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Your guide to supporting the right nonprofit

by | Sep 27, 2019 | Nonprofit

When you’re determined to help drive a positive change, it is not a question of whether to give or not to give.

Instead the question is:

How do I find the right nonprofit to support? And how can I be sure my contribution is going to make a difference?

With over 1.5 million registered nonprofits to choose from in just the US, it makes sense to feel overwhelmed navigating all the different types of missions. Oftentimes, nonprofits’ causes may seem similar but their missions and scopes vary wildly. For instance, there can be two nonprofits stating that they work to save elephants. Of course, we all love elephants. But one may be working to saved orphaned baby elephants, and the other may be working on measures that could help stop elephant tusk trade across the globe. While both have the same intention to save elephants, the scope of their missions varies from local to global.

The scope is one of the many pieces of nonprofits to assess if they are a good candidate for your time and money. The scope of a nonprofit’s mission combines the objectives and resources it’ll take to reach the goal within certain boundaries. While some nonprofits focus on a community level, there are those that work with states or regions, and others are powering change on a national or global level. Different scopes for different folks.

This is just one example of the many aspects to consider when you want your money or time to have the greatest impact. That’s why we’ve decided to give you advice on navigating the nonprofit world and making informed choices while giving.

Here’s where you begin:

Identify the field you’re passionate about helping. Nonprofit work focuses on 8 core areas:

  • religion
  • education
  • human services
  • health
  • public society benefits
  • arts, culture & humanities
  • international affairs
  • environment/animal preservation.

Think about the causes that move you – from the grassroots initiatives to the fights for the global good. That’s the first step when choosing how and where to make an impact with your donation. Many people prefer to support local nonprofits because it’s nice to directly see the impact that the nonprofits are making on their communities firsthand. But don’t stop there! National and global causes are still just as worthy – it just may take a bit more research to find one that aligns with you.

If you need ideas over who or what you want to support, check out the Global Sustainable Development Goals compiled by the United Nations Development Program. This list could give you an idea about the causes of global importance.

Once you’ve decided on a cause, don’t rush to dive into the details. Before you begin your donor journey, decide what level of change you hope to achieve. Do you want to help an individual? Deliver change on the community level? Or maybe you’d even like to change policies? These decisions guide how you spend your time or money with an organization you trust.

Trusting an organization is a valuable aspect to the donation process. When you  start your donation-investigation to find the right cause, it may open up more questions about what it means to find someone you can trust to do good with your resources. More so, the inherent distrust donors have in nonprofits may be brought to your attention.  In Give.org’s 2018 Donor Trust Report, they state that less than 20% of people highly trust nonprofits; All the while 73% agree that it is very important to trust an organization before giving.

What makes donors so pessimistic about nonprofits? People list greed and high overhead as the top reasons for distrust. Bad reputation, negative media, lack of honesty and transparency are also among the primary causes for concern. But these causes are relative and shouldn’t deter you from putting money or time into good hands. We will detail important and relevant aspects to examine along with highlighting some industry watchdogs to help guide your decision.

Key components

Here are some of the most important ideas you should take into consideration when deciding on a cause to support:

Mission, Vision & Strategy

Your nonprofit of interest may have an inspiring mission and vision but an ineffective strategy to turn these into reality. Nonprofits are meant to deliver a solution to a concrete problem. That being said, even complete strangers should understand how the nonprofit intends to achieve their goal. Strategies, methods and current steps towards the overarching goal should be clear. If you open a nonprofit’s website or visit their Facebook page and don’t understand the direction they’re taking to accomplish their mission – that’s your first major red flag.

Vision is an ideal a nonprofit aims to reach. Mission is what should be done to reach this ideal. But what do those actually look like? Here’s Save the Children’s mission and vision and then their strategy to accomplish their goals. This example should serve as a baseline of clear and concise explanations of how a nonprofit achieves their goal:

In this case, their vision is “a world in which every child attains the right to survival, protection, development, and participation.” Save the Children’s mission is to reach “breakthroughs in the way the world treats children” and achieve an “immediate and lasting change in their lives.”

