Services track charities’ effectiveness

It’s getting easier to keep tabs on the dollars you donate to charity.

As charitable giving by Americans nears $300 billion annually, donors increasingly want to know how much impact their dollars are having. Now they have more ways to find out as increasing numbers of services spring up that monitor charities’ effectiveness and charities themselves improve their self-assessments.

Donors can readily compare charities from a financial perspective: how much an organization spends on administrative costs or fund raising, for instance. But givers, especially younger, business-minded ones, now tend to want more information on how successful a charity’s programs are in addressing the issues the charity sets out to resolve, from feeding the homeless to securing employment for the disabled. That’s especially important as the number of charities continues to grow, with about 1.4 million to choose from.

The problem is, it can be difficult – and expensive – to measure whether charitable programs are actually working, and most nonprofits aren’t willing to devote scarce resources to collecting such information.

Wealthy people and foundations sometimes hire philanthropy consultants to help them gauge a charity’s effectiveness. But other donors who seek that kind of analysis usually have had to rely on guesswork or do it themselves, which makes it tough to figure out whether one approach to solving a problem is better than another.

More services are emerging to help donors – and charities themselves – measure their impact and failures. GiveWell, a new nonprofit, evaluates charities in different fields and publicizes the information on its Web site, www.givewell.net. GlobalGiving.org channels donors’ contributions to charitable programs around the world and provides regular field reports. It recently launched a “guarantee” program, in which donors who are unsatisfied with the results of their gifts can pull their funding and direct it elsewhere through GlobalGiving.org.

“Contributors want a better handle on whether their selected charity is really having some impact on the issue they were seeking to address,” says Bennett Weiner, chief operating officer of the Better Business Bureau Wise Giving Alliance, Arlington, Va., which evaluates national charities based on various financial and governance standards.

Some charities are evaluating their own programs. Youth Villages in Memphis, Tenn., which works with troubled youth and their families, spent $30,000 several years ago to have its work evaluated. To the group’s dismay, the research showed that its approach – housing and caring for kids away from their families for one to two years – wasn’t as effective as returning them to their homes after four or five months while engaging the whole family in treatment programs. In response, Youth Villages began returning children to their families sooner.

The charity’s willingness to monitor itself impressed Mike Bruns, a Memphis transportation executive who says he has contributed regularly to Youth Villages for years and has joined the board. “So many nonprofits do not measure their effectiveness,” said Bruns, who says he likes to help kids who don’t have access to the stable upbringing he had.

Various online services provide information about charities’ finances, including Charity Navigator and GuideStar.org. In addition, charities’ own Web sites usually provide broad mission statements. But when it comes to effectiveness, it’s challenging for outsiders to assess something that charities themselves rarely measure. Donors and charities are testing a variety of methods to overcome these obstacles

Wealthy donors and private foundations – typically those who give upwards of half a million dollars – are increasingly turning to philanthropy consultants, such as the nonprofit Rockefeller Philanthropy Advisors or Geneva Global, a for-profit group that focuses on developing countries, to provide due diligence on the charities they already support or are considering funding.

Another option is to visit Web sites and piggyback on the work of so-called venture-philanthropy firms, such as New Profit Inc., in Cambridge, Mass., Social Venture Partners in Seattle, and Venture Philanthropy Partners in Washington, D.C., which do much of the legwork needed to assess the effectiveness of their charitable giving. Or, donors can check out charities that get money from foundations that put a premium on effectiveness, such as the Edna McConnell Clark Foundation in New York and the Annie E. Casey Foundation, based in Baltimore.

And there are a growing number of groups – GiveWell, for instance – whose aim is to make charity-effectiveness evaluations open to the public.

Community foundations, which are public charities that typically help local causes, may also offer effectiveness evaluations of nonprofits in the communities they serve, often for free to the public.

Donors can also check for themselves whether a charity is successful at fulfilling its mission. Philanthropy advisers suggest first asking nonprofits about their goals and strategies, and which indicators they use to monitor their own impact. Givers should see how the charity measures its results both in the short term and over a period of years.

It’s also smart to see if the charity’s progress has ever been evaluated by a third party, rather than just the charity itself. Check the charity’s Web site or annual report for specific details on how it gauges its results. If the information isn’t there, call the charity and ask.

Another way to learn about a charity: Volunteer with the group, or visit a site to get to know staffers, clients and facilities.