Knowing the strengths and areas for improvement of nonprofit organizations can help target the best way to support them.
When it comes to philanthropy, we are often asked How do I create impact? or we hear mantras such as I want to make sure my dollars count! The best way forward starts with doing your homework.
Effective and efficient research is critical; not only to understand the landscape and any relevant issues, but also to learn about the nonprofits you and your family may choose to support.
Understanding the landscape of the cause or initiative your family wants to support can begin with online research. This helps family members develop a better understanding and education about the cause, the associated issues, needs, funding gaps, opportunities, and nonprofit organizations working in that space.
Ways of research
Contacting local community groups, the local chamber of commerce, or other local institutions (e.g. research facilities, hospitals, universities, local governments, etc.) can also yield helpful information. Meeting with nonprofits already working on a particular cause or within a specific geographic region can also be very helpful, as many organizations will typically provide educational material about the cause itself, their specific work and programs, as well as major funders.
Collaboration with other funders can be of great value, as families don’t have to reinvent the wheel. Many funders are willing to share their insights, experiences, and lessons learned. This can also lead to partnerships in funding opportunities, which can provide economies of scale for organizations.
Bringing in an expert advisor to help educate your family and provide a thorough landscape analysis is highly recommended. Societal issues, medical research, education, environmental issues, etc. are all very complex problems and having an expert in the field of study your family supports is beneficial during the research process. Engaging a subject matter expert to identify funding gaps or opportunities gives funders the ability to use their resources to create impact within those gaps and opportunities.
Conversely, pooling resources with other funders may help to drive impact where large amounts of resources are needed (e.g. the worldwide eradication of polio not only requires a large financial investment, but also the cooperation and coordination of many bilateral and multilateral organizations). Expert advisors can also help to define measurable objectives and milestones for programmatic support given to a nonprofit. Measurable objectives and milestones are less subjective to monitor and evaluate.
Gaining more insight
However, the research doesn’t end here - choosing the right nonprofit partner also requires an online search of the nonprofit to check its tax-exempt status, favorable or unfavorable recent news articles, its board of directors, employees, and major funders. Site visits to the nonprofit and discussions with other funders can help to suss the skill level and experience of the nonprofit program staff, board, and operational team.
For example, in the case of US nonprofits, a review of the nonprofits Form 990 – Return of Organization Exempt From Income Tax and review of its audited financial statements can give insight into the organization’s governance policies and financial health.
The support you give to nonprofits can range from volunteer work, to donations, to board service. While your time, treasure, and talent are valuable to nonprofits, one of these may be more useful to a particular nonprofit than to others.
It is a very good idea to understand which is most important to a particular nonprofit and the best way to ascertain this is simply to ask. As a funder, you and your family are in partnership with the nonprofit – you are both in this together, hopefully for the long haul, focusing on the same results. Nonprofits, not funders, typically know best how they need to be supported.
The ;nonprofit knows best rationale holds true for the type of donation that will enable the nonprofit to make the most impact. In some cases, this could be goods or service, rather than monetary donations. In other cases, monetary donations, which do not come with a host of transportation and storage logistics, may be the better option.
Certain types of monetary support have restricted uses (e.g. programmatic support and capital campaigns) which require the nonprofit to use the funds solely for the specified use. While it’s typically easier to measure impact with programmatic support, general operating support can also lead to impact. Supporting a nonprofit’s gala/benefit, providing matching grants, and granting general operating support allows the nonprofit to determine how the funds will best be used.
Whether that is to keep the lights on hire talented team members, upgrade technology, or use for programs, each of these allow the nonprofit to do its best work to accomplish its goals and objectives; creating impact.
Rigorous research to develop a strong understanding of how to best support partnerships with nonprofits takes time and effort. However, this initial investment can go a long way to help bring your family’s mission to life and create meaningful impact.