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A Matter of Mission: Covering nonprofit groups

By Carol Guensburg                                                                                                  

                                                                                                                                         April 2008

America's nonprofit sector plays a major role in many families and communities, with organizations involved in everything from providing food and child care to supporting education and subsidized housing.

The sector's size alone – with more than 1.7 million tax-exempt entities raising a record $295 billion in 2006 – warrants journalists' attention. But it's especially timely now: A faltering economy brings more demand for nonprofit services and fewer resources to meet it. Donations slow slightly during recessions, Giving USA, a Chicago-based organization that tracks philanthropy, noted in a February press release. Donors may hold back, apprehensive about their own finances. And as consumer spending declines, tax dollars do, too, cutting into the availability and size of government-controlled grants.

Numbers play an important, but not primary, role when evaluating nonprofits. “People tend to look first at the program ratio – the percentage of expenditures that directly support the program’s mission,” observes Suzanne Coffman, spokeswoman for GuideStar, an information service of Philanthropic Research Inc. “We think that’s backward.”

Instead, she and other philanthropy experts recommend starting with an organization’s stated mission. Often, “nonprofits are dealing with intransigent issues” such as low academic achievement or substance abuse, says Adriene Davis, spokeswoman for the Center on Philanthropy at Indiana University. That work can involve significant operating costs, especially for a start-up. And “organizations that are trying to aid more controversial causes may have higher fund-raising costs because they may have to approach more donors to raise the same amount” as more mainstream campaigns, Davis says. “You need to look deeper than just what the numbers say.”

Yes, ask about the bottom line. But expand the line of questioning: Do existing programs support the stated mission? Are the goals specific and realistic? Are the outcomes measurable? What is the target audience and who’s actually being served? How accountable is the nonprofit to constituents and donors? How does it compare with organizations of similar focus and size?

Basic information about a nonprofit’s mission, makeup and money can be found on its Web site, its annual report or on the Internal Revenue Service’s Form 990. However, nonprofit organizations with revenues of less than $25,000 don’t have to report to the IRS. Nor do faith-based organizations, because of the separation of church and state.

“That’s the tricky part, because they don’t have to file a lot of public documents,” says Stacy Palmer, editor of the biweekly Chronicle of Philanthropy.

Many states require nonprofits to register with their attorney general’s office, Palmer says, adding this is “not usually a giant place to help.” But there may be other documents, such as audited financial reports or government contracts. “Then it gets to talking with people,” including the nonprofit’s chief officer, other personnel, clients and community members, Palmer says. “Talk to people on the board, who often can speak more freely and can be helpful.”

Umbrella groups – from the local United Way chapter to the National Council of Nonprofit Associations – may offer additional perspective, suggests Carol DeVita, a senior research associate at the Urban Institute’s Center on Nonprofits and Philanthropy. She also recommends checking with umbrella advocacy groups such as Voices for America’s Children, a national organization with state representatives.

Davis, of the Indiana Center, notes that more than 250 U.S. colleges and universities have programs studying nonprofits. Faculty members “understand the landscape of their local nonprofit community,” she says, including economic conditions and philanthropy.

Palmer recommends treating nonprofits – and the foundations or government agencies – as sources for broader stories and “cutting-edge trends.” Because they conduct research and experimental programs, they have a wealth of expertise on social issues. They offer “a dimension that you don’t get if you stick to government and business sources,” Palmer says.

OTHER RESOURCES

BBB Wise Giving Alliance; www.give.org
Part of the Council of Better Business Bureaus, based in Arlington, Va., the alliance traces its roots to 1918. It evaluates more than 1,200 organizations that solicit nationwide, judging them not only on financial statements, 990s and annual reports but on 20 standards involving governance, fundraising, spending and transparency. At least half of the 120 BBB organizations around the country use those standards to evaluate local and regional charities. Three out of 10 nonprofits decline the alliance’s information requests, says Bennett Weiner, the alliance’s chief operating officer. “We think it may demonstrate a lack of commitment to transparency,” he says – a point noted in online reviews of such nonprofits.
Contact: Steve Cox, 703.276.0100; scox@council.bbb.org

Charity Navigator; http://www.charitynavigator.org/
The Mahwah, N.J., organization rates more than 5,000 U.S. charities based on financial health, organizational efficiency and capacity. It awards four stars to top performers.
Contact: Sandra Miniutti, vice president for marketing, 201.818.1288, Ext. 105; media@charitynavigator.org

The Chronicle of Philanthropy; www.philanthropy.com
The Washington, D.C.-based newspaper covers individuals, nonprofit organizations, foundations and corporations, trends in fund raising and grant making, and much more. It offers complimentary online subscriptions to journalists.
Contact: Sasha Bartolf, communications assistant, 202.466.1755; sasha.bartolf@chronicle.com

Foundation Center; http://foundationcenter.org/
Supported by more than 600 foundations, the New York-based center maintains a comprehensive database of U.S. grantmakers and grants. It also operates research, education and training programs to advance philanthropy.
Contact: Maggie Morth, communications manager, 212.807.2415; communications@foundationcenter.org

Giving USA; http://www.givingusa.org/
Based in suburban Chicago, the service examines philanthropic trends and legal and legislative issues. Each June, it estimates annual giving for the previous year. It also produces a quarterly newsletter. Contact: Sharon Bonds, senior PR manager, 847.375.4709 Ext. 4836; sbond@connect2amc.com

GuideStar; www.guidestar.org
The comprehensive service in Williamsburg, Va., has a searchable database of 1.6 million nonprofits and another 100,000 religious organizations that have voluntarily filed information. Free registration is required to access a report, though detailed information requires a paid premium subscription of $700 a year (half that for journalists).
Contact: Coffman, communications director, 757.229.4631 Ext. 2

Independent Sector; http://www.independentsector.org/
An umbrella group for charities, foundations and corporate giving programs, the Washington, D.C.-based organization supports standards for self-governance and advocates for the charitable community.
Contact: 202.467.6100; info@independentsector.org

Internal Revenue Service; http://www.irs.gov/charities/index.html
The IRS maintains a list of organizations that have applied for tax-exempt status using Form 1023. (DeVito, of the Urban Institute, finds the list “outdated almost as soon as it’s issued” because some organizations quickly go out of business or decide they want to be for-profit.) Form 990 is the other public record for nonprofits.
Contact: Public affairs, 202.622.4000

Also see “Checking on Charities,” a Dec. 10 story by Jaclyne Badal of The Wall Street Journal.

Carol Guensburg is a freelance journalist based in Virignia.