This was originally posted on the Corona Insights Radiance Blog.
As the season of giving approaches many of us start to think about what we can do to make the world a better place, to help those less fortunate than ourselves, to give back or pay it forward. And in addition to undertaking individual acts of kindness, many of us will look to nonprofit organizations for ways to make our individual efforts go farther – either through participating in coordinated volunteering efforts or offering financial support to help an organization carry out its mission throughout the year.
So how do we select organizations to support? This is not only a question about identifying our deeply held values, but a question of what does it take to trust an organization (literally, to entrust them with our money)?
Limits to financials
A number of groups have developed websites to help answer the question of trust. Charity Navigator , CharityWatch, and GuideStar, to name a few, provide measures of financial performance, ostensibly to help you know whether the organization will use your money wisely. However, there has been a rising wave of dissatisfaction with common financial metrics (which tend to focus on low overhead), suggesting that the focus on those measures has unintended consequences that negatively impact the ability of nonprofit organizations to carry out their missions. For a fantastic presentation of these issues, please watch Dan Pallotta’s TED Talk from earlier this year.
Indeed, in response to some of these concerns, Charity Navigator, GuideStar and the BBB Wise Giving Alliance are adopting metrics of program success in addition to financial metrics. This move has received much press attention (see recent reports in The Chronicle of Philanthropy and on NPR). Nonprofit organizations seem both glad to move away from an excessive focus on the percentage of spending on overhead, yet daunted by the task of measuring performance.
These two issues are related – for most nonprofit organizations, evaluating program success will require additional overhead spending. And for many, to get the expertise and capacity necessary to formulate clear measures and develop creative ways to measure outcomes in challenging populations, they will need to hire a professional evaluator. While many granting agencies that provide funding to nonprofits both require evaluation as part of the grant activities and provide funding for evaluation within the grant, the charity evaluation sites may need to additionally reform how they rate overhead spent on the evaluation of program success.
What donors want is to be connected to a cause that is important to them. Focusing on what nonprofit organizations are accomplishing in terms of world betterment is a much more intuitive way of inspiring trust in prospective donors. It provides a direct connection with shared values, as opposed to the financial metrics that turn the focus on the money being given rather than the reason for giving.
We’re proud of our work helping nonprofit organizations measure their accomplishments, and we look forward to helping others document their success so that they can build trust with other likeminded individuals looking to make a difference – both this season of giving and throughout the year.