Measuring impact and efficiency

by Rich Cowles, Executive Director

The joint news release last month by Charity Navigator, Guidestar and others discouraging donors from using financial ratios to evaluate charities was welcome news. As an organization that has long tried to move donors away from preoccupation with the Program Expense ratio, the Charities Review Council applauds the release. We also fully agree with the assertion that nonprofits’ impact should be the primary criterion for giving decisions. Our newly updated standards that will be implemented 2nd quarter 2010 include a Community Impact standard and Monitoring Mission and Strategy standards.

The news release has triggered a flurry of posts in the nonprofit blogosphere affirming the importance of Impact, with some disparaging ratios as utterly useless. These comments have included the assertion that donors shouldn’t be concerned with how much it costs nonprofits to achieve their impact. If there were a limitless supply of donations, I would agree. But given donors’ legitimate desire to get the most bang for their contributed buck, they have a right to know about an organization’s efficiency in achieving its impact.

Highly flawed as it is, the Program expense ratio has been a widespread attempt to measure such efficiency. At best, it’s a surrogate until a better efficiency measure can be determined. Ultimately, “Impact per Dollar” is what we want to get to.

The sector is a long way from determining how to measure Impact per Dollar. But there’s an urgency to finding it; it should be an integral part of determining an accepted means of measuring impact. Donors do and should care about nonprofit efficiency. And nonprofits should too. We’re long past the day when nonprofits can expect donors to go for “just trust us.” And that’s a good thing.

Charities Meets Accountability Standards: Congratulations

Congratulations to the following charities that recently completed their Accountability Wizard reviews and have met the Council's Standards of Accountability:

American Refugee Committee
Books For Africa, Inc. 
Catholic Charities of the Diocese of St. Cloud 
Central Minnesota Community Foundation 
Community Mediation Services, Inc
CornerHouse
Diversity Council
Family Hope Services, Inc. / TreeHouse
HFH of Douglas County, Minnesota, Inc. 
Great Neighborhoods! Development Corporation
Hope Community Inc.
Jeremiah Program  
Jewish Family and Children's Service of Minneapolis  
Kinship of Greater Minneapolis  
Latino Economic Development Center
Make-A-Wish Foundation of Minnesota
Mediation Services for Anoka County 
Mental Health Association of Minnesota 
Metro Meals on Wheels, Inc 
Plan USA / Plan International USA Inc
People Serving People, Inc. 
Phyllis Wheatley Community Center 
Restorative Justice Community Action, Inc.
Reuben Lindh Family Services 
Rochester Area Habitat for Humanity
Second Harvest Heartland
St. Stephen's Human Services
Susan G. Komen Breast Cancer Foundation (Minnesota Affiliate)
The Playwrights' Center
Tix for Tots 
Union Gospel Mission Association of St. Paul
YMCA of Greater Saint Paul

Charities Meets Accountability Standards: Congratulations

Congratulations to the following charities that recently completed their Accountability Wizard reviews and have met the Council's Standards of Accountability:

Achieve! Mpls
Arc Midstate
Children’s HeartLink
eQuality – Pathways to Potential
Lakes Area Youth Service Bureau
Minnesota Children's Museum
Minnesota Organization on Fetal Alcohol Syndrome
Minnetonka Center for the Arts
Perspectives, Inc
Rum River Health Services
Simpson Housing Services Inc.

Announcing The New Preliminary Accountability Standards

For the last 12 years, the current Accountability Standards of the Charities Review Council have helped strengthen the nonprofit sector and to mobilize informed donors. But a lot has changed economically, demographically, legally, and socially during this period of time and the time had come to update and revise the standards to reflect this.

Over the past year, the Council’s Program Committee has led a process that brought together donors, institutional funders, academics, nonprofit leaders and community representatives to craft a fair set of standards that are sensitive to a wide variety of constituents and will further strengthen an already vital and indispensable nonprofit sector. A preliminary set of the new Accountability Standards were just unveiled last month at the Council’s Annual Forum and we are now embarking on a four-month public input phase to get more feedback before finalizing the new standards this fall.

These Standards are meant to help informed donors and accountable nonprofits, so your feedback is vital. Tell us what you think. We appreciate your comments and look forward to hearing from you!

Charities Review Council to update giving guidelines

Check out today's Star Tribune article "Charities Review Council to Update Giving Guidelines" featuring the Council's proposed new Accountability Standards to be unveiled next week at the Annual Forum.

Charities Meets Accountability Standards: Congratulations

Congratulations to the following charities that recently completed their Accountability Wizard reviews and have met the Council's Standards of Accountability:
Alliance Housing Inc

Bridging Inc

Rebuilding Together Twin Cities

Charities Meets Accountability Standards: Congratulations

Congratulations to the following charities that recently completed their Accountability Wizard reviews and have met the Council's Standards of Accountability:

African American AIDS Task Force

CommonBond Communities

Dodge Nature Center

Friends of the Boundary Waters Wilderness

Restart Inc