 Good morning everybody Good morning, if I could have everyone please start making your way to your seats We're gonna get started in about three minutes and Coffee is being served as we speak so Kim Jeffries Good morning everybody we I think we're gonna go ahead and get started to keep our program on time Welcome to the 2016 issue in profile. Thank you all for being here today I want to first of all thank our platinum sponsor and supporter of the nonprofit council the Methodist Healthcare Ministries And a special thank you to our gold table sponsors this year big brothers big sisters of South Texas YMCA of Greater San Antonio key ideas Brighton Center Sakata Shriver Carmona CPA and Debra and Rex Amini Thank y'all very much for your support again this year, and I'd also like to recognize Nowcast SA who is here today. Thanks again to the support and funding of Methodist Healthcare Ministries They are live streaming our event today as well as recording it So we will have that up in the next couple of weeks on our website linked to there So if any of your staff or board members would like to view the presentation I will send that link out to y'all and it will also be on our website And of course I want to thank our host hotel again this year the Hilton San Antonio Airport and especially the IT folks who Saved me again this year from laptop hell. So I appreciate that So I'd like to recognize now the nonprofit counsel Executive committee board those of you who are here today, please stand up and let's give them a round of applause without them All of this couldn't happen Thank y'all very much and also recognizing our Our used to be advocacy committee which we are now calling and changed our name this year to the nonprofit defense committee Let's have those members stand up, please and without y'all this advocacy effort could not happen Well, let's move on then I'd like to before we get started. I would like to welcome to the stage a member of the nonprofit counsel Past member of our executive committee friend of mine mr. David Phipps CEO of lifetime recovery to say a prayer before we get started Let us pray Lord, we are grateful for the opportunity to gather here today We lift up the mission of every agency of the nonprofit counsel and ask your care and protection for those in need Open our ears to the speakers today so that we may strengthen our ability to do your work And now we ask that you bless this food to our use in us to thy service in your name. Amen Thank You David All right, please enjoy your breakfast. We'll start the presentation now I would like to Introduce our program moderator this morning She is a an active member of our nonprofit defense committee as well as a member of the nonprofit counsel and for those of you who attended our Premier event the big gig in March. You might recognize her as the stalker of Chris Chiever that night I'd like to welcome and Kraus president and executive director of Hemisphere Conservancy Good morning everyone and thank you so much for being here. I'd like to introduce our first panelist this morning Adrienne leads guide stars strategic partnership and business development teams before joining guide star Adrienne co-founded social solutions a Software company committed to using data to generate intelligence that improves outcomes for individuals Families and communities his keen insights into the practical and strategic needs of nonprofit and philanthropic Organizations as well as the businesses that are built to serve them are based on his over 20 years as a practitioner Leader and socially-minded entrepreneur in the sector before starting social solutions Adrienne taught suspended and expelled middle school students and led nonprofit adult literacy and workforce development organizations in Baltimore as An Air Force Academy graduate I won't hold it against him that he attended the Naval Academy and he holds a BA from the University of Baltimore and an MLA from St. John's College in Annapolis Please help me welcome Adrienne Bourdone vice president strategic partnerships for guide star. All right Thank you and I Won't hold it against you either So It's funny that people got a chuckle out of the suspended and expelled middle school students come in where what's driving that I wonder You know no wonder he got into the software business Maybe that's that's the driver. So yeah, I I'm thrilled to be here today. Thank you Scott and the council And the charity defense Team it's really great to have a few moments to share with you a little bit about where guide star is and where guide star is Going and then participate in what we hope is an active dialogue with you about the sector With my colleague Michael. So I'm gonna walk through a few things that Hopefully provide some insight into where guide star is today and then we have some questions that have come From in advance from attendees that we'll dive in with and as we get into our sort of panel session today So most of you have probably heard of guide star Many of you are aware that guide star is an aggregator and curator of nonprofit data. We have about 2.6 billion pieces of data in our databases on about 2.4 million organizations It's reasonable to say that half of those organizations are No longer really part of the active dialogue in the sector today They are either organizations that were established in the 90s or the aughts So to speak and are not continuing to exist or they have sort of haven't filed 990s, etc But increasingly our work is part of an outreach and support effort to get data directly from nonprofit organizations We recognize that if your 990 is the only thing that speaks for you That's an incomplete picture. It's the same incomplete picture that Someone would get if they viewed your tax return as a snapshot of what you do and and who you are as a person So our data is increasingly not just brought into our databases But it's distributed on the upper right-hand side You see evidence that donors and nonprofits are daily logging in and out of guide star.org We have about 7 million users who log in and out of guide star every year They're looking for we catalog them as explorers or exploiters That may come up in our latter part of our discussion today and explore as someone who's looking to learn more about the sector or about Organizations and exploiter tends to be someone who's deep diving into an organization and using all the data that they can find in guide Star to either validate their perception that that Organization is worthy of their investment or to establish a counter argument to that So it's important to recognize as we talk through this intro presentation That your data if you are a nonprofit that's filed a 990 your data is in guide star if your data is in guide star There are at least 7 million people that may be seeing it through search functions So if you have a fundraising strategy that goes beyond friends and family if it goes beyond Your your immediate sort of the four walls of your organization you want to be aware of what your guide star profile Says about you because not only are there seven million folks that are logging in and out of the software on the right hand As you see on the right-hand side. There are another 30 million Individuals who are gaining access to your data through what's called our data distribution network so when anyone goes online today and sees an opportunity to Maybe on the right-hand side of an evite you see in lieu of gifts Consider contributing to a charity that is a search function that is hitting guide stars database when that search function hits guide stars database An organization's profile is revealed to that individual and if that's the thing that gives an individual a first impression of your organization So where is that information? It's it's going to our corporate partners Our nonprofit partners, etc. Our biggest partner as you may notice in the sort of front center is Amazon smile They're responsible for almost half of that 30 million user number that comes through the data distribution network So first and foremost recognize that guide star is an amplifier for you Your data is speaking for you every single day. It is speaking more and more loudly for you I would strongly recommend that you be aware of and take ownership of what that data is saying So why is that important? Well, the research is telling us a number of things first we know that there's not a significant uptick in grant in Donations that are coming into the marketplace So it is an increasingly competitive environment. We are competing for funding in an increasingly competitive environment additionally, we know that donors have Articulated two primary impediments to their giving one is this is a lack of trust the other is a feeling of being overwhelmed So what guide star is doing is acknowledging that trust is really going to be borne out and certainly Michael will likely speak to this as well By two primary data sets Individuals institutions and advisors are looking for financial data to substantiate That you are not a bad actor that you are not mismanaging their dollars and effectiveness data I think we're going to talk a lot about both of these today. We recognize the Detrimental impact of the overhead myth everyone here is very familiar with that But we cannot fight successfully against the overhead myth if we don't backfill with results data We must fill the vacuum that is the overhead myth with our outcomes and results data You have to recognize and understand that this is our obligation and opportunity to the communities We serve and to those who follow us to be able to fill that gap and start Establishing ourselves as results driven organizations and being transparent and accountable to that information Many of you undoubtedly are here because you recognize the sort of the peril and the problem that the overhead myth Poses for us. It's a huge distraction for professionals in the sector It's misunderstood and used as a cudgel in order to beat us down when we're trying to make a point about how Effective we can be in the sector. This is some data from bridge span Bridge span just did this report essentially you see where the 15% falls doesn't