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Excellence in Giving

Not too long ago I had the opportunity to listen to a wonderful speech that was given by Thomas Tierney, chairman and cofounder of Bridgespan, at the 2009 Philanthropy Roundtable Annual Meeting.  For those who have not had the opportunity to listen to it, the speech can now be found on the Philanthropy Roundtable’s website. It was a refreshing oration which I believe every donor (and nonprofit leader) would benefit from listening to. One of the focuses of the speech was to identify several brutal facts facing donors who are seeking to achieve greater impact through their contributions. Since this year, more than any other in recent memory, donors are interested in seeing their seeing their contributions stretched a little further to help more people, recognizing these facts is essential if you want to optimize the impact your philanthropy is having.  

The first brutal fact that Tierney identifies is that donors are only as good as the organizations they give to. This becomes particularly tricky when a donor considers the sheer number of nonprofits that are out there – more than a million at the latest count.

The second fact is that excellence in giving is self-imposed. It is very easy for a donor interested in average returns to stroke a check to the organization of his choice and continue on his or her merry way.  However, donors who want to see more children helped with their donation must raise the bar in their giving.  It was easy to appreciate his view that, unlike the for-profit sector, there are no predators in the nonprofit world.  In other words, if a charity underperforms, there is no larger charity that will come and absorb it. Underperformers, although often quite well-intentioned, abound in this sector.  It is left up to the donor to determine what nonprofits meet their high expectations.

The third fact that donors must face is that there are obstacles and handicaps that appear in the nonprofit sector, which are not present in the for-profit world that most donors are familiar with.  There are no capital markets for nonprofits, nor any sort of pipeline for identifying and promoting talent. Effective nonprofits must be repeatedly asking themselves the difficult questions about how they define success and how they are going to achieve that vision if they want to have the kind of impact that discerning donors are looking for.

Compound those brutal facts by this week’s press release issued by a collaborative of nonprofit watchdogs, including GuideStar and Charity Navigator, which essentially encouraged donors not to rely on overhead and fundraising ratios as a measurement of effectiveness in their favorite nonprofits: tools that have been historically used to determine a nonprofit’s efficiency.

I completely agree with what the press release had to say.  Overhead ratios do not relate to the impact that a nonprofit is having on its target population.  Not to mention these ratios encourage nonprofits to sacrifice investing in resources and talent that would increase their effectiveness but would negatively affect their ratio. On top of it all, I have never seen two nonprofits interpret the rules for determining overhead costs in the same way.

So what does that leave donors? Since excellence is self-imposed, how can donors interested in achieving more than average returns on their donation navigate the obstacles presented by the nonprofit world and find the partners that deliver the results the donor is looking for? It can be terribly overwhelming. The good news is…there is help. 

Our role at Operation Kids is to provide the research and resources necessary so that our clients can make informed giving decisions and achieve the impact they are hoping for – without taking any fees. We do this because we firmly believe that more donors giving to more effective charities results in more lives changed. If you are interested in raising the bar in your charitable giving this holiday season (or any time), contact us and see if we can help you.

 -Christopher Lindsay

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Stronger Charities = Greater Impact

Growing up in middle class America, I remember vividly the first time that I encountered poverty. As a young boy, my family took a day trip to Tijuana, Mexico. There, recklessly wandering through side streets, I saw living conditions whose depravity can never adequately be captured by camera or pen. But it was looking into the eyes of a hungry boy, who could not have been older than me, as he begged for change that left the indelible impression.  Shortly thereafter, I saw the same look in a young homeless girl outside of a restaurant in New Orleans. I recognize now in their expressions the hopelessness shared by many in impoverished circumstances. They were “tired of wishes, empty of dreams” to borrow Carl Sandburg’s phrase.  It was my first lesson that hunger and despair are very real, and they know no borders or boundaries.  

Unfortunately, the plight of these children is not unique: it is legion. Many of the children in our country face seemingly insurmountable challenges.  These types of social problems are not new nor are they ever going to go completely away.  But how our society combats these issues is constantly evolving and being refined.

