Dear Nonprofiteer, How can I know which charities are any good?

Dear Nonprofiteer,

It’s that time of year again, when I
wish to make charitable contributions.  I have the goal amount I wish to give
away, I have the causes I wish to support.  But the problem is finding the
charities to give the money to.  In the past I have usually wound up giving to
charities that I had some sort of direct contact with as I knew what they were
about, and how in general they did business.  The problem this year is that I’ve
made a major move and don’t have much experience with the charitable scene here
in
Chicago

My causes really are education but not for some fluffy program to
get kids interested in learning.  I’m sure I’m jaded but I’ve seen too much money
thrown at disinterested kids and they just think it’s fun and games and come to
expect it.  I want my money to go towards helping kids who really want to
learn.  That desire is intrinsic and developed in kids in a much more holistic
manner than money thrown at the problem can achieve.

I’ve
looked on line at some of the giving guides (justgive.org, charitynavigator.org)
but I’m not finding any matches and the way things look I’ll probably forgo
giving much of my goal just because I can’t find a connection with a charity I
wish to support.  All of which is really sad considering I’m sure some
organization out there could use the money. 

Why can’t charities find a way of
making themselves known and foster making that connection with potential donors
as I’m sure my problem is not unique even for long time residents of
Chicago?

Signed, Ready to Give

Dear Ready:

Well, if it’s any consolation to you, what you’ve described is the hot dilemma under discussion in the nonprofit world right now.  The Hewlett Foundation’s annual report contains a meditation on the need for, and absence of, information for potential donors about charities and their results–and that from an institution with access to grant applications and site visits!

The Nonprofiteer finds it difficult to believe that there’s less information on the subject available now than previously.  Rather, awareness of our lack of awareness seems to be a by-product of Google: we expect to be able to learn things readily because so much information is easy to hand, so whatever’s hidden seems more mysterious (and suspect) than ever.

Be that as it may, the need for data is real; and you’re right that charity "evaluation" sites are of very limited utility.  They try to establish a single metric for charitable effectiveness–generally, percentage of total budget spent on administration, with low numbers automatically presumed better than higher ones.  In fact, though, that ratio reflects only efficiency (and poorly, suggesting e.g. that use of volunteers is always more efficient than use of staff) and tells us virtually nothing about impact on the problems being addressed. 

Fortunately, Google is still there, and though it’s not a solution it can be a place to start.  I searched "Chicago+education+nonprofit" and found volunteermatch.org, which sorts agencies by the type of service they provide and the geographic area.  Though the site’s focus is on volunteer opportunities, as you know volunteering and donating go hand-in-hand, so the volunteermatch list (and similar lists published by the US Department of Housing and Urban Development and 1-800-volunteering) will give you some ideas.

Then what?  Then begin with last week’s advice to Withering on the Vine: after examining the agencies’ Websites and narrowing down your choices to 3 or 5 that look particularly interesting, call their Executive Directors and tell them what you’ve told the Nonprofiteer: that you’re new to the area, that your main interest is in helping children to learn, and that you’d like to learn more about their agencies.  Go over to each place, talk to the Exec and some staff members and see whether there might be a match between you and the organization–whether as a volunteer or as a donor or both.  If you’re willing and able to allocate fewer than 10 hours of your time for this purpose between now and the end of the year, you’ll learn a lot and find at least one organization worthy of your support.

You might also call the local United Way or community foundation (in your area, that’s the Chicago Community Trust) and ask for their guidance.  At the community foundations, you’ll want to speak to "Donor Services;" you may or may not want to establish a donor-advised fund but they’ll be happy to talk to you as long as there’s a chance that you do.  At the United Way try asking for Program Services–the people who review grant applications from nonprofits.  They’ll at least be able to tell you which United Way agencies provide the type of services in which you’re interested, and you’ll have the reassurance of knowing that some outside group is overseeing the charity and making sure the ED isn’t taking her lover to Bimini on your donations.  Past scandals at the United Way itself (not in Chicago but elsewhere in the nation) make this reassurance slightly less valuable than one might like; but hey, you’ve got to start somewhere.

If you’re unable to unearth satisfactory recipients in the course of the next few months, don’t give up on your idea of giving away money.  Go ahead and establish a donor-advised fund at the community foundation or at one of the many brokerage houses that offers such a service.  You make your charitable gift to the fund and get the appropriate tax deduction, and then in the course of the following year (there’s no timetable but the sooner the better) you can learn more about your new home and identify charities to which you can then direct money out of the fund.

Finally, consider the advice of our esteemed colleague Phil Cubeta at Gift Hub: that you ask your lawyer or accountant (if you have one in Chicago) for his/her advice about worthy charities.  As Phil would be the first to note, relatively few professional financial advisors have this kind of information, but you might get lucky.  In any case, you’ll be talking with fellow citizens who may be able to refer you to other fellow citizens with expertise in the subject of worthy educational causes.

Kudos to you for your generosity.  It is hard to know how to give money away–harder than is generally acknowledged–and it’s frustrating that agencies don’t make a greater effort to make themselves known to potential donors.  Unfortunately, when they do make that kind of effort, they’re often condemned for spending too much money on "administration" or "overhead," and not enough on services.  Talk about a double bind!

