It’s difficult for some charities to ask for donations. They don’t have a history of it, they are shy about asking for money or maybe they don’t have the staff or board members with the right skills. Take heart! If your agency needs a strategy to build a donor base online, then donor education sites can be valuable partners.
“Too often, we give not to the causes that are most effective, but rather to those that are best at asking for it.”
Nicholas Kristoff, Year of Living Better
Donor education sites give you a place to build donor trust in your organization as an effective, financially healthy nonprofit. After all, there is a high correlation between trust and financial support. A 2019 Give.org survey found that 70% of survey respondents believe that trust is the most important consideration when they are considering charitable donations, ranking trust a 9 on a 10 point scale.
Articulating successful outcomes is the foundation of strong appeals for donations. Proof of impact and effective solicitation for resources is a powerful combination. The donor education platforms share your success to a broad audience. You can use them as tools to solidify your position with existing donors and introduce you to others that care about your mission.
These sites have missions to provide donors with accurate information they can use for wise giving. They have established benchmarks that they use to assess agencies objectively. Most of them welcome input from individual nonprofits. You can provide the information to demonstrate you meet those standards.
This article provides an understanding of donor education sites and how you can optimize their value to you. A follow-up article will build on that knowledge with more in-depth descriptions of five sites: Charity Navigator, GuideStar, BBB Wise Giving Alliance, Charity Watch and Great Nonprofits.
What is a donor education service?
It is an established resource donors can use to evaluate charities. There is a wealth of advice for donors – and educating them on making an informed choice is at the top of the list. This is true for donors already familiar with a particular agency. It is also true that donors use them to search for charities addressing an issue important to them, where they may give an unsolicited contribution.
They also serve to prevent a misuse of scarce resources. Dishonest nonprofits target donors with emotional appeals that vacuum up donations that won’t be used as intended. Some are outright scams, using names that mislead donors into thinking their donations are going to organizations with good reputations. Other nonprofits seek donations for legitimate reasons but they do not achieve much for each dollar they receive.
Given the need charities have for money, compared to resources available to them, donors need information about where their contributions will be used most effectively.
There are multiple donor education sites with similar missions: to provide objective and detailed information about agencies that donors can use to evaluate their investments before making them. Remember, donations are investments. Donors care about causes and outcomes. They look for the organizations that will pay a good dividend, measured as an improved quality of life for its constituents.
To be more explicit, the sites word their objectives a bit differently but each one strives to serve as a reliable source of information. Donors should be able to trust that an agency achieves the most impact per dollar possible and uses its funding with integrity. This information is clearly in demand. Donors make millions of visits to information sources about charities every year.
The sites have another goal - to inspire people and organizations to begin making charitable contributions, if they have not done so in the past, or to increase their gifts if they have a history of giving. The sites bring together information in one place for ease of donor use. Not only does that reduce research time for donors, but it can also provide information they may not know how to find.
How can charities use them?
Some sites, such as GuideStar and the BBB Wise Giving Alliance, rely on charities to initiate the process of adding information to their databases. Questionnaires guide charities on what materials to collect and submit.
Others are evaluating charities with or without input from them. In-house analysts collect information such as annual reports, annual financial audits and tax filings. They assign a rating to charities based on their findings.
Either way, charities that submit information that satisfy the sites’ benchmarks earn a rating that they can use to prove to donors they are achieving the most impact possible with their resources. Charities earn higher ratings based on such measures as financial health and ratios of income vs. expenses, governance policies, program descriptions, strategic planning, executive compensation and leadership capacity. The more information the charity provides the more likely it is to receive a high rating.
If there are weaknesses uncovered as a result of their evaluations, agencies can use this as a blueprint to improve their operations. In many instances the site will take these changes into consideration and adjust the score.
Do high ratings increase contributions?
Agencies that want to build an effective donor base must demonstrate it makes good use of contributions. A high rating by an evaluation site is a shorthand way to do this. Adding a rating organization’s seal or badge to your website, social media and marketing materials enhances your credibility with donors. It can be the factor that sets you apart from the other charities besieging donors for gifts. According to GuideStar, less than 5% of nonprofits do the work to earn one of the sites Seals of Transparency.
There is limited formal data on the connection between increased giving and strong nonprofit profiles on the sites. One GuideStar blog post states that the number of donations for agencies on its site increased 150% in 2018 over 2017, and that monetary donations doubled that year. Some research found that agencies with transparency seals on GuideStar averaged 53% more in contributions.
There is also anecdotal evidence. Miriam Klein, Grants and Database Manager at Second Harvest Food Bank of the Mahoning Valley in Youngstown, Ohio, says the food bank has received donations through Charity Navigator. It’s difficult to quantify how much it helps to have a profile on it, but the agency has received unsolicited donations through the site’s Giving Basket. Klein remarked that people had been asking her about Charity Navigator before she added the agency’s profile to it.
The sites can link organizations to other fundraising platforms, such as AmazonSmile and Network for Good. Agencies that are not familiar with platforms like those can add their information and take advantage of those avenues of giving.
Successful professional fundraisers take the time to build trust with potential donors. Nonprofits new to fundraising need tools to build that trust as well. Working with online education sites can boost their efforts, for both credibility and to give prospects another avenue to explore for information. Using these sites may be significant for a fundraising campaign.
Creating Reports for Your Profile
Donor education sites have benchmarks that require data. Just as you use Casebook to generate reports for compliance and outcome tracking, you can use it to pull together the data needed for a complete profile. The sites provide space for you to describe agency programs, document how they are implemented and the successes clients achieve using that same reporting system.
Independent audits and tax filings can generate answers to financial questions. If your agency receives grant funding through government programs you may already be required to keep data that reflects cost-effectiveness, such as cost per person. Business intelligence tools built into data management platforms like Casebook allow you to set up custom Casebook reports that complement your year-end financial statements.
Casebook’s business intelligence tools can not only generate reports but it can create graphics that add visual appeal and impact to engage potential donors. For example, if you are an agency in the foster care system, you can set up comparison charts for foster placements over several program years or charts showing your outcomes exceed industry averages. If you operate a shelter for victims of domestic violence you can chart data on the number of survivors who obtain affordable housing. Nobody knows your work better than you, and Casebook’s reporting software enables you to as it best fits your donor reporting needs. . Thus, you can maximize your presence where donors who have a passion for your mission can find you.
Best of all, your high rating score can work for you 24 hours per day. Some donor education sites publish “best of” lists for high scoring charities in different sectors. They also feature organizations in blog posts, to highlight work on issues in different areas of human services. Agencies spotlighted in one of these ways positions it well to attract new donors.
The evaluation sites have some differences in the measuring sticks for agency trustworthiness and integrity. Creating a profile that earns high ratings demands time and a willingness to correct weaknesses you may discover. Once done, it can be an impressive part of your fundraising strategy.
Stay tuned for Part Two of this article, which will provide you with an overview of the most well-known evaluation sites.