cover any of the organizations from a perspective it also doesn't accurately provide evidence that that overhead it provides the 15% establishes some False positive that hey, this is the level that every organization should be on the right-hand side You see research organizations with very high overhead on the left-hand side more of your human service organizations And here of course is what those indirect costs that contribute to overhead are really Driving we know that this is something that we have to fight every day in order to bring the maximum number of resources And the maximum number of amount of value to the community that we serve So many of you are familiar with this obviously you're here because of some of the work that the nonprofit council has done I will tell you that right now there are You know there is not there are not hundreds of thousands of folks who have adopted this language and Signed on to this campaign the overhead myth campaign. It is a active sort of advocacy effort Anyone here who has not gone online and found the resources and participated in the FAQ. I certainly encourage that Right now we have that like I said thousands not hundreds of thousands of folks who are doing that so, you know Recognize that we can do more together than any of us can do individually and support try to support this Effort and learn some of the vernacular take ownership of the ways in which this this challenge can be overcome So I want to now highlight two tools. I mentioned the first one except At length in my little intro as many of you know or maybe you don't know guide stars data Where does guide stars not 990 data come from it comes from the feds? How does it come from the feds it generally comes from the feds three months after you send it to the feds So most folks in the sector take advantage of it sort of indefinite extension To file their 990 so here. I'm going to give you the dirty little secret about why guide stars data isn't up to date Everybody is going to ask that question anyway, so I'll address it right now So if you don't send your 990 into the IRS until 11 months after Which is reasonable right we your fiscal year ends you go you get ready for your audit you review your audit You board reviews your audit you take the time you need to make sure your numbers are correct the data goes to the feds to the IRS Sometimes as much as 11 months after the the feds then take their time. They are in no rush They take images of those 990s and then burn those images onto CDs And then send those CDs to guide star who then prints those images and hand types that data Into Our database did everyone hear that what? That's like mixed tapes. It's like we're sending mixed tapes to one another Okay, that's awful. That's the that's the world we live in right now It is a world that is starting to change some of you know that the IRS is starting to release increasing portion of their data to a Amazon web services hosting environment But I cannot stress enough that you have the opportunity to overcome that Impediment by virtue of just updating your profile every organization that files in 990 has a profile your profile is either either Auto-generated based on your most recent 990 data or it is owned by claimed and owned by you And then you're the one who decides what folks on Amazon smile C This is a simple Opportunity for you to take proactive steps to defend against this perception and why is this data all out of date? So our profiles used to look like this notice the contribution that guide star made to aesthetic not much You also notice that Financials and 990 are posted right on the left hand side. Which way do we read left to right? What are we going to land on financials and 990 data? Are we ever going to get to programs data? No No, we're gonna look up 990s. We're gonna look up salary data. We want to know who's making what we want to know What who's on what board? Increasingly we've been able to roll out this the new profile. This is if you haven't seen it recently This is what your profile looks like now you may have a banner across your profile on guide star That says this profile is unclaimed if so, let me just a sidebar here shame on you just claim it It takes about 10 minutes. I'll help you with that if you want to give me your business card today I will make sure you get your profile claimed But notice that the summary information is followed immediately by programs and results the real the focus of our and notice that 990 data You can't see it here because it's on the far right, but it's really pushed to the right-hand side The single largest complaint about our new profiles is that no one knows where to get the 990 data Which is kind of fine for us Because we don't want them focusing on 99 990 data. We want them focusing on the substance of your work There are four levels of transparency that build out your profile and all of this is free for any nonprofit organization Once you claim your organization's profile, you can update it Make sure you get your donate to me button on your profile who wouldn't want one of those Allowing up to 30 million people to donate to their organization. Make sure they have their your contact information, right? Make sure if you have audited 990s They're uploaded and current again beating the IRS to the punch if you don't have audited 990 data You have an opportunity to digitally sign a self attestation of the quality that this is where you are from a financial standing perspective It takes about 30 minutes for an organization to claim its profile get to bronze get to silver Charting impact gold level is the hardest level to sort of complete if you haven't gone through it as an organization If you don't if you can articulate your value proposition if you can articulate your theory of change Then you're going to struggle a little with the charting impact questions This is the narrative the story that establishes you as a value provider in your community And then most importantly from my perspective and what may we may spend some time talking about today is the platinum level of Guide star profile. This is where results are now being captured. These are results that you can take advantage of So let's take a look at how a guide star profile might tell a story First we go in and we learn from the Habitat for Humanity of Omaha, which is a platinum level provider that they are Doing well at one of their hallmark metrics moving folks from unsafe Housing into safe and stable housing. We then can learn more about how they go about doing that What the finances are that contribute to that effectiveness of that organization? What the board members are the leadership of the organization and what constituent feedback? They have to demonstrate that they are Engaged in an active dialogue with the community. They serve constituent feedback will likely come up in our panel presentation later today The results framework is a catalog of 600 Commonly used results in this excuse me 800 commonly used results in the sector You search for things that are meaningful to you if you choose to use them you can add your own you add longitudinal data guide star graphs that data and makes it available to 30 million people Don't miss an opportunity to fight against the overhead myth by committing yourself to results and being transparent in the sharing of those results Texas is doing really well Second in the country for organizations who are sharing their results So you are in a community that is committed to results. I was in Oklahoma City last week They are not in a community that's doing so well. Is there anyone here from Oklahoma? Okay, I apologize in advance. You're all set. Don't tell Oklahoma. I said that Last thing guide star for grant applications if you have a complete profile if you've committed to recognizing the importance of Using guide star to amplify the value of your organization You are going to stand and applaud about what you are about to see Guys star for grant applications allows your organization to auto populate Please listen to this part if you've listened to nothing so far Please write this down if you've written nothing down so far. It allows you to use your guide star app Profile to auto populate a grant application. What? It allows you to use an your guide star profile to auto populate your grant application If your profile has key data in it that how many folks here? You may be applying to hundreds of grants a year the first 10 to 15 questions in on every grant are the same How about if we auto populate them in a form that looks a whole lot like a sort of auto fill from Google Chrome So nonprofits update their profile that profile data flows to the grants applications. Let's take a quick look What does that look like? For nonprofits time isn't just money It's resources and energy desperately needed to solve society's biggest challenges a single nonprofit spends hundreds of hours each year Filling out grant applications multiply that by all nonprofits and doing good starts looking more like doing paperwork But foundations have the power to change that when applying for a grant guide star for grant applications Eliminates the need for nonprofits to enter the same information over and over again Foundations implement this functionality in their grant management software Allowing nonprofits to populate applications with common information from their up-to-date guide star nonprofit profiles That saves nonprofits precious time and provides foundations with consistent standardized data While still providing the chance to ask unique questions for each grant Lots of foundations are already using guide star for grant applications But if you're not get the ball rolling and talk to your grant management vendor Standardizing the way that we share data strengthens the sector making it easier for nonprofits to focus on their missions and for Foundations to make better decisions So let's commit to streamlining the grant application process and turn the hour spent filling out applications into hours doing good Okay, who knew that was available who knew that that was something that was available in the marketplace today? Awesome There are three seats up here We