It's Time to Judge on the Basis of Impact

The end of the year is approaching and people are hastening to make their 2009 gifts. Some generous souls will respond to any organization that makes an ask. For most, however, the process involves either going through the stack of envelopes received from organizations to which they’ve given in the past, merely to decide how much to give this year, or logging on to a charity watchdog site, such as those run by Guidestar and BBB Wise Giving Alliance, to see which organizations serving a personal passion get high marks. But, are any of these means the best way to approach this important task?

A small but increasingly vocal number of people are suggesting we should be looking at impact when we make our giving decisions. Has the organization to which we’ve given loyally over the years really lived up to its promise to the community? I can hear the contingent that turns to watchdog groups saying, “But that’s why I check these groups out!” The problem with the watchdog groups is that the criteria upon which they’ve been rating organizations are criteria that are easy to measure. They are not necessarily criteria that speak to impact.

One of the key factors upon which high ratings have been given in the past is the maintenance of low administrative costs. However, nonprofits have rightly complained for years that it takes people, facilities and equipment to provide services and achieve impact. People, facilities and equipment cost. Other key factors that result in a strong ranking include the number of dollars that are spent to raise money and the period of time the organization could maintain itself without any further fund raising. While clearly related to good business practices, neither of these criteria speak to results. Frankly, even factors such as numbers of programs, numbers served or satisfaction levels speak more to busyness than they do to impact.

Ken Berger, the CEO of Charity Navigator – one of the foremost watchdog groups – bravely came out this month to say that Charity Navigator will be redesigning its rating system to focus on impact. He admits that it won’t be easy, but believes it is necessary and doable.

Until all the watchdog organizations do our work for us, I propose that we put aside emotion and analysis based on easy but less-than-meaningful numbers to do our own assessment of impact. Is, for instance, our favorite homeless shelter merely serving more people or is it putting the people it does serve into their own homes and providing them with the skills to pay the rent and take care of the maintenance?

We can also look at how well the organizations we identify play well with others. Does that homeless shelter insist on hiring its own case managers, building out and staffing its own kitchen, or collecting its own clothing to provide to clients when it could reach out to other organizations in the community who already have case managers, a kitchen capable of feeding those in the shelter or sufficient clothing to share?

Doing this sort of research will take time, but the rewards go beyond knowing that you answered the call to ensure the status quo. It will draw you closer to the organizations you ultimately select. It will intensify the feeling you get inside when you give. It will force organizations to make a difference or leave the marketplace. And, it will allow you to live in a healthier, more robust community.