GuideStar: Invaluable Nonprofit Resource | An Update

Back in 2013, I was invited by GuideStar to produce two case studies about my experiences with the platform. They were produced in an interview format and attached to the GuideStar website. But since then, GuideStar and The Foundation Center merged to become Candid. Many helpful changes have been made to the website that have made Candid even stronger and more helpful today. But my case studies were lost in the transition.

I wanted to share those experiences along with more recent observations in a new blog post. I find most nonprofits barely skim the surface of GuideStar. While they may rightly focus on polishing their nonprofit profiles to secure official seals for transparency, they often abandon GuideStar after doing so, until a profile update is due. Smart nonprofit staff will learn to use GuideStar in greater depth, however. It is an indispensable research tool one should consult routinely.

My first experience with GuideStar was after many years of hands-on major gift fundraising experience, in the mid-2000s. I did not know much about it until then, oddly enough, as I had been distracted with multiple fundraising projects. In fact, I had just helped raise $5 million for a new facility, and our lead volunteers decided to polish the organization’s Board of Trustees as the organization moved forward into an exciting new era of community service.

The Board had become large and unwieldy. Some felt a lean and more engaged Board of Trustees made sense. Recent fundraising successes revealed those genuinely committed to the mission, and that was a relatively small group of civic leaders. To prepare, they asked me to reach out to similarly-sized nonprofit organizations in other cities, and to ask about the size of their Boards and what those groups found to be successful in terms of size and composition. I began my work.

But what I soon discovered was staff members of other nonprofits were reluctant to reveal the size and composition of their governing bodies, even in the most general sense. They felt the information was confidential. But the truth is, if you file a tax return as an approved nonprofit organization, your Board is public information. From Don Kramer’s Nonprofit Issues:

Can our 501(c)(3) organization keep the list of board members confidential and refuse to make it available to the public?

Not if you are required to file a federal Form 990, 990EZ or 990-PF tax information return. Each of those forms requires a list of officers, directors and key employees. State charitable solicitation registration forms are also likely to require the list.

If you are a very small organization or a church or other religious organization that is not required to make such a filing, you may have no legal obligation to disclose such information to the general public. But the failure to do so undercuts the credibility of the organization and is inconsistent with the increasing desire – and legislative demand – for transparency in the charitable sector.

The task was daunting. Few of my nonprofit colleagues wanted to bother with my pesky inquiries. I was frustrated. One fellow was so rude that I got angry, and I got online. And then I discovered GuideStar and tax returns galore. I was elated! I uncovered all the information I needed and more. I was able to produce a comprehensive survey and report to the Board of Trustees.

My second experience was meeting with a prospective donor, a well-respected attorney who also managed his family’s private foundation. I was implementing a major gift campaign, and had gotten halfway through the multi-million dollar effort. In this instance, I knew I needed to be well into the campaign, and to look solid and poised for success before attempting a grant request. And in fact, that was true by the time of our meeting.

I arrived with our executive director. We shared our story and why we were there to meet. The attorney then said he wanted to ask a few questions. And every one of those questions focused on our tax returns. Before we arrived, he had been doing his research on our financials as they appeared on GuideStar. But we hadn’t given them a thought. I was completely surprised. I did manage to defer the answers to his questions, as a form of follow-up to our meeting afterward (and we were able to secure the grant we sought, thank heaven). But this experience taught me to become familiar with GuideStar and my own nonprofit’s profile prior to showing up at a solicitation meeting.

My sense is today, with the ever-increasing role of professional advisors helping philanthropists make wise giving decisions, fundraising staff must familiarize themselves with their own GuideStar profile. And if the accounting staff or others have not already claimed and fleshed-out your nonprofit’s GuideStar profile, then fundraising staff should do so. As GuideStar notes, with your profile, you can:

Showcase your programs and your impact

Send fresh information to 200+ charitable sites, including AmazonSmile, Facebook, and Network for Good

Add a Donate button directly to your profile to boost your funding

Use your profile as the perfect handout in funder meetings

Celebrate your diversity and share your staff & board’s demographics

And much more.

Further, “Villanova University and University of Wisconsin Milwaukee researchers compared nonprofits that earned a GuideStar Seal of Transparency to those that did not. Nonprofits that earned a Seal averaged 53% more in contributions the following year than organizations with no Seal. The research also found organizations that elect to be more transparent had stronger performance across a range of governance, financial, and operational dimensions.”

Today, I remain an avid GuideStar fan. Not only do I make profile preparation a priority for the nonprofits with which I work, I use GuideStar to review the tax returns of private foundations that are also “nonprofits.” In these ways, GuideStar is an essential tool for building credibility, facilitating research of all kinds, and ensuring more effective and appropriate grant proposal targeting.


You might also enjoy

High Tech Prospect Research Worth the Investment (June 2011 and continuously updated since then)

Research and Writing | Ideal Tasks While Working from Home (May 2020)

TechSoup Connect Presentation on YouTube, “DIY Prospect Research” (May 2021)

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