We live in a very generous nation, and this generosity has contributed to a vibrant community of nonprofit organizations. While many of these charities are founded and staffed by individuals who passionately care about ameliorating the circumstances of children worldwide, the ability of these nonprofits to show results for their work varies greatly.  Because of this, it is often difficult for donors to judge which charity will most effectively put their donation to work. 

This is one of the reasons why Operation Kids’ model is so valuable.  Each potential charity partner is carefully screened to ensure that it is indeed “best-in-class.” For us this assessment begins by carefully reviewing the organization’s tax filings, overhead expense ratios, program budgets, and fundraising activities. We go beyond the financials, however.  We want to know if the charity can clearly demonstrate the effectiveness of its programs and if it is achieving operational excellence in its given area of focus. This is a hands-on process, and it allows us to become intimately acquainted with how each charity operates – both financially and programmatically. After all, donors deserve to know where their giving is going, and they deserve to know it is making a real difference.

We do not just stop there.  Our charity partners are integral parts of the social fabric of their communities.  For many who are underserved and in desperate situations, these organizations are able to treat the root cause of their problems, not just the symptoms of hunger or addiction that the rest of us see. So we work closely with these charities to increase their effectiveness, diversify their funding sources, and collaborate with other community partners to better serve those in need. As the capabilities of these nonprofits grow, their ability to meet and solve important child-related needs expands.

Our model is a double-lift.  It provides donors with the transparency they need to make important decisions while ensuring they see their Return-On-Contribution™ once their gift is made.  It also builds the capacity of charities so that they can more efficiently provide services and be able to attract the support they need. Of course, the real beneficiaries of this entire process are ultimately children in need, the reason behind everything we do.

Christopher

Christopher Lindsay recently joined Operation Kids as a Sr. Charity Analyst. You can read more about his background here.

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A Welcome Perspective

I would like to welcome a new employee to Operation Kids whose background and expertise, represents everything we are about. The prospect of bringing greater accountability to charitable giving, is something that we have to work at every single day, and Christopher Lindsay, our new Senior Charity Analyst, helps our mission in several important ways.  

Christopher joins us from his most recent post at the Electrical Safety Foundation International where he was Director of Programs. Prior to that, he served under the previous administration in the lead White House office for nonprofit policy issues. While there, his responsibilities included evaluating the results of Federal programs focused on mentoring, substance abuse recovery and prisoner re-entry. In addition, he played a pivotal role analyzing data and reporting trends on over 25,000 nonprofits who partnered with the government in providing social services – representing billions of dollars. 

This experience is unique and we are fortunate to find someone with such a background. One of our primary goals at Operation Kids is to refine the process of vetting and managing charitable giving. We often ask the question of donors, “Do you know where your last charitable gift went?” The answer is typically, “Yes, it went to (name of charity here)!” But when the question is more directed, and we ask donors if they know where it went within the organization – to  which program or which part of the organization, the response is far too often, ”I don’t really know.”

America is the most generous nation on earth – giving well over $3 billion to charity last year alone – and we give despite a general lack of trust when it comes to large charitable organizations. I have cited before the recent statistic that only 1 in 10 Americans “trusts” major charities. That is troublesome on its face and mystifying when we realize people have a need to give back, despite expressed concerns with where their giving may ultimately end up. It makes me wonder how many more people would give – and how donations might be even more generous, if they had confidence in what their money was doing and who it was helping.

This is exactly WHY we as an organization are here. And it is why we are thrilled to have someone like Christopher on our team asking the “hard questions.” I am thrilled when I consider the direct benefit this is going to have for donors and charities alike, as we are further able to provide a better understanding of how donors’ dollars are put to use and what kind of impact it has.

We have said for a long time now that when it comes to giving, caring is only part of the process. In addition to that, there must be analysis, there must be expectations and there must be accountability. It can be done. We have seen it in New Orleans, in post-tsunami Thailand and in virtually every state in the nation. It is a contagious attitude because once you see what can be done when all of a gift makes it to the child in need, you will insist on that efficiency from then on. I can promise you,  we will continue in its commitment to deliver those elements to caring donors.

