.

Difference Maker

Plenty of people have endured attending an unproductive meeting. After he sat through three of them in a single day, philanthropist Mario Morino decided to write a book.

"It was late 2009.... In each meeting, I kept getting a little more aggravated," recalls Mr. Morino in his office in Rocky River, Ohio, outside Cleveland. At each, a board was discussing how it would assess its nonprofit group. The problem? "There wasn't a nonprofit executive in the room," he says.

Morino, who owned his own software development business in the 1980s before setting up the Morino Institute and later Venture Philanthropy Partners, went home and fired off one e-mail, then another. After a fourth, he had what became the core of his book, "Leap of Reason," which has more than 40,000 copies in circulation so far – an impressive number for a book about the rarefied topic of nonprofit management.

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"It has hit a nerve," Morino says. "It has hit a really interesting nerve."

While the subject of "Leap of Reason" is "managing to outcomes" – a topic that sounds almost as exciting as "101 uses for duct tape" – the book is, in fact, a bracing call to arms. In an era of tight funding, Morino argues, nonprofits – such as charities and service organizations promoting the public good – need to prove that they are doing what they say they are doing.

Nonprofit groups "really have to go through a transformation, whether we want to or not, if we want to have a society left," says Morino, whose Venture Philanthropy Partners invests in groups in the Washington, D.C., area that serve low-income children. (Groups can't apply to VPP for grants; VPP seeks out groups it judges to be most effective.)

While he's not a household name like some other wealthy philanthropists, Morino has reportedly given away $40 million of his own money. And he's an effective agent of social change, say nonprofit leaders.

"He's been almost a kind of prophet in the field," says Billy Shore, chief executive officer of Share Our Strength, which is working to end childhood hunger in the United States by 2015.

Morino didn't just make a lot of money in business, start a nonprofit, and write a book about it, Mr. Shore says. "He worked for years and years … and then wrote about it. He brings a ton of credibility."

Morino sits on the board of the Lawrence School in Cleveland, which helps children with learning difficulties. The headmaster, Lou Salza, calls Morino his "intellectual godfather."

"This is high-stakes, high-risk education," Mr. Salza says. "Many of these students aren't going to get another chance. We need to know that what we're doing works."

To that end, the school performs a weekly checkup on each student, which parents can track on the Web. Teachers use the data to make sure each child is making progress, and adjust the curriculum as needed.

Salza, who took over in 2007, began implementing the kind of data-driven changes Morino advocates in 2008. "Mario's been enormously important in the transformation of our school from a good school to a much better school," he says. "When he sees that people are really trying to get this right and trying to do better on behalf of the children they serve, he pulls out all the stops to help them."

Morino's book is free and self-published. He and his staff ship boxes of it weekly.

"Leap of Reason" "has been an important book in the life of our school," Salza says. "[Morino will] say very modestly, 'Well, it's not that great a book, but the timing is right.' But I think it is a great book because he timed it right – and the message is right."

In his book, Morino decries dysfunctional boards, nonprofit groups that won't ask tough questions, and nonprofits that substitute feel-good anecdotes for hard data. "When you get down to it, money doesn't go to the best organizations. It never has," Morino says.

He wants to change that – immediately.

Nonprofit groups are facing shrinking budgets and growing needs. There's no time for incremental change, he says.

Morino is "absolutely right on the money when it comes to the changing realities of not-for-profit work," says Bob Templin, president of Northern Virginia Community College in Annandale, Va., who worked with Morino at VPP from 1999 to 2002 and now sits on its board. "The few that will thrive in this environment will be the ones that deliver significantly better outcomes for more people for less cost."

The book bluntly assesses charitable groups. In the opening, Morino quotes Yogi Berra: "We're lost, but we're making good time."

It isn't aimed, however, at small nonprofits or civic-minded individuals, Morino says. "They represent the strongest core of philanthropy in the US. You don't want to touch that." He likens these folks to his long-ago neighbors in Cleveland, where, "if somebody's building a garage, everyone helped build the garage."

Of the 1.5 million nonprofit groups in the US, 40,000 have budgets of more than $1 million, according to Bridgespan. They are the targets of "Leap of Reason."

When they argue they can't afford data-tracking, Morino counters: "Thinking through what you're doing does not cost money."

Patrick Lawler, CEO of Youth Villages, which serves 18,000 children who are either in foster homes or the juvenile justice system in 12 states, says that when it began tracking data in the late 1980s, it found "our hypothesis was terribly incorrect."

Youth Villages had thought that removing children from troubled family situations and letting them experience a stable home was the solution. Instead, he says, it had little impact.

The nonprofit had to start over, Mr. Lawler says. "Instead of raising other people's children, we had to focus on helping those families," he says. Now the nonprofit tries to keep children in their own homes whenever possible. Today, 80 percent of the children Youth Villages serves are at home, in school, and not in trouble with the law – up from 50 percent before it started tracking data, Lawler says.

"Are we doing what we say we're going to do?" That's the question any nonprofit group should answer honestly, Morino says.

"A lot of people are committed, but I put him in the 1 percent category," says Steve Denning, chairman of General Atlantic, a private equity investment company based in New York, who has known Morino since 1982 and helped finance his company. "He had that heart of gold even in the business world."

Morino's focus on children comes from his own childhood, he says. "I grew up in an area of Cleveland that ... was blue-collar, lower-income, mixed. We would have been qualified as technically poor. We had no idea we were poor. We had no idea we lived in a rough neighborhood," says Morino, who acknowledges that not all his friends from his old neighborhood have succeeded. Some are, in fact, incarcerated.

"I had great teachers," he says. "I had enough encouragement at every step of the way. There was nothing holding me back."

Those support structures are gone today.

"If you go back to the same neighborhood – not to demean anyone there – that kid won't have a thousandth of the chance I had," he says. "It doesn't mean that boy or girl won't succeed; it means the odds are stacked against them."

Both the middle and upper classes in America are naive about how grueling it is to be poor, Morino says. "I've seen families who drop their kids off at 6 a.m. and pick them up at 9 p.m. because both parents are working two jobs and taking buses to get there. And some [jerk] in a comfortable suburb is complaining that they're not working hard enough."

"It's been amazing to me: When we first got started, there wasn't a lot of talk about outcomes. Now it's beginning to build," says Carol Thompson Cole, president and CEO of VPP, who helped collaborate on and publish "Leap of Reason." "To see what Mario's leadership has built over 10 years – there's not much like it in the country."

VPP itself has helped 15,000 children over the past decade – and it has the numbers to prove it, Ms. Thompson Cole adds.

Learn more / get involved

• Learn more about “Leap of Reason,” Mario Morino’s book on effectively managing charities and other nonprofit groups, at www.leapofreason.org. The book is available there free of charge as a PDF file or as a digital book. Paper copies are available through Amazon.com for a small shipping and handling fee. For more information, e-mail info@leapofreason.org.

• The Bridgespan Group is a nonprofit adviser and resource for organizations and philanthropists. Its services include strategy consulting, executive search, leadership development, and philanthropy advising. 

• The Chronicle of Philanthropy provides news and information helpful to tax-exempt organizations in health, education, religion, the arts, social services, and other fields. It also offers lists of grants, fundraising ideas, statistics, reports, and a calendar of events.

• Charity Navigator scours thousands of documents to assess the financial health, transparency, and effectiveness of more than 5,000 of the best-known US charities.