A new website wants to be the Amazon, the Yelp, the go-to destination for the world of philanthropy.
Because while you might get a warm fuzzy feeling for clicking on “donate now,” most people spend remarkably little time — less than two hours a year — figuring out which nonprofits are effective and deserving of their support.
And serious money is flowing into nonprofits. Americans are donating $400 billion to charities each year — nearly twice the state budgets of Washington, California and Oregon combined. About $280 billion of those dollars are coming not from big foundations but from individual donors who are likely most in need of guidance.
So a new venture, called the Giving Compass, is hoping to empower donors to make sure their gifts are making a meaningful difference. It provides users with information about charities and charitable giving, and helps build community around philanthropy.
“The amount of money being given in this country is mind-blowing,” said Luis Salazar, chief executive officer and co-founder of Giving Compass. “What is the impact of that, is the core question, and how do we make it more impactful?”
The site posts news stories and studies on nonprofits, research on effective giving, helps connect like-minded donors and charities, shares calendar information on philanthropy-related events, and is a source for finding volunteer opportunities.
Giving Compass is Seattle-based, but covers information and events from around the country.
The project launched about a year ago and is funded primarily with a catalyst grant from the Raikes Foundation, established by the former top Microsoft Office exec and past Gates Foundation CEO Jeff Raikes, and his wife, Tricia Raikes, also a Microsoft alum. Salazar, too, comes from Microsoft where he was co-founder of Office 365. Microsoft has a long history of philanthropy through its large-scale employee giving campaign.
Giving Compass went live this summer. The founders hope to attract large and small donors alike who are eager for information. They’re partnering with companies to include the site on internal webpages to serve as an employee resource.
Many in the field of philanthropy say they’re impressed with the effort so far, applauding the diverse backgrounds of the staff and board, which includes experts in technology, philanthropy and marketing. They say there’s a huge need for educating donors.
“It’s easy to give money away, but it’s hard to make an impact,” said Katherine Lorenz, board chair for The Philanthropy Workshop, an international organization promoting strategic philanthropy, and president of the Texas-based Cynthia and George Mitchell Foundation.
“If you really care about a special issue or want to leverage those resource to have more of an impact, it’s hard,” Lorenz said. “The longer [philanthropists] do it, the harder they realize that it is.”
It turns out there are lots of ways to give.
“When you think about the role that philanthropy plays in peoples’ lives, sometimes we give gifts because a friend asked us to. We’re not thinking about ‘strategy,’” said Katherina Rosqueta, founding executive director of the Center for High Impact Philanthropy at the University of Pennsylvania.
Maybe someone asks you to sponsor them for a charitable run. Or you give to a hospital that healed a loved one or to your alma mater — the “grateful recipient” sort of donating. Perhaps it’s an impulse gift, dropping change in a Salvation Army bucket. Over time, someone’s giving habits can change and evolve and people want to delve more deeply into specific causes.
“A lot of people don’t know what they’re interested in, and coming into philanthropy for the first time it can be overwhelming,” said Sarah Hopper, founder of Sound Philanthropy, a Seattle-based business that advises people in their giving.
Then there is the question of what sort of effect you want to have. Some charities work to solve immediate problems — providing a bed for a homeless person or emergency relief after a disaster. Others try to change policies or set up programs to address problems in a permanent way, like eradicating an infectious disease. Some do a bit of both.
“Most organizations are kind of putting a Band-Aid on a problem,” said Lorenz, with The Philanthropy Workshop. “Those moving the needle to change the whole system, that is where philanthropy should really be focused.”
But when it comes to “trying to change the system,” she said, “there is very little philanthropy that goes to that.”
The creators of Giving Compass say that they’re not trying to push donors toward a certain kind of impact, and they recognize that many people will give for emotional reasons, which is a perfectly legitimate motivation.
“We’re not trying to remove the heart in favor of the head,” said Shelly Kurtz, chief marketing officer for the nonprofit.
They hope the site will provide people the chance to consider multiple variables when choosing recipients, and connect with others to learn how and why they’re giving.
“We don’t make any judgment,” Salazar said. “We put the information in front of you.”
Five minutes a week
When philanthropy-focused websites launched more than a decade ago, they were limited in their ability to evaluate nonprofits.
“The first piece of information that was broadly publicly available was the tax forms,” Rosqueta said.
So that’s where people sifted for information. About all that could be gleaned were data on overhead costs. Sites began rating charities according to how much money went to overhead — salaries, costs for their space, technology, etc. — relative to how much was invested directly in whatever their cause was.
While the overhead ratios are useful for sniffing out excess spending and fraud, as a sole factor for determining the value and performance of a nonprofit, they’re a terrible metric.
“That is where people go wrong when they’re trying to have impact,” Lorenz said. “They’re starving the whole sector.”
By focusing so intensely on keeping down costs, the nonprofits can “starve” themselves by failing to invest in technological improvements, for example, that are necessary for boosting efficiency, or by not hiring more costly but more skilled employees.
The shift now is to look at the outcomes from a nonprofit’s work. While profits are a sign of success for businesses, the key outcomes for charities are measurable improvements in social or environmental causes.
There are still caveats to consider when looking at impact. Measuring an effect can be expensive and difficult to do well. Bigger organizations are better positioned to define and answer these metrics, potentially overshadowing smaller, but effective, grassroots groups. Newer areas of focus need time to determine meaningful ways to measure their impact, and some sectors have more data than others. That said, many believe that outcomes are a prime consideration for smart donations.
“Measure what you can so that you will know, are you making progress, so you will know, are your assumptions correct or have you made a mistake,” Rosqueta said. “We know that it’s hard to manage anything without metrics or indicators. If you don’t have something to look at, you kind of fly blind.”
And that’s where Giving Compass is eager to help, providing donors with performance information and building a more complete picture of a charity’s impact.
“We’re asking people to give us five minutes a week to spend on outcome-driven philanthropy,” said Kurtz, of Giving Compass. “You can break that down to bite-size pieces.”