-Rick

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Filed under Initiative: Charitable Giving & Accountability, Initiative: Nonprofit Operations, Initiative: Thought Leadership

Americans Still Generous Even in Troubled Times

For some nonprofits, surviving in a time of a down economy is a double-edged sword. As both corporate and private donors tighten their belts, giving tends to trend downward. Yet, as the global economy continues to falter, demand for those same nonprofits increases. These organizations are faced with the very real problem of trying to fill a growing need with diminishing resources.

I read with interest Tuesday’s reports from the Giving USA Foundation, who does an annual report on how much American’s gave to charity the prior year. In 2007, Americans gave more generously than they ever had before – to the tune of more than $3 billion dollars. Tuesday’s report indicated that while that number had fallen during the economically turbulent months of 2008, that figure still remained above $3 billion, a generous amount, given that Americans as a whole “lost 2 percent of their wealth last year.

Still, even with the smallest of declines, nonprofits have been hit as hard as anyone else by the rough economy. People nationwide are struggling to make ends meet, to keep the lights on, their children fed and clothed. Food banks, community service programs, children’s programs and other organizations providing first-line relief are feeling the pinch more than ever, especially in some of the hardest-hit communities.

There is good news however; individuals are still contributing – even if it is slightly less. In 2008, individuals contributed an estimated $229.3 billion (more than 2/3 of all charitable giving!) – a rate of giving that fell less than corporate donations. And corporate giving as a part of the gross domestic product still hovers just above 2%.

This means that even in our toughest times, Americans are still striving to be generous people, carving out something for those less fortunate, even if it means a smaller amount. It may also be good in the long run for some nonprofits, as their leaner operations may pave the way to more transparency, better operations and more efficiency.

In the last few months, we have certainly seen evidence of incredibly generous donors, as well as improved efficiency in the way charities are thinking. I hope that this generosity and this collaboration and move to efficiency continue, because even with recent signs that the economic downfall may be slowing, it’s going to be a long time before the least of us is back on his or her feet – and there are so many programs in need of help as we say … Until Every Child is OK.

-Sara

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A Letter from the President

We’ve been doing some updates to our site lately, and part of that is extending a message to all of our supporters. In case you haven’t had the chance read it, I’d like to share it with you here.

Dear Friends & Supporters of Operation Kids,

You have made a measurable difference in the lives of tens of thousands of children in 2008. The donations we received helped children in local communities and across the globe. We look back with gratitude on thousands of generous donors and nearly $2 million in support received, managed and dispersed – all thanks to you.

I want you to know that each donation has made a difference this year in the lives of tens of thousands of children. Your reach has been broad, from supporting those lovable kids who are part of Best Buddies, to providing important financial assistance to children and families clinging to hope as part of the Children’s Organ Transplant Association.

You have changed lives in Ghana through the Forever Young Foundation and given back a smile through Operation Smile. You crossed the globe delivering benefit through Vitamin Angel Alliance (critical childhood doses of key vitamins) and provided micro-credit loans through Enterprise Mentors. You have made kids safer in your own communities through the McGruff Safe House Network and the National Center for Missing & Exploited Children.

You built the Edible Schoolyard, funded grants for the Foundation for Science & Mathematics Education, funded after-school programs for New Orleans Outreach, and rebuilt two playgrounds in New Orleans. You brought music education to lower income kids, helped families with children suffering from Autism and helped improve the health and futures of kids through the American Heart Association and Boys & Girls Clubs of America – and that’s just the beginning.

With your continued support, we look forward to addressing more critical needs and bringing an even higher level of accountability and results.  

2009 begins with assurances that we will continue our commitment to ensure that 100% of every dollar you give to Operation Kids will go directly to support proven and effective programs benefiting children.

As always, I love to hear from our supporters and what is on your minds.

Regards,

Rick B. Larsen
President
Operation Kids

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Is Your Charitable Giving Changing?

The challenges and opportunities facing the nonprofit community provide me with a growing list of issues and reasons to blog more frequently this year. Economic challenges to ripple through various sectors and the charitable giving sector is no exception.

 

If you are a reader of the Wall Street Journal you are seeing unprecedented page space given to headlines such as: “Family Charities Get Focused,” “After Madoff, Donors Grow Wary of Giving,” and “The Philanthropy Shakedown.”