may have another panel opportunity panelist opportunity. I would highly highly highly encourage you We stand in rooms with people around the country. We meet with funders We meet with nonprofits and they say this is something we've been waiting for this is live. This is available There are a dozen Grants management software vendors who have this capability built built in I was yesterday in a conference with micro edge the Their gifts online the blackball tool set. They are rolling this out today They're sort of prominent nationally if you are interested in taking advantage of this I would encourage you either to reach out to guide star or reach out to your local philanthropic community and Understand how they can help you save these hours We just did a case study with the Robert Wood Johnson Foundation They're right now. They're at about 200,000 hours of grants of time saved by their grantees Just because it's an auto-populate You know the first 15 to 20 questions on every grant application are virtually the same Wouldn't it be great if you just hit a button and it brought it over you get to the meat of the matter Okay, I'm gonna leave it there. It's really a pleasure to be here this morning I appreciate you listening and learning a little bit more about where guide star is But I'll hand it back the mic back over to Anne and then we'll get an update from Michael about charity navigator. Thanks, Anne That was incredibly interesting. I'd also like to mention that when our organization was going through its Application for platinum status. I found on the guide star website the most exhaustive list of metrics I had ever seen In my career and for anyone who is looking for metrics for measuring outcomes and impact I highly recommend you check it out because it's really interesting So thanks again, Adrienne Now I want to talk to you about our other panelist Michael provides direction and leadership at charity navigator as they strive to guide intelligent giving and Advance a more effective and responsive philanthropic marketplace in which donors and the charities they support work in tandem to overcome The world's most persistent challenges Prior to joining charity navigator Michael spent more than 15 years with Microsoft The last 10 of which as their public sector chief technology officer CTO Responsible for technology policy initiatives and engagements with government and academic leaders in Asia the Middle East and Africa based in Singapore from 2010 to 2015 he led a team of nationally focused CTOs and technical development strategists across greater Asia Over the years Michael has held various board seats within the nonprofit sector Focused on humanitarian issues the arts the environment and information technology standards development His experiences also include technically supporting ocean granted. I practice this oceanographic research for Woods Hole Oceanographic Institution and co-founding and directing the international performing arts organization dance music light He holds several patents in enterprise systems management and has a degree in music from Columbia University in New York Please welcome to the stage Michael Thatcher president and CEO of charity navigator Thank you and and thank you Scott. Where are you? There you are and the nonprofit council. It's I'm delighted to be here Where is my picker? Okay, so I want to talk to you more about what charity navigators has been doing and where we're going and Some of the things where you can help I think Adrian Gave some good insights of some of the challenges that we have as the data collectors In the sector and one of the things that charity navigator is also doing and this is a redundant effort which I Think we need to look at more carefully though the the impetus for it is going it away with the machine readable information in the 990s, but that is We also ingest an enormous amount of 990 data that we get directly from the federal government and That is a manual process as it's translated across into what becomes the ratings organizationally I Join charity navigator primarily for its mission statement and the part of the mission statement that I really resonate with is the notion of Advancing and efficient and it's responsive philanthropic marketplace where donors and the charities they support work in tandem to solve some of the world's most challenging issues What we aim to do at charity navigator is help donors find organizations that are performing more efficiently More effectively and more transparency with better governance so that the donation dollars are going to better run and More effective organizations The last part and we'll talk about where we're going with the ratings and how that is getting us to actually measuring effectiveness versus efficiencies, but that is very definitely where we're going We do this through our ratings methodology, and I'm sure you are all familiar with The ratings particularly if you are a charity and you are a rated charity, you know this you love it You hate it you have opinions about it, and I'm really eager to get into some of that in our Q&A But our goal is to deliver ratings That are impeccable They're really meaningful and where we have we're in process and this is growing their changes and I'll talk about some of the recent changes that we made to the financial metrics so as to Be more responsive to some of the feedback that we've had to look more at Allowing for things like overhead Whereas before the way the ratings were initially designed there was no room for overhead You couldn't get a perfect score with charity navigator if you had any overhead Yet you wouldn't be rated by charity navigator if you didn't have fundraising costs So you were caught in a double bind and so that's that's been eliminated at this point And so you can there's more to be done and there's and we'll talk about that Charity navigator was the idea that started charity navigator came in the late 90s There were a series of fairly high-profile negative incidents in the sector and scandals and our founder Pat Dugan had actually been a part or had been Partied to or in lost money in giving give making a donation to organizations that weren't actually Acting ethically and he realized that there wasn't an independent evaluated within the sector And so he created charity navigator. We launched in 2002 with just financial ratings When the sector which included voices from charity navigator and Many of you worked with the IRS on the evolution of the 990 form and the 990 form Changed in 2011 at that point there was the addition of the Accountability and transparency metrics to the to the ratings methodology If you look at our ratings today Only seven metrics are looking at financial health 17 are actually looking at accountability and transparency and then the it is the combination of those two scores that ends up in What is your final rating? We go from zero to four stars We also have another aspect of the what we do as a service to donors which is to Look at Activities or situations that occur outside of the rating cycle that might be something that a donor wants to know about This is unfortunately just in the negative area where there might be a scandal that would not be reported in the 990 So if you go back to Adrienne's presentation there's probably 18 months between when you're Your 990 is filed or when your year ends and when there's actually a rating that's going to be issued So there's also a lag Things happen in that in that time period that may be surfaced either by the federal government The local attorney general in your state or the media that raises to attention And this is something we think donors should know about in real time And so we we have had for a number of years What was originally called the donor advisory and the watch list that was just rebranded in September to be called the CN advisory system and we have three levels or levels of concern from low moderate to high in terms of the advisories and this is something that would affect if you have a rating and There's an advisory the if it's a low-level advisory it would be listed with your rating If it's a moderate or a high-level advisory at that point given the nature of the claim We might we in the case of a high-level advisory we would withdraw the actual rating at that point Given that we might have some concerns about the authenticity of the of the data that we'd received We're currently rating about 8,000 of the largest charities in the US We have data on all of the registered charities that that are registered with the IRS so there's About 1.6 million Charities listed in our database and you can find information on them When you search through charity navigator sites, so if you're not a rated charity your data is still on our it's still there on our site However that data is Also, a lot of that data other than what we pulled directly from the IRS is something that you can directly Modify and update and keep current We encourage people to have a registered representative with charity navigator from your organization so that you can update the information In a faster way. We have a very responsive team of analysts For every rated charity there is an analyst that is dedicated to your organization a lot of people don't know that But every organization that we rate there's someone that is dedicated to your to your to what you do and You you fit within a cause area, so they will be responsible for your cause and every charity within that cause and We have a service level agreement internally where we try and get back to you within 24 hours of your questions So please if you don't have a registered representative, that's the person who's going to get the emails when we do updates That's the person that's going to allow you to contribute to surveys that we do Use that use that information and have someone someone that can actually meaningfully respond to those questions Be there. So who do we rate? We rate 501 C3 charities We are looking at the largest charities in the United States generally at about one million dollars annual revenue All over the country We also look for organizations that have been in existence and file it have filed