One other note: you may want to think less about causes you support and more about the specific kind of change you want to make in the world.  If it’s "bringing kids to first grade prepared to learn," you may want to fund Head Start programs; if it’s "teaching kids how to handle the inevitable frustrations of learning," you may be interested in tutoring programs; if it’s "levelling the playing field so that poor kids are able to get as much out of school as rich ones," you may be best off with community-sponsored home interventions or with local charter schools directed at specific populations, and so on.  Often we back into recognizing what’s most important to us, as the Nonprofiteer is constantly learning with her own charity.  But the important thing isn’t getting charity "right" on the first go but starting somewhere and learning as you go along.

Keep us posted on what you discover!

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7 Responses to “Dear Nonprofiteer, How can I know which charities are any good?”

  1. Bill Dalton Says:

    I just wanted to make you aware of another great victory for humanity
    (or at least “education”..)!

    As reported in the Sept. 29th issue of Education Grants Alert, the Iowa
    Dept. of Education recently rejected applications for pre-school grants
    from 30 School districts due to the applicants’ failure to follow
    directions to D O U B L E – S P A C E their proposals.

    Actually, I see this as a double-Victory:

    .. We’ve proven once again that bureaucracy/ bureaucrats have their
    place
    (and even in an environment of nearly overwhelming ‘macro’ issues,
    like NCLB, funding, …, they have
    not lost the ability and willingness to be ‘detail-oriented.’

    .. We are wasting no opportunity to teach those at the very foundation
    of our educational system to abide by
    the 11th Commandment — Thou shalt follow directions.

    Deep down inside (limbic system??), I know I should feel a warm sense
    of satisfaction and pride that the integrity of our public pre-school
    programs has been protected, surely another fine example of a classic
    Win-Win for Education (which, in and of itself, is a fine example of
    non-profiteering ..).

    Yours truly,

    B. Dalton

  2. Anita Bernstein Says:

    Right on, Ready to Give! I was especially interested in the reference to “overhead.” Can anything be done to encourage the report-writers to break that category down? I’m happy to support some of it (PR about new initiatives, donor-related info, even some personnel spending) and would be disgusted by other expenditures (junkets, boozy parties, inflated salaries for upper staff). I’m sure that managers of nonprofits agree that not all overhead is created equal. Any advice on how to approach a nonprofit to ask for more detail about this particular wedge of its pie chart?

  3. Jen Says:

    Ready to Give could also check out Community Shares Illinois at http://www.communitysharesillinois.org/ a coalition of non-for-profits similar to the United Way, with no taint of scandal. Community Shares has chapters nationwide and often leans a little farther to the left, right up my alley!

  4. Tony Says:

    If numbers don’t scare one off, Guidestar http://www.guidestar.org/ is also an excellent resource, with pdf of the annual 990 returns from all nonprofits. It can be helpful to actually see where the money goes. (You have to register, but it’s free.)

  5. Albert Ruesga Says:

    Thanks for addressing this topic, Nonprofiteer. Ready to Give might also try visiting Network for Good. This online service enables him/her to search for charities using program area (e.g., education), state, zip code, and other criteria. NFG has a partnership with GuideStar that enables NFG users to automatically access the GuideStar listings for the organizations they’re interested in learning more about. Network for Good is among the few means available to non-brand-name charities for making themselves known to a broader public.

    One word of advice about contacting nonprofit EDs directly: These people are extremely busy, especially if they’re running a small shop. Many nonprofits below a certain size can be very effective at accomplishing their missions, but suck at donor relations. Don’t be a peevish, overly demanding donor. Don’t blame these charities for not “making themselves known.” They’ll get there one day. Right now they’re busy feeding people while tending as best they can (and know how) to the infrastructure demands of their growing organizations.

    Our charities need to be better at fundraising and marketing—I’m not letting them off the hook. At the same time, donors need to be better educated about charities—their life cycles and the demands on their time.

    Long ago when I worked at a small nonprofit, I remember burning through hours of time on the phone with potential donors I later discovered were doing their due diligence on a $25 gift. Yes, every penny counts, but so does every minute to an overworked, underpaid nonprofit staff member. I suggest that Ready to Give start by visiting the websites of these organizations or sign up for their newsletters, if they exist. If the organizations are supported by local foundations that do due diligence (e.g., proposal review and site visits) on the grants they award, that’s another clue that they might be worthy of support.

  6. Nonprofiteer Says:

    Anita, meet Tony: the 990s available on Guidestar contain a breakdown of overhead/administrative expenses that should provide what you’re looking for: salaries are broken out, as are marketing, fundraising and educational-outreach expenses. Of course, the more sophisticated the nonprofit, the better it is at shaping these numbers to its advantage; but it’s a start.

    It’s also fair to ask a nonprofit to which you intend to give a substantial gift if it’s willing to show you its revenue and expenditure budgets. And any nonprofit recruiting you for a Board position should volunteer these documents.

  7. Nonprofiteer Says:

    Albert’s point is well taken: if you’re thinking about a $25 gift, you’re not entitled to the Executive Director’s time. But people rarely worry that they’ve mis-spent $25; they worry about mis-spending $500, or $5000. Ready to Give’s seriousness about his/her donation plans suggests that s/he’s talking about serious money.

    I guess I’d also argue that Executive Directors who are too busy to talk to donors misconceive their jobs. Program directors may be too busy serving clients to talk to prospective donors; Executive Directors generally have no higher purpose than representing the agency to people in a position to support it. It may be apocryphal, but the tale of the unassuming visitor who rewarded respectful treatment with a multimillion dollar gift should be in the minds of all nonprofit EDs (and all nonprofit receptionists, for that matter) at all times.

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