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Three Cups of Tea – Part II


In my last blog post, I talked about the current controversy surrounding Three Cups of Tea author Greg Mortenson and his organization, the Central Asia Institute (CAI). Is this a classic case of a charismatic founder engaging in hyperbole and not paying attention to the details of the organization or is there something worse going on? How do we as donors make judgments about nonprofit organizations?

We at GuideStar believe that donors come to the giving process with a distinct set of values, opinions, and priorities on what constitutes a good charity. Our goal is to present as well rounded a picture of an organization as possible.

I went back today and looked at every piece of information GuideStar had on CAI and here is what I learned:

  1. It is a legitimate, IRS-approved tax exempt organization certified by our Charity Check product.
  2. We have copies of 990s for 12 years – from 1997 to 2009 – all filed by CAI under penalty of law with the IRS.
  3. There is extensive information about its mission, people and programs and an annual report, including the fact that it is generously supported by many public figures and receives widespread publicity. Generally a good sign.
  4. There are 23 GreatNonProfit Reviews. All of them done since this story broke and many of them positive. Our partner Give Well decided not to review CAI in July 2009 because it either did not a) “publish high-quality monitoring and evaluation reports” or b)” it did not have sufficient financial information about program expenses.”
  5. There is an audited financial statement for the period ending September 30, 2009 that looks fairly normal. The statement does, however, includes this pregnant paragraph: The Organization has an economic interest in a book written by the Executive Director, Greg Mortenson, which is written in regards to his journeys in Afghanistan and Pakistan while pursuing the Organization’s mission. During the fiscal year ended September 30, 2009, the Organization paid $1,729,542 for book-related expenses associated with outreach and education.
  6. The CAI was awarded the GuideStar Exchange Seal, our way of recognizing commitment to transparency and accountability in July 2010, BUT we took it away in 2011, because the organization did not comply with our requirement that audited financial documents be less than 12 months old.

All in all, pretty thorough documentation on an organization. It would be tough to detect any operational problems from this extensive list.

By far the biggest gap I see from the Mortensen story is a serious analysis of program goals and impact – not on finances. I always urge donors to start by asking three big questions:

  • What is this organization trying to do?
  • How do they do it (for example building schools in remote areas for boys and girls)
  • How are they doing? One of Jon Krakauer’s charges is that many of the schools CAI takes credit for were not built or are not functioning. CAI’s documents do not address this issue.

This undertaking is pretty difficult at the moment though. There is no one central place where a donor can find information on how a charity is doing. A donor might find that out from the charity itself, but not easily. Each charity is different, with different goals and objectives, different impacts and a standard way of measuring how charities are meeting their own goals is a real challenge.

A new approach we are launching with partners Independent Sector and BBB/Wise Giving Alliance is called Charting Impact. We are asking nonprofits to address five important questions that measure an organizations impact, trying to help donors focus on what really matters. Asking CAI to fill out the Charting Impact questionnaire may have helped the organization identify some of its weaknesses and may have given donors new insight.

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 CAI