at least seven nine nineties The reason for that is that in the early years of an organization There's going to be a fair amount of volatility in in your particularly in your finances and in your structuring and as you develop who and what you are and We were noticing is that it actually first of all we don't have trending data and we are basing our rating over multiple years But also until you've hit sort of that seven-year mark. There's too much volatility for us to give you a fair rating Which is not going to be bouncing all over the place We're looking for organizations where the majority or at least 40% of their funding is coming from from the public Charities that we don't rate So we don't rate private foundations. We don't rate charities that don't file a 990 Churches and Houses of worship that also don't file a 990 or even organizations like the Salvation Army Which is a which is registered as a church and they do not file a 990. We are unable to provide a rating for them 501c4's private foundations Affiliates we can rate but it has to be done through the organization through an interaction between charity navigator and that Organization to for them to provide us a pro forma 990 which includes and normalizes across the different affiliates that they have There are about 75 organizations on our site that we rate today That that have affiliates 8,000 is sounds like a small number But it's actually almost 40% of the giving dollars So what we're looking for is to increase that We are looking to meet reach a point where sort of an 80-20 rule where we've got about 80 80% of the giving dollars I don't think that's going to be in the 1 million charities. It's going to be much smaller than that in June of this year We we made some changes to the financial metrics I'm sure if you're a rated organization. You were involved in that process We tried to do that in a collaborative away and is a transparent away as we possibly could By bringing in the voices we have two task force that we work with one is a financial measures task force which is made up of CPAs and some of the audit firms that work directly with the nonprofit sector It's a group of about 15 people and then we have a general advisory panel which is made up of nonprofits CPAs Philanthropists to broader counsel We've also we've conducted surveys with all of the rated organizations that we have work with some academics and Looked at sort of trends that we had seen over the near 15 years of our existence as to what was actually working and not working in terms of the evaluations Couple of things that changed with the CN 2.1 We moved to three-year averages, which was not something that had been done before Across five out of the seven metrics we have a new scoring for Program program spend and the percent of what literally would be the overhead As I mentioned this when I was starting out I said if you had any overhead if you had any overhead expense or less than a hundred percent was going to program You couldn't get a full you couldn't get a full ten points for that particular metric We changed that now. It's we've set the bar It's you know, I'd like I love seeing the 15% that Adrian had on the the slides from Bridge spin, but we've set that at now 85% so if 85% is going to programs You will get a hundred you'll get the full the full ten points for that particular metric That said if we've tightened up on the bottom end So if less than 50% is Being going to programs you will then not get any points for that particular metric. So we're looking to If you're spending less than 50% of your money on your program on your primary programs and focus We think that's that's something's not not quite right there We remove the revenue growth metric this was something that was driving focus inappropriately On where's the money coming in the other thing is if you given the way you have to file the 990 if you received a three-year grant for Two million dollars that was going to be paid out over three years You had to book it for the year you received it in that meant you'd have a spike in that year And then you'd have you wouldn't be able to amortize that money over the three years in terms of the How we would look at it from a ratings perspective. So that was creating a lot of Volatility in the ratings and we got rid of that number We added a new capacity metric which is looking at debt ratios Which we felt was a way to actually continue to have some some form of measurement around the financial health what we're looking at now and where we what we've What we've been focusing on I'm going to talk a little bit about the work that we did over Shouldn't have done that Forgive me. All right. Let's find my way We were Some of you may have been involved in some of the earlier work. We did around results reporting or what What we were looking at was not so much impact measurement, but Creating a framework for how to report on the results that you have as organizations And I'm going to talk about that in greater detail The other things that we're looking at internally is improving our ratings efficiency. So In June the IRS did make the 990 available in a machine readable way It was machine readable from a technical perspective But the usability that data has been a bit challenging and so we're read, you know, we're we're making our way through that we've actually been able to bring in about 800,000 records of 990 data and we have a data scientist that's sort of pouring through that and trying to make some sense of it We're that will increase some abilities for automation We're expanding the scope of charities that we rate in terms of the Different criterias that we have right now with regard to how much government support you have Program service revenue or donated services. There are organizations that we can't rate today based on our methodologies that Smile train for example, which is an organization that they do great work through donated services of surgeons for pallet surgery. We don't rate that organization and Looking at different ways of treating some of the smaller charities Our methodologies are all based on large organizations So what would be the right way to create a validation that would give donors the assurance that this is a good organization to give to? Even though this is not an organization that's filing a 990. So the smaller charities There's a lot of really good smaller charities out there that could use an accreditation from an independent evaluator and we're looking at systems around that The results reporting work was looking at helping organizations find a meaningful way to actually report on their outcomes and We launched this effort. I'll give you the well. I'm gonna skip ahead To the timeline my slides are I updated these so I want to give you the the timeline of the what we did across the sector in 2011 we began doing research on Results reporting and on how to bring in a third element to the evaluation systems that we have In 2012 we issued a concept note and then in 2013 we began implementing across a set of Five different rubrics that we were gathering information from from the charities in 2013 there was also the this particular Letter to the to the American donors Basically asking them to focus their attention on transparency governance leadership and results In 2012 we had just added the accountability and transparency metrics, which we're looking at Shifting the attention away from just the financials to actually looking at at more than that But what we all realized was that results or impact was the really was the was the missing piece What happened was when this when our initial inquiry went out? not a lot of data came back and We're telling donors don't look at overhead Look at other elements of the charities But then when we're we're asking the charities for that information or we're directing the donors to the to that information not all of it's there and I think So what happened in 2014 a second letter was sent to the to Buy guide star charity navigator and bbb wise giving This time it went to the nonprofits of America Share your results data manage towards results educate funders on the real cost of obtaining those results what is I'm gonna skip to this slide That hasn't happened guide star launched the the platinum initiative What it's not quite a year old? Yeah We're big they they're beginning to gather Single output data points from organizations. They have if you look at the bottom square on this slide We just did a project with feedback labs where we did a web scraping of as many charitable Organizations as we could find and we were searching on key terms around impact output outcomes related language 2.5% came back Where we actually had data on organizations with their own websites So by all means you should be filling out you if you need to be able to answer the charting impact questions And that should be in your guide star profile. You should have a platinum Some form of an outcome or an output in that in that field But we've got you've also got to get the information on your own website And I think that's something that if it's not clearly articulated what your outcomes are and What your own in other words? It's good to have your information in our website and in guide stars website But it's got to also be on your own What we did in the first pass of results reporting was looking at Is what you say you do aligned is your mission aligned with what you're actually asking money for? Second was does what you're saying actually makes sense in other words? Is there a Plausal, you know, is the causal logic plausible? I love that I love that phrase as a as a conundrum in the English language But basically if I do this if I add this and this activity and these actions Will I get these outcomes and what would the common would a common individual sort of say? Yeah, that makes sense What are the what are the external validators that you're using either through previous research done by other organizations to actually achieve those outcomes? What constituent voice feedback or the voice of the beneficiaries is actually incorporated into your results and Then finally are you publishing evaluation result