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As we turn the calendar to a new year, it’s the perfect time to help your clients think about their philanthropy through a fresh perspective. Set them up for success when they receive requests from nonprofits by encouraging them to start thinking about the causes they want to support. According to the National Center for Charitable Statistics, the U.S. is home to more than 1.5 million nonprofit organizations. With so many to choose from, how do you help your client decide which ones to support?

Whether your client is researching types of nonprofits or already have some in mind, here are 5 key questions to ask as they evaluate a nonprofit.

  1. What is your client’s philanthropic personality?
    Evaluating a nonprofit to ensure there’s alignment with their mission really depends on the type of funder they are—or want to be. Are they an innovator? An advocate? A change agent? A capacity builder? For example, let’s say your client wants to contribute to education. There are several ways to go about this, but you want to be sure the steps they take tie back to the defined role they want to play in fulfilling their philanthropic objectives. Do they want to advocate for education change on Capitol Hill? Or build schools in Africa? Those are two very different paths, so before they find the right nonprofit, it’s important to help them define their philanthropic personality. 
  2. Does the organization have a clear mission that aligns with their passions and values?
    Look for specificity. It should be focused, concise and clearly explain the entity’s unique set of skills for strategically solving problems. Ambiguous intent with statements such as “We’re dedicated to making the world a better place” often leads to vague, ineffectual work. What is the overriding purpose of the organization? Is it clearly focused on an issue or cause that matters to your client? When they do receive a proposal, does the need addressed align with their mission and objectives? It should be a clear fit—from the population they serve to their organizational strengths.
  3. Does it meet a critical need?
    In other words, does the nonprofit matter? They need to determine that there’s a clear need for its services and whether there’s substantial data available to justify its mission and efforts. It’s important to understand what its target population is and what percentage of that population it serves. Then they can examine whether these numbers have increased or decreased over time.
  4. Do they agree with its approach?
    How is the nonprofit fulfilling its mission? A group of nonprofits with similar missions, say ending childhood hunger, may approach the same problem from different angles and perspectives. Be sure your client agrees with the organization’s strategy and tactics for addressing the issues they care about. Do they make sense? Are they based on credible research? Are they comfortable with them? For example, if the nonprofit frequently lobbies state and national legislatures yet they dislike politics, it may not be the right fit for their donation. To compare nonprofits with a similar focus, visit “watchdog” organizations like CharityWatchCharity NavigatorGive, and GiveWell. These websites apply uniform standards to grade the financial and programmatic quality of nonprofits. They will also help you beware of scams, fraudsters, and fake charities trying to trick unwary, but well-intentioned donors.
  5. Is it making a positive impact?
    For many people, impact-driven philanthropy is a top priority. Will your client achieve a bonafide positive impact by donating? Can the nonprofit prove its success? Does it report tangible evidence that it’s successfully meeting its goals? If results aren’t publicized, consider it a red flag, and instead advise them to donate to a nonprofit that tracks data and provides metrics of success. After all, they have to trust the recipient to make their contribution count. To take it a step further, they should choose a nonprofit that will partner with them to measure impact. For example, a nonprofit could work with your client to provide serial funding with future gifts that are contingent on results. But don’t base success only on output. Instead, look at the outcome. For example, if your client’s goal is to help at-risk school children do better in class – and they want to gauge how effective a charity’s after school program is in achieving this – look beyond how many kids participate. That’s the program’s output, but what may really count is its outcome; how significantly the children’s performance in school improves.

Next Steps
If your client isn’t finding the information they need, advise them to contact the nonprofit. And if they’re contemplating a sizeable gift or ongoing commitment to the organization, this warrants additional due diligence to ensure their giving creates the desired impact.

By researching before donating, you’ll help your client gain valuable insight and experience. With time, they’ll acquire the skills to determine when their donation isn’t just a gift, but an investment in progress.

Want to see the rest of our list? Check out the complete article featured on Financial Advisor.

Ready to learn more about how to evaluate a nonprofit?
Talk to one of our philanthropic specialists by scheduling a call with us here or reach us at 800-839-0054. Together, let’s #begiving.

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Gillian Howell

Gillian Howell

Head of Client Advisory Solutions