Performance Insights: Donors Want Easy Access to Nonprofit Results

I’m excited to share the release of Informed Giving: What Donors Want and How Nonprofits Can Provide It, a report based on research generously funded by the Hewlett Foundation.

We worked with an independent research firm to conduct qualitative and quantitative surveys of more than 200 Fidelity Charitable donors with donor-advised funds to learn more about the types and formats of information they are interested in receiving. This report focuses on the 71 percent of respondents who reported that they regularly or sometimes give to new social causes or nonprofits each year.

This research was conducted to confirm our premises about what engaged donors – those who use information to make decisions and are open to giving to new nonprofits – want in order to make their decisions. Do they care about results? Do they care about whether nonprofits are using best practices to address a specific social issue? Do they care about how one nonprofit is performing relative to its peers? Not surprisingly, the answer was yes to all of these questions.

Excerpted from Root Causes's Informed Giving Report

Excerpted from Root Causes’s Informed Giving Report

Here are some findings that I thought were particularly relevant:

  • Donors want to better understand the social issue being addressed: Of the donors giving regularly or sometimes to new charities/causes, 57 percent actively seek out information about social causes.
  • Donors care about the impact a nonprofit is having: As many as 75 percent of donors use information about the nonprofit’s impact, while 63 percent use information about the social issue the nonprofit addresses.
  • Benchmarking nonprofit performance is important: If information were readily available and accessible, the number of donors using benchmarking information would increase by 47 percent points, followed by the number of donors using information about best practices (44 percent).
  • Donors have an overwhelming preference for using third-party sources: When looking for ratings/ reviews/recommendations, fundraising or overhead costs, and benchmarking data, donors turn to sources like GuideStar and Charity Navigator.
  • Donors are interested in concise formats and comparative data: Donors indicated a strong interest in side-by-side (70 percent) and comparative formats (62 percent) in which nonprofits are compared against key metrics.
Excerpted from Root Cause's Informed Giving Report

Excerpted from Root Cause’s Informed Giving Report

I joined Root Cause with the premise that donors should have access to more rigorous information about the nonprofit sector, similar to that made available to them when investing in public companies. Having worked in financial services, I believed that information should be available about the “industry” (i.e., social issue) that donors care about as well as the nonprofits they are giving to.

We have been providing social issue research and nonprofit assessments for donors and funders to make more informed giving decisions since 2008. And recently we launched Peer Performance Exchanges, in which a cohort of nonprofits working to address a specific issue are provided with an independent assessment and benchmarking against their peers so they better understand their position in the field. We believed that donors and nonprofits alike would benefit from understanding best practices and having access to comparative data within a social issue.

We’ve heard from the nonprofits in the Exchanges about how valuable the benchmarking is, and now this research indicates that donors are interested in it as well. The report also includes important findings for nonprofits about how they can most effectively report their results – from the types of metrics they report, to where they report it, and in what format – all aspects we work on with nonprofits through the Exchanges.

You can read more here about the preferences of engaged donors and action steps donors and nonprofits can take to be more deliberate in their decision making and fundraising based on the research findings.

To learn more about the Peer Performance Exchanges, please contact me at cstanzler@rootcause.org or 617.649.1536. We are currently recruiting new members for the Youth Career Development Exchange. Learn more about the 2013 members here.

*Fidelity Charitable is an independent public charity with the Fidelity® Charitable Gift Fund, a national donor-advised fund program.

Colette Stanzler

Colette Stanzler

The preceding is a cross-post of an article by Colette Stanzler, director of research and assessments at Root Cause. You can read the original post on the Root Cause Blog here. With the research team, Colette hopes to provide the nonprofit sector with more rigorous information through the analysis of programs that result in more resources being allocated to high performers. Colette also leads the Peer Performance Exchanges to provide programs with independent analysis, benchmarking against the field, and the opportunity to take action through peer learning. Colette joined Root Cause in 2006 as a graduate student to launch the Research and Assessments unit. From her experience in the business sector, Colette brings an understanding of how data is used to inform investment decisions and investor expectations of performance. She has more than seven years of experience in product development and internal strategy consulting at financial service firms, including Franklin Templeton, Scudder Weisel Capital, and most recently as a vice president in equity research at Deutsche Bank. Colette is also the Vice Chair of Board of Trustees for the Phoenix Charter Academy Network.

3 responses to “Performance Insights: Donors Want Easy Access to Nonprofit Results

  1. My wife and I are small donors – we give small multiple gifts to mostly local charities. I thought it might be helpful to learn more about some of our local charities, so I looked on the GuideStar website. While it lists the charities, the basic free information in not helpful. While a report can be purchased from Guidestar, doe $125/per nonprofit it is not cost effective for small donors. GuideStar does not even provide a link to the nonprofit’s website. I note the Root Causes publishes a pamphlet about Informed Giving which recommends nonprovide one-page report on the charity’s profile and performance metrics. It seems GuideStar might do more to allow nonprofits to make this type of information available at a more reasonable cost.

  2. I’m sorry you feel that way, Rob. We try very hard to present as much information as possible about a nonprofit, including (it should be noted) a link to the website. Whether that link is available, however, depends on the nonprofit. Check out GuideStar itself, for instance. http://www.guidestar.org/organizations/54-1774039/guidestar-usa.aspx You can clearly see a link to our website, for free. (You don’t even have to register) We did a lot of research (www.guidestar.org/moneyforgood) to find out what donors like you want, and then we completely changed our nonprofit reports to show that information at the top. If we have key pieces of info, there’s a green checkmark. If we don’t, there’s a yellow exclamation point. And we found that the biggest unmet need in the sector is impact–and we now have an impact statement that nonprofits can fill out, as well as partnering with Independent Sector and BBB Wise Giving Alliance on Charting Impact (www.guidestar.org/chartingimpact). All of that info is available for free. We are the only org in the world that has information on every IRS registered single tax-exempt organization in the country, and through our free GuideStar Exchange program (www.guidestar.org/exchange), we entice nonprofits to give us more information so donors like you can find it. Out of the 10 million visitors we have annually to our site, 98% use our information for free. The 2% are looking up many orgs at once and need analysis or verification.

    One thing we can agree on, however, is that Root Cause is great, which is why they are one of our expert partners (http://www.guidestar.org/rxg/give-to-charity/take-action-at-guidestar/index.aspx). :)

    Thanks for starting the dialogue, Rob! I hope you had a great Thanksgiving.

  3. This research was conducted to confirm our premises about what engaged donors – those who use information to make decisions and are open to giving to new nonprofits – want in order to make their decisions.

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