reports? What went well was that we actually did see some organizations Adapt and bring in information and give us data around what was what they were doing And there was there was a lot of enthusiasm particularly the idea that we were moving to this third area of measurement What didn't go so well was the fact that it was It was hard you saw that slide before with the five different cause areas Those those are not necessarily that that's simple to get through and There was a lack of sample data. We don't have good examples to learn from and This came across as a one-size-fits-all and if you're running a Food bank you're gonna have a very different set of outcomes than a symphony orchestra or a humanitarian aid Organization and so how do I know how do I how do I deal with that? And we didn't we didn't have enough answers and that and I think we came it it did not work as well as we had hoped We we stopped that effort in 2015 if you you know I'm And are now in the process of Restarting that process if you're aware of what what some we had organizational chair changes a charity navigator in 2015 We paused this work. We had a change in leadership my predecessor left in March I joined in August and so we're now you know I'm a year into my role and where the results reporting effort is well underway again, and we're looking at how do we bring in Additional research from what's already out there in the field. Is there something we can do in terms of surfacing or? Helping provide commentary on What has been gathered by others I? don't believe that we are in a position to be issuing a rating on the impact of Organizations we can help you articulate your impact in a way that will be meaningful to donors But to actually issue a rating on impact is there would be much too premature at this point in time where we are as a sector We're gathering input, and we're looking for people that have data that they want to share if you are interested in interacting with us in that please send an email to results at charity navigator.org and Finally take the steps to measure your own results if you're not doing this today use Guide star use charity navigator as a means of propagating that out There are a lot of organizations. I saw this is I'm showing you on our we point people to our own results There are or other organizations that even in their 990s. They're saying look for our results here, and they're adding a URL to their websites to their to their 990s Get a registered representative with charity navigator so that you can interact with us more effectively That will speed the time and improve the quality of the data you have on our site we have over 9 million visits to our site every year and We're seeing a tremendous amount of traffic going through that site and also through our we have a we have an ability to actually You can donate directly through our you know We don't there's a donate button you can donate direct we have a giving basket and we've seen that The surges in that in terms of how people respond to that in the ratings might talk about that in later on And then any any suggestions, please send them to results of charity navigator.org Thank you. Yeah, invite you to stay Thank you very much Michael We're gonna get into our panel discussion now And I want to thank everyone in the room who did send in some questions in advance and we aggregated them to make sure we're covering a lot of bases and Then we will open it up in case there are any questions from the floor So for all these questions that we have you can either both answer them or just take a turn or whatever Whatever makes sense. So let me begin How did you come to write the letter to the donors of America? I'll start with that one. The irony is neither of us were involved in that process Which is awesome so we can point fingers at others So but I do think I have a perspective that Michael will likely agree with so The letters to the donors of America was really something that was born out of but our current CEO Jacob Harold Came to guide star and was on the board while he was a program officer at the Hewlett Foundation I think that that That gave him an opportunity to both in a real way in a symbolic way to use his Position as a funder to sort of ask funders to take Responsibility for the challenge that they were putting in front of these nonprofit organizations So it so he was really the catalyst for that certainly charity navigator and the wise giving alliance were Right there with him But I think what he did was use his presence as a recently transitioned Leader in the foundation community to flip the switch and sort of say this is something now that I'm on the other side I'm going to hold my former call ask my former colleagues to hold themselves accountable to this You know this distraction the overhead myth and to the credit of the about both of our organizations and BBB wise giving alliance I think the messaging has been very collaborative since then and our efforts have really been closely aligned all along. I Think the only thing I'd add is and again not having been there Each each of the three organizations was feeling the lack and seeing this rise in Almost obsessive behavior with looking at just an overhead metric. It's such a it's such an easy, you know numbers are easy and Starting the conversation to something. That's much less simple than and direct as a as a percentage point And so needing to articulate that strongly to the donor community Clearly we have more work to do I would say it was an unintended consequence of guys So if guide star wasn't publishing this data the 990 data it might not have been as easy to get to those numbers And it would have been in people wouldn't land on that overhead percentage. So in many ways, I think, you know Jacob and guide star took responsibility because we published the data that other people were Interpreting in a particular way to the to the detriment of the sector Thank You gentlemen Several years ago. We had Dan Palota here to talk about the paradigm and breaking it of the overhead myth And so with respect to that, how do we work to change the conversation to one that replaces overhead with outcomes? I know you both touched on this in your presentations, but how can we continue to work on that? I think The first thing that we can do is start talking about outcomes and create a conversation as to Why actually why is it important? Why are outcomes important to have that dialogue with your donors? and Then start publishing information on that get the data out there right now. There's a there's a lack of There's just a lack of data for us to point to and to start evaluating as an evaluator We need data to work from 990s are easy because it's it's that's you're doing that on an annual basis how you're actually talking about your outcomes how you're articulating sort of leadership strength your transparency Your accountability. What's the governance of your organization shift the dialogue away from the financial metrics too often? We're actually we're doing ourselves the the injustice of saying we've managed. We've managed these numbers really well It is something you're often going to get asked, but you've got a bridge away from that bridge to a different dialogue Yeah, I would actually be even more aggressive than Michael is probably so I spent 15 years So I'm not a middle school teacher anymore, right? I'm also not teaching adult basic education, and I'm not running nonprofit employment programs I'm not doing any of that because after doing that for about 10 years I realized I had no data that demonstrated anything I was doing made a difference and that was demoralizing Terrible and I was working with Vista volunteers and people who had You know decades in a career and none of them had anything out of that sort either and I felt that was an for an embarrassment as As an individual and as a professional. I also thought it was a scourge on the communities we were serving I had I could not in good faith make myself feel well about going in and to work every day and thing I was making a difference when I had no data that demonstrated that I was and oh by the way I was making up my reports to my board and to my foundations and I was great at it So I was successful as a nonprofit executive driving money to my programs and and still not and Nominally trying to figure it out. We have an obligation as leaders of our organizations to foster and create a spirit of inquiry You do not have to establish Causality you must strive toward correlation build a data set that demonstrates that some there's a preponderance of evidence that demonstrates that when we do this as Michael mentioned a moment ago classic logic model theory of change language When we do this this is more or less likely to happen and when this happens Then the goal toward which we are striving is more or less more or less likely to be achieved if you are not doing that every single day if your staff are not doing that every single day then you are doing Yourselves the professionals that will follow you and the community that you serve a disservice and I Actually have a more aggressive stance on that that I'm gonna keep to myself Do you encourage him to not hold back? No, no, no, no, I'm gonna pause I'm gonna pause I'm in a way. We've got a few more questions I don't want to keep my my credibility going in to be able to answer a few more questions And then I'll exit out of that door right over there Fair enough, but we will hold him to that won't we Okay, well, I can speak for my own organization All we do is fundraise and we give to another organization So when someone's looking at us for well, what's your overhead? Well, everything we do is to raise money to give somewhere else So we ourselves do not have programs per se and I know a lot of hospitals are set up that way and other things And so we're not alone Performance-based measures are a little messy different for every agency It's sometimes hard to get the long-term data on impact, etc So I'm not asking just for myself. I'm asking for others who are in the same boat out there What key points or data would you suggest nonprofits include for their donors to begin to start