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Watchdog
by Gary B. Grant
In addition to giving nonprofits new tools and abilities to enhance fundraising, the internet also gives donors a greater ability than ever before to research the behaviors of the nonprofit organizations they support. This can be done by using sites that serve as watchdogs or evaluators of organizations and it can be done by monitoring and participating in social media sites where your organization’s donors, members, clients, and other stakeholders are discussing you.
It is important to stay ahead of the game. You don’t want to just cross your fingers and hope that it goes well for you on these sites. Not to scare you, but rumors can severely damage and, in some cases, even end your organization, whether they are true or not and whether they give the full story or not. Your reputation in your community is so important and is fragile and very hard to repair when shattered.
Let’s start with the watchdog sites. These are a mixed blessing. On one hand, who can complain about sites that are dedicated to holding organizations to high standards and putting more information in the hands of donors? On the other hand, no watchdog group has the resources to truly research and dig in to know the integrity and operational details of worthy organizations.
Watchdog sites can, therefore, only give donors confidence relating to the data they can reasonably collect (or that the organizations provide them). Your goal should be to visit the sites, see where you land, and do what you can to get the best possible rating (or prepare to “lean in” and explain why your rating is low).
Here’s an example. Suppose a watchdog focuses on how much organizations spend to raise a dollar. The lower the percentage, the better. Now take two organizations. One has a major donor patron that underwrites its expenses each year. The other relies on the gifts from 100,000 members who are solicited, educated, and mobilized through direct mail. The cost to raise a dollar is more in the second case, and the costs of fundraising and public education are harder to separate. The first organization might get an A+ for spending only 1% on fundraising and the second a D- for spending 24%. But the measure is very misleading on quality and worthiness for donor support.
Now let’s look at some specific sites you should know.
Charity Navigator (https://www.charitynavigator.org/) has carved out a place at the top of watchdog sites, rating some 170,000 organizations. They allow donors to see their overall scores easily so they can give with confidence. They allow donors to organize their giving activity right on the site. Charity Navigator provides a clear explanation of its measures.
Their basic score looks at financial accountability. Their formula is fairly detailed, and you can get into the weeds on their site. But basically, you will want to make sure you are dedicating more than 70% of funds to the programs (both organizations in the above example would get full points in this area). Scores are also based on four major factors:
- organizations getting independent audits, having a large enough and sufficiently independent board, and documenting their minutes
- not having too much in liabilities
- publishing a website
- demonstrating policies for whistleblower protection, conflict of interests, and records retention.
Charity Navigator also offers impact measures: “A nonprofit receives a total of 100 out of 100 points if it is highly cost-effective by our estimates.” A culture and community measure recognizes organizations that welcome and collect feedback and demonstrate inclusivity. And finally, the score includes a leadership and adaptability measure.
Once you spend some time maximizing the visibility of your organization’s worthiness for support on Charity Navigator, the site offers tools for you to promote this. You may not think that many of your donors are checking you out on Charity Navigator, but more than you think probably are. Make sure they are pleasantly surprised by the good report they find. More importantly, brag about your scores. Use them when needed to alleviate concerns or disarm rumors.
Another site is the IRS database at https://apps.irs.gov/app/eos/. Enter your organization’s Employer Identification Number (EIN) into this search tool, and you (and your donors) should be able to view your 990 submittals for the past decade or so.
Guidestar (https://www.guidestar.org/), which merged with the Foundation Center to form Candid in 2019, is also a trusted source for information. You may use it to look at foundations, and your donors (including those same foundations), may use it to see your organization and its commitment to transparency. Guidestar encourages organizations to go through a checklist that will secure them ratings from Bronze to Platinum.
At the Bronze level, you provide some basic information, such as logo images, leadership, and board chair names. This awards the organization the ability to rank higher when donors search Guidestar. At the Silver level, you submit additional financial information, which allows potential funders to feel more confident in your organization. The Gold level enhances this with evidence of success in your mission. You demonstrate a good strategy, anecdotal successes, and a vision for achievement. A Platinum seal is achieved when you have shown at least one of 20 qualifying metrics (see: https://help.guidestar.org/en/articles/2743881-how-to-earn-a-2021-platinum-seal-of-transparency).
To conclude, fundraisers should work with their organization’s CFO, marketing team, and others to do a health check on Charity Navigator, Guidestar, and any other similar watchdog sites. Donors will likely increasingly use these tools, and even if they don’t, an organization is wise to see them as an opportunity rather than a threat.
Next Blog: Organizational Reputation, Part 2: Social Media
Photo credit: Keith Lindquist
Gary B. Grant
Gary B. Grant has a BA from the University of Chicago and a JD from Illinois Tech's Chicago-Kent College of Law. He currently serves as Senior VP for Development for Florida Institute of Technology (Florida Tech). Founded at the dawn of the Space Race in 1958, Florida Tech is the only independent, technological university in the Southeast. In this role, he oversees all fundraising and leadership engagement for the University. Gary has authored several books on the use of the internet in nonprofits and fundraising.