Posted by: Don Linnen | 31 December 2007

Due Diligence

There’s over 9,000 nonprofits in Dallas County today. More than 3,500 of them filed a 990 tax return so say the smart folks at Urban Institute. With that many working nonprofits in town, chances are that there’s someone trying to do the same thing you’re doing.

Okay. Let’s narrow the field from that 3,500+ and add another filter to look just at your cause: healthcare, poverty, children, environment, aging, the arts, whatever. Chances are that you’ve still got somewhere between 5 and 25 other nonprofits trying to do something very similar to what you’re doing. That makes it a little challenging to raise more money and excite more volunteers year after year.

You may be slightly different or very different from your peers (aka partners …. aka competitors). But to potential donors who want to help fight poverty, for example, all the homeless organizations look the same at first blush. The fact is they are mostly very different.

How do you distinguish yourself??

It’s no longer enough that you have a compelling case statement. (Although you can take some comfort in knowing that some of your peers have not reviewed or updated their mission statement or web site in years.) Being current and relevant certainly helps you distinguish yourself.

Each year, donors ask better questions and perform more due diligence about the nonprofits to whom they may give. It’s important for the nonprofits to improve their own due diligence.

The keys for many donors are:
– show me the numbers!! (quantities, percentages, benchmarks, results, results, results)
– show me some independent evaluation
– show up (as either a volunteer or a site visitor)

Showing up is not a popular choice for many foundations, donors, and evaluators. It takes time. You might be uncomfortable in the surroundings. You might get dirty. (I’ll save this rant for another time.)

GiveWell is a new foundation in NYC with the noble intent of evaluating charities in different fields and making the results public. They began this with big hearts, good business brains, and a real drive to bring efficiency and order to the evaluation process (ahhh….the appeal to my own left brain….). There are other evaluators across the country.

Many nonprofit evaluators are still learning that there’s a lot more to evaluations than just cranking the numbers and publishing the results. For one thing, the numbers on true effectiveness are elusive. It’s often made more difficult by our mobile society and the fact that many clients just don’t stay in touch on a consistent basis.

The best way to distinguish your nonprofit is to show everyone how effective you are. Until you can get the donors and evaluators to show up for site visits or as volunteers (….do you have a really good volunteer coordinator???….), you need to be able to show you’re effectiveness. It takes a process to measure your successes. That costs time and money, but it needs to be done.

You may learn something about your organization. It may mean a very critical self examination of what’s working and what’s not. It may take real guts to change. But you’ve got to ask yourself, why you do what you do? Who are you really trying to help?

Whether you’re new or have been in this business for years, it’s absolutely vital that you not only show everyone you are different, but that you make a difference. Due diligence and investments in process, self examination, and change will pay big dividends for everyone involved.

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