4/4/2014 Charity Evaluators How do The ▪ BBB’s Wise Giving Alliance Good ▪ Charity Navigator & ▪ Charity Watch The Bad The ▪ Guidestar‐Philanthropedia Ugly Help (and Hurt) our clients? ‐‐or‐‐ ‐ The Challenge:Raters can evaluate on The Challenge:Raters can evaluate on Governance Standards Financial Performance 1 4/4/2014 Is this the best approach? But, raters have a great deal more trouble answering the question Are their programs effective?I How, when, where are they measuring effectiveness? Is this a complete fraud? Is the organization having the desired impact? Yes, COMPLICATED Wow! that’s complicated So, there ARE different approaches Different evaluators will take different approaches. ▪ BBB’s Wise Giving Alliance ▪ Charity Navigator ▪ Charity Watch ▪ Guidestar‐Philanthropedia ▪ and a couple more of late 2 4/4/2014 The GOOD: Better Business Bureau: Wise Giving Alliance The BAD: Better Business Bureau: Wise Giving Alliance ● Oldest, most established, experienced (BBB is 112 organizations‐‐started 1912) Started rating charities 2003 ● 20 standards met? “Accredited Charity” ● Organizations can request, troubleshoot In 2012, USA Today reported that the BBB‐WGA had come under fire for giving its charity seal of approval for fees of $1,000‐$15,000 annually‐‐67% of its income. http://www.bbb.org/us/standards‐for‐charity‐accountability/ Charity Watch criticised BBB for taking money from the same agencies it was rating. The GOOD: Charity Navigator The not really so UGLY: Better Business Bureau: Wise Giving Alliance Started in 2001, $1.3M annual budget (2012) Supported by donations BBB Wise Giving Alliance, GuideStar USA, and “America’s largest charity evaluator” IndependentSector joined together to form Charting Impact. Website has a blog, donation tips and Top 10 and They ask 5 questions about aims, strategies, capabilities, Bottom 10 lists progress, & accomplishments . 3 4/4/2014 The not really soBAD: Charity Navigator The SNUGGLY: Charity Navigator Provides rating for 1,100 organizations, evaluated more than 5,400. Rates on 1. Financial Health and 2. Accountability & Transparency, use “star” system. Very transparent about its own rating system. click here for link to video. The GOOD: Charity Watch The not really soBAAAAAAD: Charity Watch Founded 1992 by Daniel Borochoff. Prides itself on independence and super sleuthing through financial data. Donors join as members $50/year. 2012 revenue was $523K 4 4/4/2014 The UGLY: Charity Watch The GOOD: Guidestar/Philanthropedia A January 25, 2011 article The Ratings Game: Evaluating the Three Groups that Rate the Charities reported in the Stanford Social Innovation Review wrote that some watchdog groups Started at Stanford Graduate School of Business in 2008, joined ● rely too heavily on simple analyses and ratios derived from poor‐quality with Guidestar in 2011. Crowd sourced expert opinion. Their financial data; ● overemphasize financial efficiency while ignoring program effectiveness; and “supply chain of nonprofit information” is ● do a poor job of conducting analysis in important qualitative areas, such as ● Sources (nonprofits, volunteers, donors, experts) management strengthen, governance quality and organizational transparency. ● Aggregators (IRS, community foundations, BBB Wise Giving Alliance, & others) This article stated Charity Watch had a “gotcha” mentality and lack of transparency itself. They aim to review nonprofits they feel are not spending wisely to education ● Hubs (Guidestar, NeXII‐now Alternativa, SocialActions & others) the public and will not hesitate to “call out” a nonprofit.” ● Channels (Fidelity, DonorEdge, Network for Good, Facebook Causes & others) ● Users (wealthy donors, retail donors, foundation staff & others) The who would think this isBad?: Philanthropedia/Guidestar The STRUGGUGLY: Philanthropedia/Guidestar Rate with an elaborate methodology based on “expert opinion.” Environment of Uncertainty versus Opportunity 5 4/4/2014 What did we learn? What can WE do about it? Financial data is easy to obtain, analyze, and report Begin with financial data to get some concept of scope But it doesn’t address the most important questions Educate yourself about the cause, form an hypothesis ● What is the problem? Find an organization that shares your hypothesis and ● What is the best approach? investigate one particular project (call, contact a local ● Is the organization taking the best approach? community foundation, United Way) The very GOOD The very GOOD GiveWell has sought proven, cost‐effective, scalable charities for individual donors to support. They look for unusually straightforward, evidence‐backed value propositions such as "$X delivers Y bednets, which saves Z lives." 6 4/4/2014 The Future? DATA The very GOOD •International society dedicated to eliminating poverty in the developing world. •Member sign the PLEGDE TO GIVE: “we will give at least 10% of our incomes to wherever we think it will do the most to relieve suffering in the developing world.” The Future •Organization are strongly vetted, recommendations are broken into two categories: 'High‐confidence recommendations' and 'Opportunities for leverage'. Susan Edwards Colson, Esq., CPA Westchester Community Foundation 200 North Central Park Ave, Suite 200 Hartsdale, NY 10530 [email protected] (914) 819‐8924 7.