down this path? So if anyone's ever looked at schedule H data, I will tell you that hospitals as a sidebar do a terrible job And recent US News and World Report article highlights that house some hospitals are actually using their Uncollected debt to unpaid bills from for the population that can't afford to pay them as a charitable contribution, which is terrible That was an article two weeks ago. I So this blends with a follow-up a question that that follows a little and I want to be a little careful not to Not to make both questions the same I would encourage you as an or as leaders of your organizations to try and Learn one thing a month Learn one thing a month try to prove something that you intuitively believe is true Try to disprove something that you think is probably false Create a spirit of inquiry within your organization create a Mechanism for learning that is not about the outside world think about it as that we have to do this for ourselves We have to do this because we cannot believe that caring enough is going to solve the problem So what are some of the metrics that that I recommend donors to think about? I certainly the count the challenge of being held accountable to outcome data that reaches beyond the duration of your program is Crazy the concept of collective impact on which many of you were probably bought into Ambiguously you certainly sit in meetings and say nod your head up and down And then you go back to your office and say shake your head back and forth Yeah, that's that's not fun, but take full responsibility for the data That you are generating today make sure that you are capturing it in a consistent manner Create an environment where you are actual where the staff the team members the direct service staff The folks who are really doing the work have an opportunity to inform the success that you're having give the Michael mentioned a moment ago. It's a constituent feedback. I can't say enough for that. It's It's it's the the lack of data We have around the fact that an in a young person in need or someone or an adult seeking employment services Has no third-party place to go and say where's the best organization to meet my needs? I don't know maybe that exists in San Antonio if it does that's awesome It doesn't in most communities around the country because we haven't codified that feedback We haven't created in but we don't respect the population we're serving enough to be transparent with them about our results Most of us engage in a very passionate and compelling way But ultimately if we don't believe most of us are in the business of transformational relationships If you don't believe that you can measure the strength and impact of a transformational relationship Then you should not be leading your organization If you do believe that you can measure the strength and impact of a transformational relationship, then you should be measuring it every single day Kind of hard to follow that what it what I will say is what a springboard on on your point of the spirit of inquiry and Challenging yourself I would be transparent with those challenges and actually Find a way to share your information and particularly what is so hard right now in particular You know is we're punitive in how we look at our failures But we need to be celebrating our failures and actually so let's say you do challenge one of your assumptions and you find out you've actually been wrong What are you gonna do? You're gonna bury it and just keep going are you or are you gonna actually sort of say wow? We just figured out we we didn't have this right and we're gonna be doing something differently now and And how do you keep going after that? particularly one one of the One of the challenges that we have is particularly we're dealing with human lives. We're dealing with the well-being of others There's no room for mistakes Yet the reality of what we do is that we make mistakes and We're evaluated on that and so find a way to articulate your learnings So don't just learn but articulate it and and publish it and build that So that as a sector we can start showing that and then I think what we also need to do And as the custodians of some of this information is how do we how do we shift the dialogue from punitive to supportive? So you're a four-star organization today. You go down to a three-star Rather than walk away from you. How do I what's wrong? How can I what didn't work this time? And how can we help out and provide perhaps guidance funding whatever it is to do more in that respect I? Think on that to your to your you started by talking about the health care and and fundraising organizations And I think the the structures I wanted this is sort of a technical point, but I wanted people to be clear on it In the evaluations the charity navigator does right now there is a ratings table per cause area So fundraising organizations are treated differently than food banks than our museums And so the cost structures are entirely different at the end of the day It's going to show a number which has been normalized, but when it's not a one-size-fits-all There's a there's a huge span between I'd say the lowest cost structures coming from food banks So probably the highest cost coming from museums just given the so there's that study is taken into account I want people please be clear on that point. It's definitely not a one-size-fits-all Let me offer two more resources if you're not familiar with these two books I would recommend these as write-downs and takeaways as well One is better by a tool go one day. It is the best book I have read that She uses the medicine as an example of how to go about Establishing a spirit of inquiry recognizing failures and fixing them and if you read that book and substitute social worker for doctor you will have one of the best Examples of a sort of our articulation of a strategy and approach a second book that I strongly recommend is leap of reason this is a Book that is actually a case study of 11 different organizations that Acknowledged publicly that they had no data that demonstrated They were making difference one of which actually acknowledged publicly that its programs were contributing to harm in the lives of the individuals it was serving I would venture to say a significant portion if you're not you don't have data that demonstrates You're producing positive gains Then it's very likely through lost opportunity cost or through actual interventions that you are contributing to harm So defend against that but that book leap of reason is a page Turner It's 11 organizations each is about a 10-page case study And it's an awesome sort of laying bare Transparency of an organization saying this is what we didn't know here's what we did to fix it And I would encourage you to embolden your efforts within your organizations to to get copies of those books Read them as leaders share them with your team and help sort of carve yourselves out of the place that you're in today Thank you, I'm hearing a theme about sharing your learning and That's wonderful as something that in addition to performance outcomes So in addition to constituency feedback and what have you learned? What are some other things that you might include in a top five list of best ways to measure a charity's performance? So I think we're that we're on some levels repeating a little bit, but it's So what are my out? What am I what? I would even publish a logic model and show show your show How you're getting from one, you know? Validate your theory of change. I would I would publish I would be as transparency. I'd be looking at the transparency of the organization How do they articulate what they're doing the progress the failure of? Basic information like that governance. I would also look at the financials You can't you can't ignore the financials of an organization that doesn't go away. It's place in the hierarchy Shifts, but it does not go away So guide star does a quarterly impact call public call where we share with anyone who cares to attend what our results Have been for the previous quarter. I would encourage you to think about doing something of that sort even if you're just doing it for your board and your constituents your Your clients who reviews their quarterly performance with the clients they serve probably no one here and that's unfortunate I Would look and many of you may be involved who here's involved in actively involved in equity initiatives Okay, so you will be in the very near future equity is There are there are proxies that we can use equity is essentially The ability of an organization that is demonstrating that it's working with the community It serves as a part of the community it serves not at the community of sir It serves or to the community it serves, right? We all struggle with this every day But there are increasingly data sets that we can use to establish relative likelihood of impact as a measure of equity and those four Data points are to what degree does the staff of an organization reflect the demographics and socioeconomics of the staff reflect The target population that's being served to what degree is the constituents that are being served fit within that same framing the board And then the census data if you take those four data points You have a Venn diagram that will demonstrate a level of equity in the organization I think equity can be a Powerful catalyst for impact over time and increasingly is being acknowledged as such I would also say one other thing Something that I looked at a lot in my work when I'm working with an organization something called return on man hours so we often Sort of struggle through an ROI strategy And then we struggle through Expense and overhead etc. But you know return on man hours is a measure that says, you know what is our Organization scalable, can we do is the definition of success for our organization that more is by definition better If more is by definition better than there's a problem there And it's a it's a problem we have to face as a sector We have to recognize that better does not this can't necessarily mean more But if you require 10,000 man hours, whether they're paid FTE and volunteer man hours or a hundred