Cutting through the fog: Five steps to smart giving

This post was originally published on July 21, 2009. We thought it would be helpful to re-publish this blog post in light of year end giving season, in order to give people another resource for determining how to make their final charitable contributions of 2009.

Guest blogger Jacob Harold is a Program Officer, Philanthropy for The William and Flora Hewlett Foundation.

Most of us don’t have a lot of money to give away. But we know there are big challenges in the world: climate change, homelessness, AIDS. We want as much bang for the buck as we can get. The truth is some nonprofits are better than others. So, to get as much social impact bang for our philanthropic bucks we have to make good decisions.

There’s no simple ranking system. In a world as complicated as the nonprofit sector there may never be one, but there are some basic things we can all do to make better philanthropic decisions:

1. Pick issues with your heart; choose organizations with your head. Only you know what issues are most important to you—education or health or wildlife protection. That’s a deeply personal choice. But when it comes to picking organizations within your chosen focus area, it’s time to turn on your brain. (Philanthropedia (formerly Nonprofit Knowledge Network) offers this explanation.)
2. Be proactive. Don’t just wait for organizations to come to you. If you’re proactive, you can compare one organization to the next. Most every nonprofit is doing some good work so if you think about them one at a time each one might seem good. But if you consider Nonprofit A and Nonprofit B next to each other and compare them, you’ll probably make a smarter decision.
3. Look for clarity. Organizations need to be clear about three basic questions: What are they trying to accomplish? What do they do to reach their goal? How do they know if they’re making progress? If they can’t communicate this basic information, they may not be clear on it themselves, which makes it hard to be effective. Many—though not all—nonprofits have posted this type of information on their Guidestar profiles. Others will have it on their own websites.
4. Care about results. We don’t give away money just to feel good; we do it to get some lasting results. Strong nonprofits care about results and learn from the successes and failures of others. Ask: does the nonprofit have data or research that support its strategy? Are they focused on long-term results? (Some of this type of research is compiled by the Coalition for Evidence-Based Policy.)
5. Learn from others. No one is an expert in every issue area. Try to learn from the experiences and research of others. GreatNonprofits offers reviews from volunteers, beneficiaries and others. GiveWell offers some detailed analysis of organizations in a few issue areas, like international aid. The Better Business Bureau’s Wise Giving Alliance has analysis of nonprofit accountability and governance. Right now, Charity Navigator only offers financial analysis (which is of limited use) but their new CEO has pledged to do better. (Update: Since the original publish date of this post, Charity Navigator, GiveWell, Philanthropedia, Guidestar, Great Nonprofits, Hewlett Foundation and Philanthropy Action teamed up to issue guidance for helping donors evaluate and choose nonprofits to give to this holiday season).

Smart giving isn’t easy, but if you follow these simple rules you’ll have a much better chance to make good decisions and get more social impact bang for your philanthropic buck.

For more information and resources, go to www.givingmarketplaces.org.