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Just days before Intelligent Philanthropy turns 1 year old, we have finally been recognized as one of 8 major online charity evaluation and accountability organizations. RELEVANT Magazine published an article "Where Do Your Donations Go?" and listed Intelligent Philanthropy alongside Guidestar and GiveWell. Admittedly, the author chose to highlight and interview Charity Navigator and ECFA leaders. But the citation in a 3rd party publication is a step in the right direction for what we believe is the best all-around charity evaluation platform available.
Are foundations making good grants? I see positive trends to applaud and emulate in the latest Money for Good II study that surveyed foundation giving decisions. If you want to find out how many hours of research foundations are doing before issuing grants and how much their findings affect new gifts, check out my recent post about Positive Trends in Foundation Grant-making at the Council on Foundations RE:Philanthropy blog.
What if your donation to fight human trafficking paid the salary of a human trafficker? What if your donation to support widowed law enforcement families went to a felon’s bank account? What if your child sponsorship monthly donation and letters never helped the girl in the picture? What if you gave money to loan to a struggling entrepreneur in Africa that was actually embezzled by loan officers? In the last year, I have seen each one of these nightmares come true. It could have been avoided. Read how in my latest Alliance magazine article Giving poorly can be worse than not giving at all.
Endless conversation about "outcomes," "performance," and "impact" needs to come to an end. It doesn't need to stop. It needs to get somewhere. Concrete categories and conclusions need to take shape and either be adopted or discarded. That is what my next 7 blog posts are all about. I'm going to lay out a standardized approach to assessing organizational health and performance in the nonprofit sector.
Before I present the six standards for evaluating nonprofit performance, I've got to be clear about the pros and cons of a standardized approach vs. a customized approach.
Do you want to know if you are supporting effective and efficient nonprofit organizations? You can. That is what the Intelligent Philanthropy web platform is designed to do. I've stopped blogging for the past 4 months to launch it as soon as we could.
I have been working on this project for almost 2 years with my coworkers at Excellence In Giving. We have evaluated all other online resources for making smart giving decisions and decided that our platform would outperform all of them.
None of us wants to be judged for not doing what we never tried to do. But it happens all the time. One nonprofit I recently critiqued responded with this exact complaint, "You can't say we have failed to become partially self-sustaining when we have not made that an explicit goal for the last ten years." The complaint was justified. I had to modify my critique to read: if a donor wants a self-sustaining model, this organization has not developed it in the last ten years.
So how do we create a 'fair' performance standard for measuring nonprofit outcomes? In the world of business investments, analysts can run the numbers and get a clear record of expenses, revenue, and profit. In the nonprofit world, measuring performance is more elusive. There is no absolute standard that applies equally to organizations operating in different program and geographic areas. The only fair approach is comparing the relative performance of organizations in the same sectors.
I have had no time in the last 6 weeks to pause and post insights from my daily philanthropic due diligence work. The high number of evaluation, research, and advisory projects on my "to do" list has kept my nose to the grindstone. However, in the course of completing these projects I am employing every element I know from the art of philanthropic due diligence. So let me say a few words about nonprofit "Strategic Plans."
As part of our Levels 2-5 Due Diligence reports, we collect and analyze 1-3 year "Strategic Plans." It is my job to tell whether I am looking at a nonprofit's "Big Dreams" or realistic "Strategic Plans." There are a few giveaways that make the call an easy one. When the first line reads "Reach every child, everywhere," I'm staring at "Big Dreams." When a 2-year old organization serving 2,000 people sets a target for 220 million people in 10 years, again I am seeing "Big Dreams." The problem is not the audacity of the goals. The problem is the lack of feasible plans to achieve the goals in a specific time frame.
"We've reached a total of 2.5 million people." I read claims like this one from many nonprofit organizations. The sheer size of the number is intended to impress potential donors. However, totals don't tell the whole story. One family ministry that has reached 2.5 million people in the last 34 years actually is in decline. The number of clients served has been dropping by thousands since 2006. In more alarming fashion donations have increased 18% during that time (significant for a $40 million operation) while clients served has declined 7%. Those trendlines tell the story that matters today. The organization's heyday has come and gone.
An informed practitioner of philanthropic due diligence is not easily taken by totals. The most valuable data is found in a time series not a "total" column.