thousand man hours to achieve The impact or results that you're going after you should be able to look at other organizations and determine is there a way for me to Do this more efficiently because there is no limitless source of volunteers and quality FTE or paid staff You have to be able to look at your man hour burn and your impact and over time as a sector We don't do a great job of that because we always think more is better Therefore we're just more hours more hours more hours more hours that is killing us And frankly makes a mockery of the sector when you're talking about building something that's scalable just at one point in terms of in as you try these different things out and you Start publishing information particularly on your websites Use some web analytics to actually see if anyone's looking at what you're putting out there in other words use data To back these are all great initiatives But if nobody sees it and nobody hears it in the donor community doesn't doesn't actually then then there's a there's some Evaluation and needs to go on there so that this really gets front and center if We're not changing the dialogue because we may be talking about these things But it's not actually getting broadcasts in the right way, and I would really There's so much data in your websites And what's so interesting is we're so focused on mission that we're actually not evaluating at an area that we can collect so much information so Find find a volunteer who can do some tech work for you and just dig into that data. It's so rich That's an excellent point, and thank you for all the other ones you made that are in addition to the performance based outcomes We appreciate that it makes us think a little bit broader sometimes How many of you out there are using some kind of analytic? analysis for your website That's encouraging keep it up And let's go on to the donor perception So, how do you think donors perceive your rating levels? I understand the algorithm has changed recently so maybe too early to tell but are there more changes coming? How do you assess that? So anecdotal and this is not this is representative of We have I mentioned we have a giving basket so you can actually track A portfolio of charities and you can give to those charities through our through our website if you're a registered user That that has been we were you were able to donate through charity navigator for years But we're actually now hosting it natively we have data and analytics on this now and 91% of the donations that have gone through our giving basket in the last 12 months have gone to three and four star charities a Little over 5% have gone to unrated organizations The rest have gone to the zero one and two star charities It's if you're coming to charity navigator you're already looking for a certain You know, so there's a there's a bias to that data set but it so that But it's very definitely people care about the well-rated organization. I think too Adrian you made a point at the beginning of your presentation about trust being a key factor in or lack of trust being a key factor in the people not giving and people Many people so our analytics show us that people use charity navigator as a validator So they're coming in to make sure they've heard about the organization They want to see how does it how does it rate based on a based on our evaluation system? They care about the rating. I have also anecdotal feedback from charities telling me that Losing a star can be worth half a million dollars to them in annual fundraising. So the the stars count Well, I'll say I served on the board of the United Way of Central Maryland for six years I just rolled off it in June of this past summer and we lost a star last year and it freaked us out And it hurt and it was for some Auditing irregularities. There was nothing that really rose to the level of malfeasance But it was they were ways in which our data fell on the wrong side of the equation and I know we wasted Wasted the wrong term we spent You know 200 man hours you put the whole board together Figuring this thing out and then determining what our response would be and reframing our message to our donors and our community Etc. And then preparing and working hard to make sure next year's star rating. We come it's it's it absolutely Affects the way we think I will say on the flip side. I'll speak from a different perspective I am wholeheartedly Disappointed with the degree to which the funding community uses results based intelligence to make Database decisions from a grant-making perspective. I Have yet to sit in a room full of well-informed smart grant makers Who are looking at data and saying this is how our investment strategy is going to yield results? I hope no one holds me responsible for that comment. Don't share that. I'm being taped Where's the person I'd like to I'd like to erase that from the redact that from the record I'm gonna get myself into trouble too, but we just did a user survey We're in a strategic planning process right now looking at sort of where we're going for the next few years and We we surveyed Our community of you know the people that we have on our mailing list and got back about 12,000 completed surveys Which was a great data set for us to pour through many of which were coming from foundations as well and What they cared about in their decision-making process Financial looking at the financials was still front and center for many of the many of the Funding organizations so this is not you know It's it's still there and I think part of it is because of the lack of coherency in in the in the reporting In a coherency and results and in reporting. Yeah, here's where fear comes in a little I'm gonna ask for one more qualifying comment So my indictment a moment ago, which I would like to redact from the record Is actually let me restate I think we just have to recognize that we are in the very very very very early stages of a sector that's starting to make the transition from storytelling to Science and evidence there is a 20-year period from 1490s to 1500s where both the microscope and the telescope were invented Right so before that time our entire understanding of the world around us was defined by how far we could see and after that time We introduced the ability to see infinitely deep into small places and infinitely far into far away places And we're still reaping the benefits of that and we're still dealing with science that is imperfect in much of everything that it does So I I don't want to everyone to I don't certainly don't want to go on record as saying what I said earlier But I also don't want anyone to feel demoralized by the fact that hey We're the first generation of practitioners that actually have a possibility of using data to make informed service related decisions This didn't even exist 25 years ago We did not have relational databases in every one's hand We did not have processes that were being sort of muscled together So we are not going to get this right. We are 16 year olds driving on our provisional license We're gonna hit some guardrails and it's gonna be awful and we're gonna make some mistakes But we have a long way to go and we have to keep plotting forward Absolutely keep moving forward do not let the fact that you don't feel like we're making progress stop you from moving forward We are Thank you Let's talk for a minute about who who initiates these ratings So with respect to guide star, you know a non-profit can find theirs and then they can update it themselves And you explained Michael how charity navigator kind of assesses the the top 8,000 and Certain folks don't necessarily fall fall into those categories. So can we talk a little bit more about? the smaller Organizations and how they might initiate the ratings process Yeah, let me first thing I'll say and then on this is really Michael's question But the count the running joke between Michael and me is that the first question I get when I walk into a room full of people And do a presentation on guide star is how can I get my charity navigator rating up? And my answer is I'm not charity navigator. I'm guide star guide star is really we have just to be clear We have levels of transparency that every organization in this room could freely Ascribe to and complete there is no rating on Guide star that level of transparency is a measure of the amount of data that your organization Chooses to share through your profile and you hurt you saw bronze silver gold platinum So we are not really we are often misunderstood as a rating agency We are certainly a source of intelligence for folks who are trying to make informed judgments about charities But certainly I think this question is more pointed to Michael so the 8,000 that we've rated The initial draw when we first came out I think it was 1200 charities were rated and they were really looking at that time at the largest organizations and the sort of the best-known US charities that list has grown if you're an eligible charity today You'll have a page on charity navigator site and there'll be a there's a voting button And we have a very clear process where if you have people that vote and that we get enough votes We'll add that organization as we're adding capacity We've we've constantly been adding new charities. They're also charities that either Merge or go out of business and so those come off, but we're right now running at about 8,000 There's not a there's not really an applications process There's more if the public demands for this organization to be rated We will rate them if and if the public demands for them to be rated and you don't want to be rated We're still going to rate you right and that's the we're working from the IRS 990 We're getting it directly from the IRS and then we're comparing the data on from the from the 990 with information That's on your website. So it's all public information some of which The reason I asked for the charity rep before is that you know if we've got your CEO wrong or we've got information about you know You we misquoted your mission statement or you update your mission statement That's something that the charity rep can manage and keep current so that