 

Philanthropy and giving in this country is a critical element of who we are and why our nation works. Non profits are, by definition, neither governmental organizations nor private sector businesses. They are something else – the individual pieces of a sector large enough to generate over $300 billion annually and important enough to earn tax exempt status from the IRS.

 

The fact is that non-profit entities provide vitally important services that for-profit entities would consider “unprofitable.” They are an effective alternative to government because of their flexibility and their ability to voluntarily secure support –in time and money – from interested and involved citizens.

 

As Americans, we support this approach but for reasons beyond the practical. We actually see value, each of us, in helping our neighbor. We have within us a desire to make the world a better place and give of our success and prosperity, in a way that no other nation fully parallels.  

 

But when the economy turns soft and people who should know better turn dishonest, these tough times and disingenuous people are as likely to target a non profit organization as they are a for-profit business. Recent headlines prove  this and also tie a growing sense of concern to charitable giving.

 

Here is an important point: so far, what we are seeing among our donors is this: people are not determined to give less, but rather are becoming determined to see more results from their giving. From our perspective, that is a good thing.

 

It is shaky ground to refer to a crisis or disaster as an opportunity. The good people of New Orleans will tell you, in reverent tones, that while no one would wish the devastation of Katrina on anyone, the reemerging community, particularly in the area of education, is better.  People there have determined to take advantage of the disaster and make things better.

 

Likewise, since we are all in the current financial crisis together and destined to ride it out, we can take the situation and make things better. The greatest crisis would be a measurable shift from our innate desire to help one another. Many more children will be hurt if our fear and skepticism over the deplorable actions of a Madoff cause us to pull back even a little.

 

It is timely that Operation Kids has a decade jump on this issue. That is how long we have been helping donors “give smarter” and helping charities deliver services more efficiently. Our plea as a charity and advice as a charitable giving strategist is this:

  • Give, but give smarter. Expect more from your giving
  • Get advice before you give, just as you get advice in other important areas of your life.
  • Research the charitable organizations you are giving to and get to know their key players.
  • Demand accountability and results for your giving.

The current economic crisis has made the situation just that much worse for too many children.  Giving to organizations that effectively address need is more important than ever.  There are many great organizations out there. Now, more than ever, it is up to individuals, foundations and corporate donors to support those organizations that are truly making a difference. There is more to come as we try and do our part in educating donors and keeping the spirit of people helping people, alive and well.

 

So, how are you changing your charitable giving, given the current economic climate? Are you give more because it is needed more? Less because you have less? Demanding more because of recent examples of gross greed? Asking more questions? Tell us how this current climate is changing your thinking – or why it is staying the same.

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Nonprofits and the Economy

For the few months I have been attending courses that constitute the University of Utah’s Non Profit Leadership Academy certification. The program has served to remind me of two very important characteristics of not-for-profit efforts:

First, it is not easy to do it right. While the creation of a charitable organization is not difficult, doing it “exactly right,” is. There are a great many steps and rules to follow and rightly so, particularly with a public entity. Every charitable organization should be committed to understanding the rules charities must follow and then guarding its compliance in every way.

Second, I am reminded that there are a lot of good people in the world who want very much to make a difference. Their passions range from recycling to the arts with a seemingly endless menu of need.

It all serves to reinforce why we are working so hard at Operation Kids. There is a need for organizations who “do it right;” who pay attention to every possible detail and encourage, through support, other charities who do the same. There is also a need to sort through the many efforts. A recent course discussion focused on the state of the current economy and its immediate impact on giving.

Our observation is that charities need to take the current economy as a cue to refine their message, their operations and present programs that address a true need and offer an effective solution.

If they can do that, there are generous people who can and will give. Perhaps the economic downturn will cause donors to ask an additional question or two of a solicitation, and that is not a bad thing. We encourage that, in good times and bad. Donors deserve to know that they are supporting charities that make every effort to be compliant, effective, efficient and accountable.

Operation Kids was founded on these principles. Our commitment to accountability and efficiency is not economy-driven, but rather it is part of the DNA of our organization. We continue to encourage donors to remember that there is great need, and there are charities they can trust.

It is validating to hear that we’re on the right track. We will continue to evaluate, to partner and to advise – to ensure every dollar has maximum impact and serves the greatest need. Because now, more than ever, accountability counts.

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