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Impact measurement has been dubbed the Holy Grail of all social enterprise. If non-profit and for-profit social enterprises could capture the lasting difference made from all the meetings, projects, programs, fundraisers, volunteers, budgets and staff, we would have arrived. We would know if all the donations, charity walks, social media campaigns, grant proposals and collaborative partnerships are worth it. Not surprisingly, no one has found a short cut to universal impact measurement. There is no simple formula that determines whether a charity is ‘high impact,’ I believe there are a few specific steps to take when assessing any non-profit’s impact.
High performing nonprofits develop careful strategies for creating consistent revenue to sustain operations. Donors do not want to support an organization one year and see its programs collapse the next year from insufficient funding. Great organizations with bold visions and effective programs understand that sustainable revenue streams are mission-critical.
Finding out if organizations you support will sustain themselves is step 3 in our 6-step process for evaluating nonprofit performance.
Do you want to know if charities you support operate efficiently and effectively in pursuit of their mission? You can. The best online charity evaluation platform just got better. The 2-page nonprofit Analytical Overviews from Intelligent Philanthropy have added 30 entry fields for a total of 150 up-to-date data points on organizational health and performance. Check out a sample 2012 edition Analytical Overview. There is no more comprehensive and concise overview of a charity's leadership, financial management, strategy and impact available on the internet anywhere.
New nonprofit information in the 2012 edition Analytical Overviews include...
High performing nonprofits must understand how to manage their money. Charities cannot promise great things to supporters and run out of resources along the way. A delicate balance of maintaining healthy reserves, minimizing debt, and sticking to a budget is required. Donors don’t want a bait-and-switch where increased donations go to debt service or get stockpiled in the bank without any increased impact. And no one can tolerate financial mismanagement where an organization lives in the red with unrealistic budgets or doesn’t put the majority of its funds into mission-related activities.
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.
Where do you start when evaluating the health of a nonprofit organization? Incessant headlines about dishonest educational programs, irresponsible board governance, misleading cancer charities, and corrupt first responder foundations remind us a little assessment can go a long way. But most of us don't have time for detailed due diligence. So where do we begin a cursory evaluation of nonprofit infrastructure and impact?
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.
When people think more, they are less generous. How do you feel about that? Leon Neyfakh promotes this hypothesis in his new Boston Globe article "Why We Give to Charity." Nonprofit service organizations like Law For Change and Campbell & Company have posted the provocative article for website visitors to read. It has been swirling around philanthropy-related twitter feeds for all to see. I bumped into it on a daily news blast from the Chronicle of Philanthropy. I loved its trend-bucking subversion. But I found its case truly unconvincing. So much so, I'm firing back with some neglected facts in the oversimplified case.
Before you evaluate nonprofit performance, stop and ask 3 questions about the charity:
These 3 questions are all related to OUTCOMES. Outcome measurement and outcome-based evaluations have taken center stage in the contemporary debate about nonprofit performance. I, for one, am a voice and supporter of this trend. However, we can't let the trend rewrite each organization's goals. Some charity's just don't exist to produce the savory long-term, ever-increasing, measurable outcomes that have become all the rage. So if we are going to determine how well an organization is performing, we must first figure out what standards we can and cannot use to evaluate performance.
I started Intelligent Philanthropy because I knew we could do better than all other online charity evaluators. So I'm biased against Charity Navigator from the start. Anyone who reads our detailed feature comparison between Intelligent Philanthropy vs. Charity Navigator vs. Guidestar knows where I see other major players lacking. When Charity Navigator announced an upgrade to their ratings system last month, they received a round of compliments. I myself do appreciate the direction they are going but still see fundamental problems. I've laid out some of those concerns in my latest Alliance Magazine post: New Charity Navigator ratings based on old tax forms.