Over the holidays I wrote a blog post about how to pick a great nonprofit to donate to with extremely minimal work. That post spurred Lucy Bernholz to write two posts (part one and part two) about her effort to help a 10-year-old pick a nonprofit to support.
Lucy’s posts were great because out of the need to communicate nonprofit due diligence best practices to a 10-year-old, Lucy manage to distill everything down to three simple questions:
- What does the organization do?
- How do they do it?
- How do they know if they are making a difference?
I’ve written up my own list of five simple questions to ask, but they are a good deal more technical. Sometimes I think the “smart giving” movement gets lost in our own nuanced debates and forgets how powerful it can be to reframe our discussions so they make sense to anyone (in this case, a motivated 10-year-old ended up being the perfect foil for Lucy).
Here’s why I think Lucy’s questions are so powerful and are the core of what more complex evaluation processes are trying to get at.
What does the organizations do?
This seems to be such an obvious question that it doesn’t need to be asked. But visit the Red Cross’s website and try to explain what they do. Or check out the American Cancer Society, which many people think does cancer research, and then realize that only 17% of their program expenses go to research.
Understanding what an organizations actually does should always be the first step to building conviction in a decision to support them. A good answer to this question can’t just discuss the organization’s goals or focus area, but should describe the programs or approaches taken by the nonprofit in pursuit of those goals.
How do they do it?
The question above might be answered above for a college access nonprofit that the organization provides assistance to under-privileged high school students in the process of applying for college. But lots of nonprofits do that sort of work, so how does the nonprofit in question provide the service? How does their service differ from similar organizations? How do they fund their activities?
How do they know if they are making a difference?
Any high performing nonprofit is going to have some process in place for trying to get a handle on whether they are having success in their programs. The answer to this question doesn’t need to come in the form of a spreadsheet. It might be completely qualitative. But regardless of how it is answered, a solid nonprofit should be able to speak convincingly about their own efforts to know if they are making a difference.
In some ways, that’s about all you need. If before you make a donation you are able to fully describe what an organization does, how they do it and how they know if they’re making a difference, you are well on your way to knowing that your money is actually going to make a difference.
I’m sure some people will argue that this is too simple of a process. My own advice on this matter requires that a nonprofit base their programs on evidence about what works or, if the program is experimental, make clear that the program is a research effort. But we can go on adding qualifications and additional due diligence forever.
In a world where most people do little to no research before donating, it seems to me that a big positive shift would occur if donors began to spend 15 minutes figuring out the answers to Lucy’s questions before making a donation.
You might like Atul Gawande’s “The Checklist,” which goes into the question of how much detail to answer before making a decision. Like you’ve outlined in the post here, he realized it’s often enough to answer 4-6 questions, even if the experts suggest you need 20 questions. The 20 will get you an in depth response, but will also mean very few people will answer all the questions.
Saundra at Good Intentions are Not Enough also has a good charity rating website, Charity Rater, and is also interested in this question of how-much-to-analyze versus how-many-donors-complete the analysis. For those interested her system is at http://goodintents.org/the-charity-rater
Thanks for the shout out Brigid. This week the site will be offline for a day or two as we simplify the system and decrease the number of questions we ask donors to answer.
I’ve heard of The Checklist, but not read it yet. Thanks for the tip. I have read studies within wealth management that show how a relatively small amount of information about a stock improve an investors decision making process, but additional information only increases the investors confidence, not their effectiveness if making good decisions. The problem is that overly confident decision makers tend to make worse decisions.
Sean, I’m in a talk right now listening to Jeffrey Solomon speak on impactful philanthropic giving and he has just recommended- at the head of his talk- this post (which I had just read an hour before). Well done.
Hey, thanks for letting me know! Jeffrey is a nice guy.
My organization prepares profiles of Jewish and Israeli nonprofits to help donors make more informed giving decisions. See, for example, http://just-tzedakah.org/shopexd.asp?id=204. and my booklet at http://www.just-tzedakah.org/SmartTzedakah.pdf
The overwhelming majority of donors are unwilling to take the time to evaluate charities carefully. That’s why Charity Navigator and similar garbage-in-garbage-out-rating systems are so popular.
I think it is incumbent on the people who recognize the importance of, and are passionate about, informed giving to educate the public through lectures, letters to the editor, op-ed pieces, postings on social networks, etc.
I agree Ira. Although I think it is important that we don’t fall into the trap of thinking that if we just make a strong enough logical argument that people will start giving in smarter ways. Instead, I think we need to make smart philanthropy an attractive, sexy, fun, cool thing to do. Too much of the smart philanthropy movement sells smart giving like they’re telling people to eat their vegetables and brush their teeth.
I look for organizations that are doing good in multiple ways. My new favourite organisation is Energy In Common. They are similar to Kiva, but with a focus on green energy. They also offer loans that are repaid in 2 months and you can loan as little as $5. Good for the environment, helping people obtain access to modern energy, plus carbon offsets are generated, so you can offset your own footprint. Win-win-win
Simplicity is elegant. Simplicity makes it do-able no matter how much or little you give or how analytical or non-analytical you are. The beauty of the Luch Bernholz’s three questions is that sophisticated funders can expand any of the questions and go as deep as they feel is necessary. Well done!
I have subscribed to your feeds and found your blog enjoyable.