Picking A Charitable Partner: First Steps to Finding the Best Fit
“How do I evaluate which charities are best for my business to support?”
Business leaders ask goBeyondProfit this question often, in their quest to find the best charitable partner. Beyond choosing charities by their proximity, relevance to your business and resonance with staff and customers, we wanted to share a few evaluation insights and resources from national and local experts.
You may not know that all charities must file an annual Form 990 with the IRS, providing publicly available information about their finances and governance practices. These are easily accessible, generating invaluable transparency and insights for your evaluation.
There are multiple resources for accessing a Form 990 and other comparative insights. One terrific starting point is Charity Navigator (www.charitynavigator.org) which publishes evaluations of tens of thousands of charities, including impact data from four reliable sources: GuideStar, Classy, GlobalGiving, and ImpactMatters. (They also have a wealth of articles under their “Tips for Donors” tab!)
The Charity Navigator website lets you search any organization you’re interested in and read their rigorous, comparative insights.
Some small or emerging Georgia nonprofits worthy of your support might not be evaluated by these global monitor sites. In that case, Charity Navigator offers a guide to assist donors in doing their own due diligence. This Guide provides details about three main aspects to evaluate:
- Study the organization’s financial health: Look at Program Expenses, Types of support they’re getting, Executive Pay, Professional Fundraisers and Fundraising Costs Allocated to Program Costs.
- Check for evidence of the charity’s commitment to accountability and transparency, by checking their website, how they respect donors’ privacy, news coverage, and Form 990 insights into best practices.
- Investigate the charity’s results: The report includes a recommended list of questions to learn about a charity’s accomplishments, goals and challenges by reviewing its website and/or talking with staff. These include: What is your organization’s mission?; What are your organization’s goals?; What progress is your organization making towards its goals?; and What sources are available to increase my confidence in your work?
While sites like Charity Navigator and the Form 990 itself provide useful data, we recognize the limitations and drawbacks to this numbers-oriented view.
To fill in those blanks, we asked Karen Beavor for advice as the President and CEO of the Georgia Center for Nonprofits, our state’s central advocate contributing to thriving communities by helping nonprofits succeed.
When you check out potential partners, Karen encourages Georgia companies to beware of relying too heavily on simple analysis and ratios. They may not give the full picture of a non-profit’s efforts. For example, she points out, the Form 990 does not include non-cash (in-kind) donations in its calculations. As a result, nonprofits such as food banks, hospices and community theatres that obtain great amounts of donated food and services are likely not appropriately rated.
Furthermore, Karen cites that financial ratios and basic organizational information are helpful in narrowing charitable partners – however, just like any business, there are many factors that influence success. For instance, the Form 990 does not measure or report on key qualitative aspects such as program effectiveness, management strength, governance quality, or organizational transparency.
“There is no better way to pick a partner than to learn about their work first-hand from attending an event, volunteering, or talking to a board or staff member,” Karen confirms.
With so many community needs to choose from, and multitudes of companies eager to activate their corporate values — we hope this helps you find the best charitable partner for your journey.