STAT BOX
Founding Board Member Laura Gassner Otting moderated conversations with two of Boston’s most insightful philanthropic leaders, Theresa Ellis and Susan Musinsky, at workshops for SheGives members. Laura founded one of the most highly respected national nonprofit executive search firms in the country through which she consults for some of the most innovative and powerful nonprofits on wide-ranging issues. Previously, she served as a presidential appointee for the White House Office of National Service, was part of the team that created the AmeriCorps and worked on the Clinton/Gore Transition Team.
Theresa Ellis is a Harvard Kennedy School Gleitsman Visiting 
Practitioner and the Founder of Common Impact. Common Impact is a market-changing nonprofit that was one of the first to systematize the engagement of talent resident in America’s Fortune 500 companies to create stronger communities. Her work at Common Impact has been widely recognized for its innovative model, including accolades from the Wall Street Journal, The Chronicle of Philanthropy, the Boston Business Journal and the Social Innovation Forum.
Susan Musinsky is the director of Root Cause’s Social Innovation 
Forum. SIF identifies five early-stage nonprofits through an intensive diligence process and then helps them gain visibility, expand their networks and build capacity. Since 2004, SIF has directed close to $13 million in cash and in-kind support to 59 Social Innovators and Impact Entrepreneurs. SIF brings together philanthropists, foundation staff and business people to ensure the growth of innovative nonprofits and businesses that address important social issues.
Personally driven giving is central to SheGives model, so we began our SmartConversations with this working seminar on how individuals might approach evaluating nonprofits for personal giving. The views expressed here are not necessarily shared by all participants.
Evaluating Nonprofits for Individual Giving
So, what did we learn? There are ample resources and vehicles to inform personal giving at all potential grant sizes. Our Resource List with some useful ones are below. GiveSmart provides checklists with detailed research items to consider depending on whether you want a “light touch” inquiry versus something more full blown.
But let’s step back and ask, “Why bother doing research at all?”
For two reasons at least, suggests Theresa Ellis. First, your resources are limited, if not scarce. Your time, money and energy are all finite. Giving to one inspiring education cause may very well mean that you can not give to another inspiring education cause. So you have to choose. How do you choose well if you are not informed? Secondly, the world has big, seemingly intractable problems. You want to support the efforts that create real and lasting impact. And how do you know that if you don’t evaluate?
When performing diligence what matters most? Not simply whether a nonprofit’s mission makes you swoon. Two of the most important things to consider are its leadership and impact.
How does an individual donor get at leadership? Not through the metrics available on most nonprofit rating sites. Depending on the size of your potential gift relative to the nonprofit’s revenues, an in-depth in-person q&a with its key players may or may not be an appropriate use of its resources. The level of engagement you expect for diligence and reporting should be proportionate to the potential size of your grant.
To form a view on leadership when it doesn’t makes sense to get one-on-one attention from the leaders, you can look at the Executive Director’s bio and resume from the nonprofit’s website, as well as the results of google and you tube searches. You are looking for evidence of concrete accomplishment, leadership roles, management experience and lots of energy and passion. Lots of energy and passion. Because it takes that to be an effective leader of any organization. Look at the rest of management with the same eye. Does the head of finance and administration have relevant experience? It’s a key role in whether the organization runs well.
When you meet with an Executive Director to consider leadership, what do you ask? We like to ask what Susan Musinsky asks: Particularly if it is a start-up. Among other things, she asks how they built their Board. Whether they were strategic, how they approached it, what type of Board they’ve built, what skills and constituents are represented — this says volumes about strategic vision. And her or his ability to put together a leadership team with the right skill set. Does the Board’s composite reflect a wide range of the nonprofit’s constituents? It should.
And here’s something you don’t hear enough of. Susan recommends that when you understand how they built their Board, next go to how they use it. Does the Executive Director understand how to make effective use of the Board’s resources and skill set? That’s a metaphor for whether the Executive Director can get the job done.
How do you measure impact? This can be difficult. For starter’s, though, you want to scrutinize a nonprofit’s impact statement. Do they measure how many they reach? How they change their beneficiaries’ lives? Impact is related to strategy, which is related to mission, so you also have to consider these together. A nonprofit’s mission is what it wants to achieve. Their strategy is how they are going to get it done. Does their strategy seem like an effective way to address their mission?
