Tuesday, December 9, 2014

Tricycle Tips for Giving to a Charity

Originally published on Linkedin on December 4, 2014. 

               Article cover image

The largest portion of charitable gifts are donated in the month of December each year, to over 1 million charities. Based on my thirty something years in the nonprofit sector and seven years evaluating their performance, I suggest this simple technique to think about how to be sure that the charity you are considering supporting is among the best. It can all be summed up in the image of a tricycle. Just as there are three wheels on a tricycle, there are questions to be answered by the charities covering three core dimensions of their performance to find the best among them. At Charity Navigator, we provide you with the help you need to get these questions answered. Here are a sampling of the questions:
1. Financial health (smaller back wheel) - Does the nonprofit follow financial management best practices and maintain adequate resources to be sustainable? Does the organization have a reasonable balance of allocations between program, administrative and fundraising expenses? Does the organization normally achieve break even or better in covering its expenses?
2. Governance * (smaller back wheel) - Does the organization have a truly independent board of adequate size and skills to oversee the organization and the CEO? Are their best practices being followed such as policies regarding whistle-blowers, conflict of interest and CEO compensation?
3. Results (bigger front wheel) - Does the nonprofit manage and measure its performance over time to continuously improve and assure that it is meeting its mission in a meaningful way?
The tricycle has two smaller back wheels and a big one in the front. The front wheel is the most important for moving forward and meeting the mission of the charity. In other words, it is critical that a charity can provide evidence of how it meets its mission and delivers meaningful results. However, results alone are not enough. Without good financial management, today's results can be tomorrows bankruptcy. Without good governance, today's results can be tomorrows unethical leadership scandal. You need all three wheels to be humming along. Finally, you need someone at the steering wheel that is capable, passionate, ethical and focused on data driven high performance. They lead the staff and steer the organization forward and help give it the energy to move forward (pumping those pedals and steering in the right direction!).
Once you have evidence that all of these dimensions are in place, you can be much more confident the charity is among the very best! Once you know that, you can give with a great deal of confidence that your donation is going to effectively help the people and communities you care about. At the same time, your charity of choice can do a "wheelie" and you can be really be proud of the great work it is doing!
* At Charity Navigator, this dimension (or wheel) is called Accountability & Transparency.

Flickr/Albert Lynn

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