The following is an open letter from Kristen Parrinello. She is writing to her friends, family, colleagues and anyone else who may ask her donate to their chosen charity. We thought she raised some good points, and so we’ve asked to post the letter to our blog for our readers to consider.
Kristen Parrinello (@InvisibleWork ) is a student of effective non-profit management and is preparing for her next round of fundraising.
Dear Fellow Fundraiser,
Thank you for your commitment in time and energy to raising money for your cause. Social media and technology have given non-profits direct access to volunteer fundraisers, which have allowed them to reach out to larger audiences. However, I have been asked to donate over a dozen times this year, and I bet you have been asked many times, too. All these requests make me wonder, do you know what the non-profit is doing with the money you are raising for it?
In return for my financial assistance, I would like to help you become a more educated fundraiser and donor. When made with the right organization, donations are social investments. And, indeed, donations are most effective and create the greatest impact, when those investments are given to the right people with the right plan that will implement the plan well.
Organizations that are, at a minimum, business-like, potentially can make the greatest impact. Non-profits that strive beyond business basics, measure their impact and have proven their success, merit investment. Before committing to fundraising for a cause or donating, I invite you take a deeper look into the organization by visiting charity evaluator and social investment guidance sites and asking some questions of the non-profit’s effectiveness measurement and success.
Generally, we respond to two forms of information: qualitative (heart-wrenching stories of success) and quantitative (numbers that prove success by examining the social change, otherwise known as outcome metrics). While stories round out the picture of what an organization accomplishes, to many, the numbers prove that change is occurring. Of course, no set of metrics is perfect and no story can determine the effectiveness of an organization.
In the non-profit world, there has been an increasing focus on outcome metrics over the past few years. Unfortunately, the detail of the information and intensity of this conversation can get overwhelming. I’ve listed some information I hope you will look into when researching an organization.
Sites to visit:
Charity Navigator (@CharityNav) is a good place to start, but theirs is not the ultimate set of metrics of effectiveness, which they address on their website. Why? Many in the non-profit world believe that their strict standard is unfair, as it measures a non-profit’s impact by examining financial ratios based on the information given by the organization in their IRS tax form 990. All information should be taken in context for each non-profit mission, business model and the organization’s stage (start-up versus mature). Charity Navigator is working on creating new metrics that are more individually based, rather than their current overall sweeping methodology.
GiveWell, which was started by two former hedge-fund analysts, closely analyzes non-profit effectiveness by reviewing a non-profit’s internal monitoring reports as well as independent, academic evidence of effectiveness. Unlike Charity Navigator, GiveWell dives deep into each organizations individual information, puts it into context and then bases their recommendations from their detailed findings. However, due to the intense nature of their work, GiveWell covers a lesser number of organizations as compared to the large gamut Charity Navigator includes in their ratings.
New Philanthropy Capital helps potential donors research the effectiveness of their cause with their Good Giving Principles.
The Alliance for Effective Social Investing, posted their “Guide to Effective Social Investing”, an in-depth piece that explains social investing well.
How does your non-profit measure its success? What outcomes do they use to track their change?
With the way your non-profit measures its impact, how successful is it? It’s easier to measure success by looking at the goals the organization set out to complete and compare that to the outcomes that are accomplished.
Does your non-profit have their financials audited by a third-party? As a donor, you can request a copy of those financials and their IRS tax form 990, which is a public document. Some charity evaluators get their information from the 990, which should be taken into context, and many evaluators don’t have the capacity to do this. Numerous 990s are listed with GuideStar, a site that can provide data for your sleuthing.
What is the non-profit doing to move from working off only donations to a business model with a consistent revenue stream or how are they bringing in money as an alternative to donations? Many non-profits are cleverly finding ways to wean themselves off of donations to making money on their own by developing a social enterprise. Goodwill has been doing it for decades, as they create a business that supports the funding of their mission.
To dive deeper:
There are people, specifically bloggers, who advocate for more useful measures of non-profit effectiveness to help donors to make the best decisions. Some of the more passionate and outspoken bloggers in this arena are Sean Stannard-Stockton (@tactphil) of Tactical Philanthropy and Elie Hassenfeld and Holden Karnofsky of GiveWell.
The Center for High Impact Philanthropy at the University of Pennsylvania is a good site to visit to find more detailed information on sector-specific analysis and tools, and field-building resources.
The next time you ask me to help financially, I will be curious of your research on your cause. I believe in the power of non-profits to make a positive impact in the world and I hope as we better educate ourselves, that impact will be more significant. Please help me invest my money well.
Kristen Parrinello (@InvisibleWork) is a student of effective non-profit management and is preparing for her next round of fundraising.