For instance, we considered a start-up nonprofit whose mission is to deliver critical items to the needy. Their strategy is to provide these on bicycles in order to minimize environmental impact. That sounds terrific at first glance, right? Then we thought about it. Many of the items would be bulky — are they limiting their deliveries to small items? And then, we live in New England where the long cold, icy winters could hamper — if not halt — the efficient delivery of products. So if they are only delivering small items in bike-able whether, how many needy could they serve? Not as many as we wanted them to. That’s impact.
And how do you think about financial diligence? A number of online sources, including The Boston Foundation’s Giving Common, Guidestar and Charity Navigator provide efficient and useful financial information and analysis. (Check out our Resource List below). For Massachusetts’ nonprofits, all financial filings made with the State are public and should be available online here. To learn How to Read the IRS Form 990 and Find Our What It Means, the Nonprofit Coordinating Committee of New York has published its guidance here.
Financial analysis is a necessary part of performing nonprofit diligence; however, we believe that there are significant limits to the consideration of financial data and these may be related to the role of nonprofits in our world. For instance, how do you easily measure the confidence and self-worth gained from an art therapy program? And, consider this: the New York Times Giving Column recently ran a piece arguing that guide dog training has a high cost, but the payback is incalculable called “Precious Eyes” here. We also believe that the context, stage, mission and recent developments of the nonprofit are critical to understanding any numbers, and that more focus should be shifted from administrative spending metrics to results. Yet, we believe that donors do want to know that their contributions are going to organizations that are responsibly financially managed and they want to understand what proportion of their contributions are going to program funding.
If you want to specifically research nonprofits in the Commonwealth of Massachusetts, where do you start? If you are looking for nonprofits within the Greater Boston area, as we were, we found the Giving Common’s website here the most useful, fact-filled and efficient way to get a view on whether to consider a nonprofit further. It includes not only overviews (and increasingly, impact statements), and also financial information and metrics. In most cases, we looked at a nonprofit’s entry on the Giving Common’s site before we ever engaged directly with it. Whether it is on there, whether it keeps its filings up-to-date, whether it accesses this powerful vehicle to reach donors (and receive) contributions was helpful input to us on that nonprofit’s resourcefulness and savvy — two critical features of long-term success and sustainability.
SheGives connects committed, inquisitive donors with a slate of diligenced nonprofits in the Greater Boston area.We provide members with relevant data about the nonprofits in our portfolio and an opportunity to meet directly with our nonprofits’ Executive Directors and senior staff in small settings that promote in-depth q&a’s and, ultimately, informed giving. Giving is personally driven, but because we give side-by-side our collective impact is greater. Our diligence process includes standard-practice steps for grantmaking organizations, including financial statement and Form 990 review; q&a’s with senior management; review of grant proposals, websites and youtube videos; site visits; partnership and beneficiary feedback; reference checks and other efforts appropriate and customized for the nonprofit.
The Resource List.
Possibly the Most Valuable Thing We Know: Where to Turn for Insight
Our thoughts on resources for reliably thoughtful data and opinions. Disclaimers: this list is highly edited and not comprehensive; the resources listed represent a variety of viewpoints, and some we don’t entirely agree with, but all are worth considering and good to be aware of. Got suggestions? Let us know
Some Greater Boston Area resources for learning about Greater Boston nonprofits
The Boston Foundation’s Giving Common
Social Innovation Forum
Associated Grant Makers
Massachusetts Government Website on Public Charities
The Following Best-in-Class Social Venture Funds and Engaged Grantmakers/Consultants in Boston Are Recognized as Performing Professional, Detailed Diligence on Nonprofits prior to Providing Funding, as well as ongoing Strategic Support. We have the utmost respect for their work, and in our diligence process pay close attention to the nonprofits they support.
New Profit Inc.
Social Venture Partners Boston
Greenlight Fund
Edvestors
Strategic Grant Partners
Diligence-focused Giving Circles & Organizations in Boston:
Hestia Fund
Womenade
The Philanthropy Connection
TUGG
Notable Resources on Evaluation and Ratings (and many other areas of being an informed philanthropist)
The Bridgespan Group
GiveSmart
GiveWell
Guidestar
Charity Navigator
Learning By Giving Foundation
How to Read the IRS Form 990 and Find Out What It Means, by the New York Coordinating Committee on Nonprofits
Sites and Columns with Ideas and Opinions Worth Reading:
Chronicle of Philanthropy
Stanford Social Innovation Review
New York Times Giving Column
