GuideStar Blog

One of my greatest frustrations in trying to build a sustainable nonprofit organization has been the difficulty in finding capital. GuideStar has been blessed with a consortium of foundations that have generously invested tens of millions of dollars in our early years. But as we have grown and reached mid-life in our maturation, foundation dollars for operations have been harder to raise. Several years ago we took on over $2 million in PRI’s as a way to bring in stable and reliable dollars that we could invest in product development, sales and marketing in order to continue our growth at a fast pace. We’re pleased to say that we ended 2010 with 90 percent of our operations covered by sales of products and services and we’re now to a point that increasingly we are relying on foundations for special projects and opportunities, but not support for direct operations. In general we’re now starting to see some attention given to the lack of nonprofit capital and there are a number of interesting developments going on in the nonprofit sector (a subject of another blog). I’ve often thought, though, that with easier access to capital, GuideStar could have grown much faster.

It’s time for executives of high performing organizations to begin thinking about what the new economic normal will mean for them. Too many nonprofits are operating off of business models created in the 1960’s. Those models had several components that are no longer sustainable. For starters, after non-stop growth in total donations, the nonprofit sector experienced a significant dip in 2009 (Giving USA) and I wouldn’t be surprised if we saw a further decline in 2010. At the very least, growth will be much slower in the years ahead than it has been in previous decades. At the same time, investment income has declined to historically low levels affecting foundation endowments and organizational endowments alike. Finally, there is the nonprofit sector’s traditional dependence on government grants and contracts, for nearly a third of total revenue. This is a source already in decline and likely to plummet before it stabilizes.

That was the observation from a speech I heard this week by Dr. Sherry Cooper, Executive Vice-President and Chief Economist, BMO Financial Group.

It is heart-wrenching to watch the scenes of utter disaster on television. It is a personal crisis on an epic scale and clearly there is a need for housing, food and clothing assistance. And many of us want to do something, but what? Most reports I’ve read say the Japanese government nor Japanese NGOs are asking for help. And Japan is probably one of the best organized and well prepared countries in the world – in fact they have always been very generous in supplying assistance to other natural disasters in other countries.

I’m excited to report about GuideStar’s acquisition of two innovative nonprofit organizations. Read more about the acquisition here in our press release that was published today.

Excerpt from How to Connect with Donors and Double the Money You Raise

We’ve learned a lot over the last month about the power of social media to bring down tyrants and corrupt governments in Tunisia and Egypt and mobilize people in Yemen, Libya, Bahrain, Iraq, Algeria, Morocco, Jordan and Oman. It’s been thrilling to watch how Facebook and Twitter, in particular, have helped to encourage thousands of people to take action.

We are on a regular basis updating information on our web site about giving to the Japanese earthquake relief effort . Thousands have died, thousands more are missing, and the death toll continues to rise. The race to find survivors is accompanied by the urgent need to prevent meltdown at nuclear power plants damaged by the natural disasters.

The IRS is preparing to release the first Nonfiler Revocation List, a compilation of organizations whose tax exemptions have been revoked because they were required to file an annual information return (Form 990, 990-N, 990-EZ, or 990-PF) but failed to do so for three consecutive years. The revocations are automatic and mandatory under the Pension Protection Act of 2006.

I went back and re-read the book The Starfish and the Spider by Ori Brafman and Rod A. Beckstrom this week. It’s a great read for anyone who runs an organization, particularly a membership organization, or works primarily in the internet world. Since the book was written, social networks have soared in popularity, helping to topple dictatorships and transforming politics.

We’re thrilled to announce that nonprofit organization Office of Letters and Light is the winner of the prestigious GuideStar-Kimbia Nonprofit Giveaway Contest. As contest winner, Office of Letters and Light (OLL) will receive a $5,000 donation, provided by KIMBIA, which provides nonprofits and other organizations with the most powerful and flexible online fundraising and event management tools. The contest winner was determined by the total number of new reviews submitted on the GuideStar and GreatNonprofits websites during the month of February.

On February 24, 2011, the IRS announced the impending publication of the Nonfiler Revocation List. The list will identify nonprofits whose tax-exempt status has been revoked because they were required to file an annual information return (Form 990, 990-N, 990-EZ, or 990-PF) but failed to do so for three consecutive years. Revocation for failure to file is mandatory under the Pension Protection Act of 2006; the list that will soon be published represents the first time this provision of the law has been implemented.

Charities tweeted. They e-mailed. They issued news releases.

It seems that over the past several years, not a month has gone by without a new tool introduced to assist nonprofits' fundraising efforts. From online fundraising portals and text messaging to streaming video and social media, the number of tools is literally growing faster than our ability to leverage them. In addition to "traditional" development tools such as direct mail, in-person asks, and mass market media, a whole set of apparatus that was barely known even 15 years ago—e-mail, Web sites, and customer-relationship management platforms—has become not only accepted but required aspects of the development portfolio.