Next question is how do they accomplish that? According to the nonprofit’s Global Working plan, Save the Children’s strategy is to develop evidence-based solutions to problems facing children; advocate and campaign for better practices and policies that would fulfill children’s rights and “support effective implementation of best practices, programs and policies for children, leveraging our knowledge to ensure sustainable impact at scale.” Click here to learn more details about their work.

Outputs & Outcomes

Outputs indicate how much was done to help a beneficiary and how many beneficiaries actually received support. Outcomes indicate the difference and impact these activities made. Keep in mind that decent results of outcomes may take months, even years, to accurately represent the impact.

B’more for Healthy Babies (BHB) can serve as a quality example of an organization keeping track of its measured success. This initiative involves over 100 partners, including businesses, foundations and nonprofits, who joined forces to reduce child mortality in Baltimore. BHB initiatives include public education campaigns, prenatal care assistance, teen pregnancy prevention programs and much more. The results of BHB’s work have been impressive: Between 2009 and 2018, the childhood mortality rate fell by 35% and the teen birth rate decreased by 49%.

It is important to keep in mind that a lot of the benefits that nonprofits provide may not be directly measurable. Success may look different from one organization to the other. However, there are metrics that hold nonprofits accountable to their mission and their donors.

Failures

Success stories are important, but so are stories admitting errors and failures. If a nonprofit can admit its flaws and failures, it means they’re honest and humble. By sharing missteps, nonprofits show that they’re focused on improvement, which always is the best mindset for an organization to promote.

A failure could look like: “Unfortunately, we couldn’t save Baxter, a lab mix who has been violently abused by his owner. Help us make sure this will never happen again…” Some of these stories can drive awareness about the cause in general by attracting attention to the daily challenges of nonprofit work.

Numbers

“Thanks to your support, 230 children received the chance to attend school in 2018.” Numbers make an impact on people’s perspective and make supporting a cause a bit more tangible. As a donor, you need to know what nonprofits have accomplished thus far, and what a certain financial contribution can actually achieve.

For instance, First Book, a nonprofit delivering books to children in need in 33 states writes that “every $3 helps to provide a new book or resource for a child in need.” If your nonprofit of interest can provide clear data, it means that it’s focused on monitoring and reporting. It also helps establish that they are holding themselves accountable to their donors so that your time and money is worthwhile.

Public Information

Transparency and honesty are everything. If financial reports and other official documents, such as internal regulations, are publicly available it means that the nonprofit will be less likely to have something to hide. For example, let’s have a look at the financials page of Charity: water. This nonprofit provides access to annual reports, audit reports, 100% model audit information, form 990 and salary surveys. With transparency comes trust that your support will be used wisely.

Resumes

Is the nonprofit’s staff competent enough to deliver change? Do they have the experience and skill to handle daily operations? Nonprofit websites should give you a good idea about the competencies of their leadership. Have a look at the leadership page of First Book to get an idea about what we mean. If the website doesn’t offer enough information, try researching on LinkedIn.

There are many other useful sources of information you can explore. Flip through your nonprofit’s brochures and annual reports, review newspapers and magazine clippings mentioning their projects and, if you really want to dive deep into the details, go through their Form 900. This document contains information about your nonprofit’s governance, oversight and finances.

And one more thing: If the nonprofit you’re interested is located nearby, try visiting their office or attending one of their events. This could give you a firsthand experience about what their work is like.  

Bear in mind, hardly any nonprofit will be perfect on all accounts. Keep your expectations realistic.

What do the watchdogs say

As you go through a nonprofit’s website, there’s a chance you may see a rating or a seal of approval by a nonprofit watchdog.

But what’s a watchdog and why do they matter?

A nonprofit watchdog is an organization that evaluates nonprofit work based on a certain set of criteria – from fundraising costs and operational expenses to financial transparency. Their approval can be a good sign that an organization is trustworthy, but, as with all things, do not let their approval be your only form of judgement.

Here’s an overview of some of the most notable nonprofit watchdogs and what they focus on:

Give.org, also known as BBB Wise Giving Alliance, evaluates nonprofits against a 20-point list of Charity Accountability Standards focusing on areas of governance and oversight, effectiveness, financing and informational materials. Their database currently contains over 1,300 charity reports. Three times a year Give.org publishes a magazine called Wise Giving Guide, which features information about the most inspiring American nonprofits.

