Nonprofits Are Being Required to Provide Hard Facts to Get Funding
August 10, 2009, The Plain Dealer — Pressure has never been so great for nonprofits to prove their worth. For groups seeking grants and donations, it's no longer enough to have a charismatic director or a touching story to tell.
These days, nonprofit agencies had better produce statistics to show they are accomplishing their mission if they want to compete for dwindling charitable dollars.
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And while it is inconvenient to chase after program participants with evaluation forms and surveys, some nonprofits are learning the information they're collecting has helped them improve.
The latest news release from Big Brothers Big Sisters of Greater Cleveland gives an example of the changing playing field. The release touts hard facts, not heartwarming tales.
It says that adults who were mentored as children through Big Brothers Big Sisters tend to be better educated and wealthier and have stronger relationships than peers of a similar background not mentored by the agency, according to a study conducted last spring by Harris Interactive.
In today's market, there's no better way to advertise than with strong statistics like these, provided by the national office, said local chapter President Margaret Mitchell. "Funders and donors want to know that their investment has a return," she said.
A number of factors are sparking the shift, most notably the dismal economy, which is causing foundations and government agencies to demand that nonprofit groups demonstrate a successful track record. Individual donors are becoming savvier too, using the Internet more to research nonprofits.
Many experts also say the tidal wave of community activism that swept President Barack Obama into office is still having an effect. The White House's Social Innovation office, set up to promote fresh ways of fixing old problems, has a heavy emphasis on measuring results.
"There is a movement for more accountability," said Jeff Mason, chairman of a newly formed group of nonprofit leaders called the Alliance for Effective Social Investing that gathers in Washington, D.C. "If you want to get funding, you're going to have to demonstrate that you can perform."
Mason said the alliance is devoted to identifying top-performing nonprofits and driving more money to them. The group's biggest coup: persuading two key Web sites for donor giving, Charity Navigator and Guidestar, to revamp their rating systems so that a nonprofit's social effectiveness, not just its financial performance, is evaluated.
Ken Berger, head of Charity Navigator, said it will take at least a year to implement the change. He estimated only 10 percent of the rated charities measure outcomes.
Robert Egger, founder of a Washington, D.C., nonprofit and another alliance member, said that in cash-strapped states like Ohio, it's vital that government agencies stop throwing money at organizations that aren't accomplishing social change.
Cleveland's United Way saw the trend coming and held workshops to prepare nonprofits for the data-driven age.
Judy Simpson, who led those workshops in 1999 and today is United Way's vice president for community investment, said organizations have no choice but to hire or assign a staffer to manage client data.
Some local nonprofits, like Big Brothers Big Sisters, get help from a national office, giving them access to a larger data pool and a framework for local data collection.
But at low-budget and grass-roots nonprofits, it's a struggle to satisfy the new demands.
Joy Banish, executive director at Greater Cleveland Volunteers, said her agency (the former RSVP of Greater Cleveland) can produce pages of charts and tables to illustrate accomplishments. Yet her staff is stretched thin because each funder seems to ask for a different slice of data.
Yet nonprofits say they're learning more about their operations as the research rolls in. At Big Brothers Big Sisters, for example, surveying "bigs" and "littles" in short-lived relationships helped staffers identify what went wrong. "Our program is better as a result of the studies," said Mitchell.
But funding can be fickle, even for those who tenaciously gather the information.
In Lorain County, the First Step job-preparation program had statistics to show that between 2004 and 2009, it transformed half of its 308 graduates into wage-earners and saved the state more than $800,000 in cash and food stamp benefits.
The program was praised by the county's Job and Family Services Department for accomplishing a lot on a $140,000 annual budget. Still, the agency lost its funding June 30, a victim of state budget cutbacks.
Executive Director Rick Grahovac of Common Ground, the nonprofit that created First Step to help people with serious life challenges, said he's disappointed that the high-achieving program has been suspended. "I really felt it made a difference and had a big impact," he said.