With last Sunday’s Oscar’s, it seems only fitting to explore the most recent trends in nonprofit performance review and rating systems. In their article, “Results are Us”, published in the January 4, 2017 issue of the Chronicle of Philanthropy, Drew Lindsey and Eden Stiffen explain that donors are changing the way they measure a nonprofit’s effectiveness when deciding how to direct their charitable gifts. Where donors once determined a nonprofit’s effectiveness by how little it spent on overhead expenses, more and more donors are seeking detailed performance data to evaluate a nonprofit’s worthiness for fiscal support.
According to Amanda Seller of the International Rescue Committee, younger donors in their 30s are driving this trend and demand for more evidence of mission performance.
“Unlike the baby boomers, they’re not going to have a huge, built-in optimism about the state of the world,” Ms. Seller says. “They know the world is a tough and difficult and complicated place. If we’re going to engage that generation in philanthropic giving, they’re going to need a more sophisticated proposition.”
While donor expectations change, the nonprofit sector is struggling to determine what tools and formats to use to meet those expectations. To date, GuideStar has launched a new “platinum” seal for nonprofits who provide some performance measurement data on their GuideStar posting. Charity Navigator, a national nonprofit sector watchdog group, is close behind and plans to launch a new rating system called Charity Navigator 3.0 in 2017 that will focus more on nonprofit performance. Details about the new system are still being finalized.
Bottomline: It looks as though 2017 will bring more careful scrutiny of charities – this time, from the donor community rather than the IRS. And, while that scrutiny may feel threatening for some, it is really an opportunity to move away from the “overhead myth” and talk about the value of the work charities do – not how they spend their resources. For now, it’s up to us nonprofits to resolve to define, track, and report clear metrics that demonstrate how effectively we perform in fulfilling our individual missions.
To view the article in its entirety, click the link below.