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GuideStar Blog

Taking the Long View on Nonprofit Evaluation

It’s that time of the year when we’re being flooded with phone calls from reporters asking about holiday giving and how donors can spend wisely. Part of this activity is driven by skepticism – donors are increasingly wary of nonprofits and how they spend their money. Many of the calls are motivated by a genuine concern for making a difference and a desire to direct hard earned contributions to where it will do the most good.

Still a third reason for these reporter calls is caused by the nonprofit sector itself. Unfortunately too many nonprofit organizations continue to define themselves in terms of their overhead ratios – a short-sighted approach to evaluation. They promote the so-called overhead ratios on their websites or otherwise publicize ratings they have received from watch dog organizations about overhead ratios. How many mailings have you received this season from organizations promising that none of your contribution will go to overhead? As long as we define nonprofit organizations in terms of expense boxes, we are painting ourselves into this corner.

Here at GuideStar we tend to take the long view about these questions.

Over ten years ago GuideStar led the movement to promote transparency and accountability among the philanthropic sector. Today stakeholders can view the available IRS Form 990s on GuideStar. Nearly 7,500 organizations will earn the prestigious GuideStar Exchange Seal this year signifying their commitment to transparency. Donors expect an organization to freely provide information about their programs and finances and are suspicious when they aren’t readily available.

We urge reporters researching what donors should do before giving to start by looking at the mission of the organization and asking three simple questions:

  1. What do they do?
  2. How do they do it? What are their programs and activities?
  3. And how are they doing? Is the organization having success in achieving its goals?

Currently we have a major test underway with our partners Independent Sector and the BBB/Wise Giving Alliance called Charting Impact. The project is designed to help nonprofits better communicate with the public about how to evaluate nonprofit performance by answering five easy questions:

1. What is your organization aiming to accomplish?

2. What are your strategies for making this happen?

3. What are your organization’s capabilities for doing this?

4. How will your organization know if you are making progress?

5. What have and haven’t you accomplished so far?

The Money For Good study performed last year by Hope Consulting found that donors are very interested in learning about nonprofit organization performance but infrequently actually use data to make decisions. At GuideStar we see that as a challenge to learn more about donor needs and to lead the next wave in making better decisions.

Bob.jpgThe preceding is a guest post by Bob Ottenhoff,  Chief Executive of the Center for Disaster Philanthropy. With an entrepreneurial spirit, strong technology focus, and a quest to make an impact in the world, Bob has the ability to take an organization and lead it into strong performance, sustainability, and industry leadership.

Topics: Impact GuideStar Promoting Transparency