The following post is by Suzanne Coffman, GuideStar’s editorial director. She is responsible for the site’s non-database content and the GuideStar Newsletter. She started her career with GuideStar three weeks after the first 990s were posted—and traffic to www.guidestar.org and interest in GuideStar information exploded.
This isn’t a trick question, but it is a tricky one. It’s also one I’ve been asking myself for nearly 12 years, ever since I began working for GuideStar in November 1999. (If you’re not familiar with GuideStar, we’re the leading source of information on U.S. tax-exempt organizations. Or, more informally, we’re the people with the honking big database of more than 1.8 million nonprofits. We’re also the people who put nonprofits’ 990s online.)
What’s so hard about measuring nonprofit impact? GuideStar’s position—one I wholeheartedly embrace—is that you can’t apply a single standard to the entire sector. Nonprofits’ missions vary too widely, and size and location matter, too. Can you really use the same criteria to measure the effectiveness of a rural food bank that works locally and an internationally renowned art museum located in a major metropolitan area? My colleagues and I would say that you can’t. GuideStar’s mantra for evaluating nonprofits has always been “You have to compare apples to apples.”
Plus, even nonprofits tackling the same problem can take different approaches to their work. For example, you could have two animal welfare organizations dedicated to reducing the number of animals euthanized each year. The first nonprofit focuses on rescuing animals from shelters and finding homes for them. For this organization, rescuing and adopting out more animals signals greater effectiveness in accomplishing its mission.
The second organization—let’s say it’s in the same community and is the same size as the first—sponsors a spay-and-neuter program to reduce the number of animals that end up in shelters in the first place. For this nonprofit, more rescues and adoptions could indicate that it’s failing miserably at its mission.
The difficulty of evaluating nonprofit effectiveness is always in the back of my mind as I develop and edit content for GuideStar’s Web site. The topic came to the front of my thoughts on October 5, when Sean Stannard-Stockton gave a webinar for us on “The Second Great Wave of Philanthropy” (listen to the live recording). Among the many interesting points he shared were statistics from Hope Consulting’s May 2010 Money for Good report. Although 85 percent of donors say they care about nonprofit performance, only 32 percent do any research before giving, only 21 percent research performance, and only 3 percent make their giving decisions based on performance data.
So how do we bridge this gap? I believe that every tax-exempt organization that accepts contributions—including GuideStar—needs to define clearly for the public (1) how it measures effectiveness and (2) how it is doing against that(those) measure(s).
Which brings us back to my original question: How do you measure nonprofit effectiveness? Although, upon reflection, the question should be “How do you measure your organization’s impact?”
If you aren’t already telling people, you need to start. Complete your organization’s Charting Impact report, update your profile on GuideStar, and ask your stakeholders—donors, volunteers, board members, clients, anyone who has firsthand knowledge of your organization and is not a paid employee—to submit a review about you. There’s no charge for any of these activities; all they will cost you (and them, in the case of reviews, your stakeholders) is time.