Starfish Impact has a robust due diligence rubric that we use to help advise our clients on identifying well run charities, however this research process is extensive, and better suited for individuals or organizations that are planning to make significant investments in nonprofits. But that doesn’t mean we can’t all be informed philanthropists. There are a few easy ways to look into a nonprofit that don’t require interviewing staff, developing impact metrics, or even leaving your computer!
- Check with your friends. Most of us who casually give do so because a friend asked them to support their marathon, personal cause, or favorite health charity, for example. So a good place to start is reflecting on who is asking you. Do you trust their judgment? Have they supported the charity for a long time? Have they experienced the mission or engaged with the staff personally? Knowing the answers to these questions will help you feel more comfortable that your friend has done some of the legwork already for you!
- Is there a website or social media presence? You would think this is an obvious ‘yes’ but many organizations don’t have an online presence – which isn’t necessarily bad – but could point to a lack of resources invested in administration and marketing.
- Read the CEO’s biography. Has the CEO worked in the nonprofit sector for many years? Does he/she have experience at nonprofits you trust? Or is this a passion project and they are just trying out? An executive sets the tone at any organization or company and an experienced executive who has surrounded themselves with trusted advisors and staff (or volunteers) that come from a variety of backgrounds is the type of leadership we like to see.
- Look at their donor list. Many charities will post their donor lists online or in a newsletter to recognize supporters. If you can find this, take a look through the names. Do they seem familiar? Are there any local well-known philanthropists on the list? If the Gates Foundation, or your local Eli Broad is supporting the charity, it’s likely that they’ve done their due diligence and you can feel comfortable just piggy backing on them!
- If you’re feeling fancy, look up the 990. This is the tax form that all nonprofits are required to file and you can search and view them through the Foundation Center’s site. Keep in mind that no one data point on its own can point to a ‘healthy’ nonprofit. Yes, many will point to salaries as the bellwether of a well-run organization, but on its own, a relatively high salary doesn’t automatically alarm us. On the other hand, a particularly low salary (or no salaried employees at all) does generally indicate rough weather ahead in the form of turnover, dissatisfaction, and unmotivated leadership. At the end of the day, nonprofit staff are people that have rent to pay as well.
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