Dahna Goldstein, the founder of PhilanTech, sent me the following email. She didn’t post it as a comment because she didn’t want to appear to be plugging her company, but I asked her for permission to share it.
I’ve just caught up on the discussion on your blog about Google Finance and nonprofits, and wanted to share my $.02. Google is potentially in a unique position — as are you, by virtue of your thought leadership and initiative on this front — to positively affect how information is shared with the sector at large, with donors, and with other interested parties.
The absence of standardized information about nonprofits makes it difficult to suggest a set of metrics or a pre-defined combination of quantitative and qualitative analyses, as a number of your readers have pointed out. And asking for new types of reporting from nonprofits risks placing an additional burden on already-burdened nonprofits.
PhilanTech has taken a step towards addressing this issue. We created the PhilanTrack online grants management system to centralize and streamline the grants management process — creating centralized reporting about nonprofit organizations, activities, outcomes, and finances. Our vision is for a centralized reporting for all donors (institutional and individual) and other interested parties (researchers, the nonprofits themselves, etc.) to obtain information to inform funding decisions — without creating additional hoops through which the nonprofits must jump. I’d be happy to tell you more about how it is structured, but in a nutshell, PhilanTrack helps foundations request the information they want to receive from nonprofits (to help them evaluate their effectiveness as grantmakers and to help evaluate potential grants) while helping nonprofits avoid reinventing the wheel each time they report to a different funder. The types of information that the system manages (activities, outcomes, finances, lessons learned, etc.), I believe, are the types of information that Google should consider posting about nonprofits.
While expense ratios, as you have pointed out, have significant shortcomings, there is still a lot that can be learned about the financial health and stability of an organization (if not its effectiveness) by looking at its finances. It requires looking beyond CharityNavigator and beyond 990 data in ways that are not familiar to many (both individuals and institutions) who are considering gifts to nonprofits. At PhilanTech, we have addressed this issue by developing a financial analysis tool that uses basic financial statements to provide six analyses (financial mix, efficiency, debt servicing ability, liquidity, long-term viability, profitability) with a number of different metrics and explanations of why each metric is important and useful in evaluating the financial health of a nonprofit.
Google Finance pages (or Google Knol) should, in my view, combine these financial analyses with the following: quantitative information about outcomes (where available and qualitative where quantitative info isn’t available); qualitative information about activities, programs/projects, mission, people, sustainability, replication (where relevant), lessons learned, challenges faced and overcome; related organizations (including any partnerships/collaborations); news; funders; discussion (like the type of discussion you prompted about the Red Cross), and perhaps something like the 360 degree views GreatNonprofits is working to create. And there are ways it could be done without placing too great a burden on nonprofits by leveraging some of the reporting nonprofits are already doing.