When I was shopping for a new car (to help out the economy, of course), I spent more time on the Internet looking up manufacturers’ websites, reading on-line reviews from car experts and reading reviews from non-car experts like me than talking to the dealer. There was so much information, in fact, that at times it was overwhelming. To the dismay of most manufacturers, the information was from third-party sources that were not controlled by their PR and marketing departments. Because of the Internet, the carmakers were at the mercy of people like you and me. Recent studies indicate that over 95% of buyers use a source outside of the manufacturer or the dealer (the Internet, Consumer Reports, etc.) during the decision-making process. However, almost 97% of all new cars are bought through the dealerships.
This analogy leads to the question: How are your potential donors and supporters learning about your charity and what are these outside sources saying about you? Is it good or bad or are they confused? What may surprise many of you is there are many donors who learn about you from information you provided to the IRS. The really good news is that, unlike the carmakers, you can better control the information the public knows about your charity.
There are four major sources of information about non-profits you should be aware of: IRS Master File, GuideStar, umbrella organizations (like United Way or America’s Charities and other organizations that provide payroll giving services), and charity evaluators. Making sure your information is current, timely, and relevant with these groups will insure you have the right impact with potential donors and supporters. I am purposely focusing on US domestic charities in this article — I will talk about International charities in a later article.
I’ll start with the easiest one first — IRS Master File. This is simply a text list of all the charities that are designated as “Eligible to Receive Tax Deductible Contributions, as Well as Their Deductibility Limitations.” It’s a downloadable text file (11 megabytes in size). This database is often downloaded and used by companies that want to provide a list of every charity for gifts, support, etc. You should download it when you have a few hours to spare and see what your listing says to make sure at least the address is correct.
The next one to look at is GuideStar.org. GuideStar is the operating name and registered trademark of Philanthropic Research, Inc., a 501(c)(3) public charity located in Williamsburg, Virginia. GuideStar’s mission is to revolutionize philanthropy and nonprofit practice with information. To that end, GuideStar has created and is constantly updating a database of information on all IRS-recognized 501(c)(3) nonprofit organizations eligible to receive tax-deductible contributions. The GuideStar database currently comprises information on more than 850,000 nonprofit organizations.
GuideStar also publishes every 990 and 990EZ tax return from a 501(c)(3) in it’s database. For this reason, you should make sure the tax return is reviewed by your development and management personnel before it is sent out so they understand the document and can insure the numbers are correct.
GuideStar powers many of the databases used by major donor-advised funds such as Fidelity Investment’s Charitable Gift Fund and Charles Schwab & Cos. Donor-Advised Fund, along with several portal sites like Network for Good and JustGive. By registering a single time with GuideStar, your organization’s information is available to grant makers and donors who use those resources. If the information in this database is not current, you may be losing the opportunity to be seen by potential donors and supporters.
Also, the GuideStar search methodology always puts charities that have filled out the most information first on the list. This sorting is especially important when a potential donor wishes to give to charities that support a particular issue. By typing in “dogs,” for instance, I get over 800 charities with either “dogs” in their title or as part of their keyword search. These charities are then listed by relevance of the organization’s name (having “dogs” in their name), then by the amount of information in their GuideStar listing, and finally by keywords (again, giving higher preference to charities that have filled out their GuideStar listing). Usually when someone is searching for charities, their attention span is highest on the first page of listings, but they quickly become disinterested after the next two or three pages. Appearing toward the top of the list is important to maximize your chances of being selected. Currently, only about 40,000 of the 850,000 charities have updated their listings. Since Fidelity, Schwab, and Network for Good represent at least $2.8 Billion in potential giving, it is worth the 30 minutes to register and update your information.
Umbrella organizations such as United Way and America’s Charities, as well as payroll giving organizations such as CreateHope and PipeVine, are another area where you should make sure you are properly represented. For these groups, the information is being presented to employees looking to make giving decisions from their paycheck. While most of the databases are not comprehensive — meaning you have to apply to be included — you should make it a point to determine the payroll giving programs in which your charity is participating and that the information is up-to-date and accurate.
The last group of which you need to be aware is the growing field of charity evaluators. Currently, there are at least 10 major evaluative organizations. Some, like MinistryWatch, focus purely on a single sector (MinistryWatch is an online database with profiles on the largest church and parachurch ministries in the United States). Others focus on the entire charitable sector — such as CharityNavigator, BBB WiseGiving Alliance, and the American Institute of Philanthropy.
Having an undesirable rating with any of these groups can have a costly result. Wealth managers that help with charitable giving rely on these rankings to make giving recommendations to their clients. Currently, many individuals are becoming increasingly aware of accountability and transparency issues, as well as fundraising efficiency. Additionally, donors are researching the charities they have been supporting for years to ensure the charities meet their standards before giving again.
There are several things you can do to make sure your organization gets a desirable rating. Be certain your information in GuideStar is correct. Several of the evaluators build their evaluations starting with the GuideStar database and then add their own evaluation criteria. Others ask the charity for data that can be gleaned neither from IRS tax forms nor from a GuideStar listing. Most evaluators also have an appeals process for information you may feel is in error or is misrepresented.
Most charities will never be rated by an outside evaluator — only about 2,000 charities have been evaluated by the organizations listed above, a mere 0.2%. For most charities, the information the public learns about them will come from the public records, such as GuideStar and the 990 tax forms, or from the information posted on your website. Just as you take the time to insure the information on your website is accurate, current, and focused, you should do the same with GuideStar and the 990.
You never know who’s looking at this information.