For years, people have tried to make philanthropy more effective. And for years, little progress has been made. Through our research, Money for Good I& Money for Good II, we now know that only 1/3 of donations by individual donors are researched, and among those, only 5 out of 100 donations are researched specifically to identify the “best” charity.
Saying that little progress has been made isn’t a knock on the third sector where good work is happening to re-focus on effectiveness. Rather, it’s a statement about how difficult it is to change human behaviors… especially in philanthropy where giving is often emotional, where so much of giving (over 80%) is loyal, and where personal relationships and connections drive many donations.
So, given these constraints, is there hope for improvement? Can we make philanthropy more effective? Our research on the topic has shown that, yes, it is feasible, and the best solution may rest with an actor that currently sits outside the space.
Since 2010, we have surveyed over 10,000 individuals who give money to charity. We know what motivates them, why they give, and how they research. More recently, we have looked into what information—in which formats, and from which sources—could get people to make more informed giving decisions. On these dimensions we expected to see very diverse responses. We believed that donors doing little research today would want simple seals of approval, while engaged donors and foundation program officers would prefer detailed statements of impact. This variance would reinforce the complexity of effective philanthropy.
Not so! As it turns out, everyone wants pretty much the same thing when it comes to nonprofit information. And, even better, there is already a trusted source tailor-made to provide it: Consumer Reports.
Here is why a Consumer Reports-type assessment of nonprofits could save philanthropic effectiveness:
- Right information: Donors, foundations and advisors want to understand a nonprofit’s mission, its programs, how it will use the money it gets, and the impact it can expect to have. It isn’t just one piece of information: it’s the full picture. Consumer Reports provides just this. While their product ratings boil down to a number, the publication looks at a range of dimensions to get there. For vacuum cleaners they don’t just look at how quickly it picks up dirt, but also at how noisy it is, how big and clunky it feels, how it works on different floors, and even how it handles pet hair. Got four cats, hardwood floors and a lot of stairs to go up and down? You can find the right vacuum for your needs, which may or may not be their overall top choice. Donors want the same thing when it comes to nonprofits: give me the picture, and let me evaluate it based on my own priorities.
- Right format: We mocked up six ways in which we could present nonprofit information, from binary seals, to four-star ratings, to website information portals like GuideStar. A “consumer reports-like” format won handily (see our Response Results graph below).
- Trusted source: In our focus groups with individual donors and advisors, Consumer Reports was proactively brought up as the most trusted organization that could potentially offer insight into where donors should give.
- All audiences: Finally, these results came from every audience we tested: donors, foundation program officers, and advisors. And among individual donors, Consumer Reports proved best not only for those already engaged in doing research, but also for donors that don’t yet look at their donations’ impact. And the clincher: for those donors that don’t research today and said they would likely not research in the future, the most likely item (out of ten) that would get them to pay attention? Seeing a “Consumer Reports Special: ‘Top Charities Rated.’”
So, there you have it. Consumer Reports is set up to provide the information every audience wants.
- It displays information and ratings in a format or presentation style that every audience wants.
- It is a source that is trusted, especially by donors and advisors, who control 75% of all giving.
- And not only does it appeal to those who do the most research, it is desired by those looking for a quick scan, and can even get people that don’t want to do any research to sit up and take notice.
However, at this time, Consumer Reports does not provide information on the third sector. So, given our findings, do you think Consumer Reports should become the go-to resource for nonprofit information and evaluation? Should it do so alone, partner with GuideStar to get information on nonprofits, or partner with an evaluator, like Charity Navigator, and serve on the distribution side?
Let us know what you think in the comments below…
Response Results: What is the most desired way to get information on a nonprofit?