Comparing Organizations and Coming up Short

I'm sure my readers are all fully aware of the difficulty of raising money from individuals, but consider this: "Giving to charity has become more challenging for donors in recent years." Or, at least, so says Cristine Cronin (Seeing the Big Picture on Charities - Yahoo! News).

Cronin writes about how well-publicized problems at such well known organizations as the American Red Cross, the United Way, and the Nature Conservancy have hurt the sector as a whole. We are all under more scrutiny, and donors we've known for years are beginning to eye us with suspicion. No longer do they feel comfortable writing checks and just assuming that their money will go for the mission that they support.

There are also more official and semi-official watchdogs issuing reports on nonprofit effectiveness, and using data that may be misleading to rate which nonprofits are "the best." Many of these watchdogs use 990 data, that is available to the public through sites like Guidestar.org, and simple ratios of administration to program expenses to make their calls.

"Tax returns were never intended to be an all-inclusive indicator of an organization's effectiveness in carrying out its mission," Cronin writes. "Nor are administrative expenses necessarily the best or the only indicator of an organization's fiscal responsibility. Ratios can be helpful if comparisons are made among organizations with essentially similar missions and programs, or where there's comparability of such factors as charities' size, longevity, or location."

These are things to keep in mind when our donors call us with questions about the next big scandal to surface, or when they ask about a line on your 990. Donors doing their due diligence is a good thing. A well-informed donor is one we can have a long-term conversation with and cultivate for more future donations. The point here is simply to welcome their questions, and to be prepared with serious and honest answers.

Tags: nonprofit, charities, accountability, fundraising