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From the President's Office, June 2008

Dear Friend:

What do we do, and why do we do it?

That was a question I asked in my Newsletter column last month. A number of you wrote to agree that it's easy to get lost in the day-to-day details of running a nonprofit, with the result that we lose sight of the big picture—our mission and those it serves.

I want to come back to that question this month because it's at the core of our work at GuideStar in promoting transparency and accountability in the nonprofit sector. We see openness not as an annoyance or merely an obligation (although there is a sense of responsibility) but more as an opportunity to share with our various stakeholders our missions, activities, and the ways we measure success.

As it turns out, government representatives at various levels are asking similar questions about nonprofits and our work, sometimes for troubling reasons. Consider these examples:

  • In Britain, a new charities act is broadening the number of organizations eligible to be called a charity but will now require a "public benefits" test. The new rules mean charities must prove their value to society. A regulatory body, the Charity Commission, will review each charity's description of its accomplishments to determine whether the organization has fulfilled its obligation to the public.
  • In Minnesota, the state's Supreme Court ruled that a small nonprofit day care agency had to pay property taxes because the agency was not purely a public charity. The agency charges the same price per child regardless of whether the parents are able to cover the cost by themselves or they receive government support to pay the full amount. Nonprofit leaders estimate that between 300 and 500 nonprofits could lose their property tax exemption under the ruling, which will cause dramatic reductions in their ability to deliver services to communities in need.
  • In California, the legislature is considering a measure that would require large private foundations to report on the diversity of their boards, staffs, contracts, and grantmaking. Assembly bill no. 624 calls for each foundation incorporated in California that has assets of more than $250 million to disclose the composition of its board and staff by gender and ethnicity and a breakdown of its business contracts and domestic grants according to the same criteria.
If you are not already persuaded that something is in the air, last month at the annual Council on Foundations conference, a congressional leader made a point of telling the audience that the "$32 billion earmark" the nonprofit sector receives each year (through tax exemption) requires something special from us that confirms our commitment to public service and diversity.

What do we do, and why do we do it? These are important questions to be asking ourselves and our organizations. More important, nonprofits need to be communicating our answers to these questions to the public and our various stakeholders.

What do we do? GuideStar gathers information about the nation's nonprofits. We make this information available on our site for free and through value-added services for a fee.

Why do we do it? Because people are looking for a trusted source of information about nonprofit organizations to enable them to make important decisions and operate more effective and efficient organizations.

Being open about what we do and why we do it is an essential part of the social compact that nonprofits have with the government, our donors, and the people we serve. We will not continue to enjoy the privileges of our favored tax status without communicating effectively about the impact of our work in the lives of the people we serve.

Sincerely,

Bob Ottenhoff
President and CEO