It makes sense that donors would conduct research on nonprofit organizations prior to making charitable donations. Those nonprofits with large operational budgets, those in existence a long time with numerous Form 990 tax returns and professional audits conducted, with well-known individuals serving on the Board logically inspire confidence and larger donations.
But do those factors actually mean the nonprofit is effective or efficient at meeting its mission? Sometimes.
I would argue smaller nonprofits – the majority of all nonprofits – are often more effective and worthy of meaningful charitable donations. Many of them operate almost entirely with “volunteer” staff. They achieve more through efficient volunteer management and incredible drive and initiative. They take their mission statements very seriously. They are also quite good at securing in-kind donations of equipment and discounts on goods and services.
“The majority of nonprofits (66.3%) have annual budgets of less than $1 million. From there, as organization size increases, the number of nonprofits decreases. For every 1 powerhouse (annual expenses more than $5 billion) nonprofit, there are thousands of grassroots organizations.”
GuideStar Blog (2017)
Follow the link above to view an impressive statistical chart.
What this means, however, is when donors and professional advisors conduct objective reviews of GuideStar profiles and tax returns, those somewhat intangible “commitment” factors are not evident. Hard budgets and data tell one story, but daily life with the nonprofit may tell another.
Smaller nonprofits can even the score and overcome this budgetary approach to evaluation to some degree. They would be wise to encourage volunteers and clients to write testimonials about how effective and reputable they are, and share those on social media and on the nonprofit’s website. GreatNonprofits is one helpful source, especially as it is linked to GuideStar. But also, many preset website templates include testimonial functions, if you choose to add them.
Volunteer hours also matter. I find it sometimes hard to get nonprofits to track volunteer hours. They have come to believe everyone should give of their time and talents without expecting compensation or credit of any kind: modesty is expected. But the truth is, in this era of data collection and evaluation, nonprofits need to be more savvy and track and share those hours.
Independent Sector notes, “Volunteers in the United States hold up the foundation of civil society. They help their neighbors, serve their communities, and provide their expertise. No matter what kind of volunteer work they do, they are contributing in invaluable ways.” Nationally this year, the value of a volunteer hour is $28.54. In Texas, the value is $26.43. To download a report of volunteer activity and values across the United States, follow this link.
Hence, if you measure the hours worked by your volunteers, not only will you be able to reward stellar volunteers, you can share the value of the volunteer hours “worked” on your website, on social media, in annual reports and with prospective donors who may give more based upon those impressive figures. Once you multiply the number of hours worked times the value of a volunteer hour, the tally is often impressive and can help philanthropists and professional advisors gain a better sense of your effectiveness and merit.
I would question the frequent request by potential funders for professional annual audits as well. Would a formal opinion by a reputable accountant or accounting firm be as helpful? Professional audits are expensive and small nonprofits are often unable to afford them, in my experience. There are other ways to gauge the financial effectiveness of nonprofits. If they simply take the time to hire an outside, objective professional accountant or accounting firm, and submit annual tax returns, that says a lot about them.
To donors and professional advisors I would suggest, look more closely at the nonprofits seeking funding. Helping a smaller yet deeply committed nonprofit succeed can be more fulfilling than funding one where you are one of a cast of hundreds or thousands of other contributors. Smaller nonprofits and their volunteers often work harder, they are more resourceful and dedicated. They are often more entrepreneurial in spirit and achieve more with less.
Carolyn's Nonprofit Blog 
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