Charity Navigator evaluates the efficiency of funding allocation, sustainability of nonprofit programs and their services, as well as the commitment to accountability and transparency. Nonprofits are graded on a 0 to 4 star scale. Charity Navigator website also has an interesting selection of top charity lists which you should check out.

GiveWell follows a data-driven approach that focuses on organizations working with global health and development causes. Its work is based on the principle of effective altruism and seeks organizations that have evidence of impact, cost-effectiveness, commitment to transparency and space for more funding. This very detailed approach doesn’t allow Givewell to evaluate many nonprofits, so this watchdog’s scope is quite limited. Many of Givewell’s nonprofits work in Africa.

Charity Watch provides ratings based on operational expenses (% of funds spent on programs) and the fundraising costs (amount spent to raise $100). A nonprofit is considered inefficient unless it spends 3 quarters of its funding (or more) on its programs and the cost to raise $100 is $25 or less.

GreatNonprofits is the Yelp of the nonprofit world. Head over to their website to read nonprofit reviews left by donors, staff and volunteers.

Guidestar is another important name that you may encounter online. In early 2019, Guidestar announced a merger with the Foundation Center, which was one of the leading sources on philanthropy worldwide, to create the organization Candid.

Candid is the organization that was born as the result of the above-mentioned merger. It will use a data-driven approach integrating data and insights from nonprofits, foundations, governments, and tech companies. It surely is one of the watchdogs to watch. It’s comprehesive database is now available to explore issues, follow where funding goes and stay up to date with nonprofit news and statistics.

While you may use nonprofit watchdogs as additional sources of information, you should keep in mind that all of them have diverging views on what makes a nonprofit GREAT. While a nonprofit that may have positive ratings on GreatNonprofits, they may not be doing so well on Charity Watch due to overhead. But the fact is, overhead isn’t the most reliable measurement.

Don’t let the overhead get to you

In case you’re not familiar with the term “overhead”, this term represents the percentage of a nonprofit’s budget that goes to cover staff salaries, general management, and fundraising expenses. This includes anything from staff training to meals for event volunteers.

As we’ve already mentioned above, high overhead is one of the most important reasons why people distrust nonprofits. Overhead is the amount of money that is used to pay salaries, staff & volunteer training. Overhead funds are also used to buy things like computers or other equipment that’s necessary for daily work. Also, funds used to organize fundraising drives are also counted as overhead.

Before you hate on overhead, take a moment to think about what it’s like to work for a nonprofit that’s forced to keep a low overhead:

You constantly feel that your work is pulling you under. Staff turnover is very high, the work/pay balance is dreadful. You struggle financially and your nonprofit struggles to find highly-qualified staff to manage projects. When you do find the right people – they don’t want to stay since they are constantly overworked and have families to feed. Your nonprofit can’t maintain complex projects because you simply don’t have the people to manage them. Your monthly budget fluctuates wildly, because you don’t have enough staff to handle fundraising campaigns…

This type of organization doesn’t sound like the employer of the year, does it? Excessive focus on overhead leaves many nonprofits – especially the ones that are just starting off – unable to do their work and leads them to sink before they can even swim.

The choice isn’t easy. We urge you to thoroughly research your nonprofit in order to make sure your money and trust are in safe hands. Choose wisely.

Takeaways

Regardless of whether you’re a caring individual or a responsible business, we encourage you to do your research before donating.

Gathering all the information possible about your nonprofit of interest will make sure that your money is well-spent.

An important final note we want you to keep in mind: avoid focusing too much attention on how much nonprofits spend on staff expenses. Instead, focus on the scope of the mission’s impact, strategies they use to accomplish their mission, and the overall transparency of the nonprofit.

A Note to Nonprofits: You may be doing a great job working on a cause that deserves public support; however, there tends to be a lack of trust between the public and nonprofit work. In order to earn that essential donor trust, demonstrate an absolute commitment to transparency. Be candid about your successes and failures and clearly demonstrate the outcomes and outputs of your work.

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