people are seeing highly relevant Current information. We're only going to be getting we start with the 990 and then ask you to to work with us to correct Miss nomers, but it's it's an open system. We're gonna we are looking to grow and increase the number of organizations that we have It's still a manual process. I've got people doing data entry from handwritten 990 forms You could be asking us why aren't guide star and charity navigator working together on 990 ingestion? And so I think that's you know, you know kind of hit me square between the eyes again You know, that's that's a dialogue We need to be having part of what we're trying to do is reduce redundancy and reduce the number of useless Man hours in our work. And so I think that's There are discussions. We are looking for ways to collaborate. And so I think that's uh, you know All right now that is the end of the questions that came in from the nonprofit council I would like to open it up for anyone here who would like to ask a question of our panelists Good morning, thank you for your information today Adrian for you I'm an alumni of University of Baltimore graduated a long time before you did. I'm not sure about that. I did so I'm gonna go Go to Michael So that was that would know that was for you. That's I just wanted to get that out there, you know It was on North Charles Street when I was there still there. Okay, so so Michael with charity navigator I think it's performance metric number five where it talks about program Expenses Sometimes it makes sense for a nonprofit to not continue a program or sometimes there's funding for a two or three or four year period Of time and that funding goes away So I wanted to know why that you chose that particular Element in terms of you get a higher score if you're continue to increase program expenses year to year the way that I remember it so great question and a Shift in your programs is going to create a reset and at your rating So if you stop a certain program and then move to a different set of programs That probably doesn't get captured very accurately in the ratings today The goal is to show that as you go forward in whatever it is that your is your primary focus and primary program That you're gonna be growing in that respect. So it's a simple growth algorithm from that perspective which In the case of a change in direction is that's that's that's gonna fall through the cracks No, but but but that's actually an area for dialogue and so when when the rating changes at that point Organizations you can proactively make a statement on it won't necessarily affect the rating But it's there's a commentary that can go there and it's a You're gonna have to articulate this change to your donors in any case, right? If you change from being you know doing this to doing that you're gonna have to have a conversation with your with your donors And so they would on some levels you can preempt that because you know, it's you know, it's gonna happen Keep the aphorism in mind all models are wrong. Some are helpful, right? So as we as we aggregate and pull these things together, you know, their algorithm isn't Isn't winning, right? It's it's helping us to generate intelligence out of data That's ultimately what we're doing and intelligence is where the dialogue begins not where it ends And I'm not suggesting that is the answer to your question, but I wanted to say something because you were both from UB Hi, I'm Bob Desch with vet trip we work with veterans with PTSD and chronic pain We have a large number of volunteer service providers. In fact last year we delivered $540,000 with the services with a hundred and ten thousand dollar cash budget So how do we get that story out because our overhead is about forty fifty thousand dollars Divided by a hundred and twenty thousand or hundred ten thousand dollars that looks like it's atrocious But when you divide it by five hundred and forty thousand it brings that under a percent or so So how do we get that word out and not be penalized by the metrics? Yeah, and then the model is for all models are wrong. Some are helpful I will say that you know if you're not the number one math I'd be doing if I were you is using the federal guidelines for the the dollar value of a volunteer hour and not which I think was like twenty three dollars several years ago when I was doing this and Immediately start using that as your proxy for overall investment In one of the areas where we're actually this year looking at its services So volunteer services is something that we're not currently capturing in the metrics We did for a time and then the IRS changed some of its Rulings on that and at that point we felt we were losing your credibility mark We were getting soccer coaches putting in their time as if they were surgeons And so there was there were some problems with Unfortunately bad behavior that made it we we basically said we can't credibly we can't verify On a case-by-case basis that the people you say they are are are either highly skilled or low skilled and We're looking at coming up with a solution for that Part of what we're one of the big changes that we're looking at is we're using the 990 as a as a quality bar as We go into the area of results. We're gonna be Getting information directly from charities and so our validator how we validate the data that we have has to change And so establishing trust models between organizations is something that This is new for us and we're working on that I don't have a good answer for you today, but it is very definitely in our sights for this for the next 12 months. I Would say if you haven't developed intimate relationships with Casa and big brothers big sisters other organizations that who's driving force from an impact perspective as volunteers I would I would you have to identify your Colleagues and build a story that is consistent with your shared goals and objectives You know what Michael's saying is the vast majority of organizations that are getting rated are using FTE as one of their primary drivers of Expense and then the numbers sort of fall out But if you can find the 10 or 12 other recognized world-class brands That are in the sector today and there are many of them who are heavily driven by Volunteers then you can work together with them to build the story around why your metrics should be Held accountable to these benchmarks and not those benchmarks And I'm not suggesting that you're not big enough to do that on your own But there are some really there's some listen these other organizations are struggling with that same thing and their advocacy Efforts are trying to debate that to To Adrienne's point about organizing and building sort of a collective voice on Articulating values that's one of the things we're looking at for our our work around results reporting is getting it's it's difficult for us to develop Too close a relationship with any one charity given that we're we're being that impartial evaluator But if there's a a group of 10 15 20 organizations that group together and say here's the set of metrics We're gonna agree on and hear the salary ranges Then it's really easy for us to incorporate that in our metrics and we would love that so I'd be happy to You know to connect offline on that because that would be really useful Thank you, I'm wondering if on charity navigator if you thought a little bit about With agencies that are not in the 8,000 that are rated. Is there a subliminal? Negativity to not being rated if someone goes to the website and sees our information, but it's not rated Could that be perceived as a negative? That's a great question We have a strong statement on so let's say your organization is not rated There is a statement on your ratings page as to why you're not rated and it's very clearly stated that there is this is neither a Statement for or against it's just that the organization hasn't hasn't been evaluated at this point in time There I think people some people will go that way some people are going to want to see a charity navigator rating before they will Actually engage and that is one of the one of the drivers for Getting more ratings out at this point, you know as I was saying with the sort of the 80-20 rule We're we're covering a lot of where the money is going We're also we have arguments internally because there's some organizations that maybe get looked at once during a year on our website And so we say well, why are we why are we taking the time to rate this organization? I am very against sort of that kind of Because it basically will skew behavior and we want to we want to have this broadly available For all organizations in a in a in a highly and you know a meaningful metric Hi, my name is Molly. I'm with SA 2020. Hello friends My question to you is you you've spoken very eloquently about how nonprofits really aren't tracking results or at least right We've heard that and then we also heard that Funders and grant makers are not looking at results We didn't hear that. No, I didn't because it was retracted But it was there. I heard it It's on the camera the recording you're welcome What I say that so you've got these two sort of separate Things that are happening simultaneously and at the same time you're saying collect more data and information for results, right? Which to a perhaps to a grant maker would be overhead? Because it's evaluation and data and science, right? So how do we sort of combat this? Constant battle right is if I go toward you go forward and say my outcomes are X and then I hear back Well, that's because you spent 25 30 percent in overhead. How do who starts the conversation at the funder level? To shift that conversation so Our first obligation to track results is to the community we serve is not I know everyone agrees with that but we'll say that out loud and then The conversation then starts incrementally with most funders that I've seen how many people here are non-profit Organizations that are grant-seeking quick show of hands. Okay, that's what I thought how many people here have participated in a Structured feedback loop with the foundations that fund them that help them understand better what Why they were were not funded and how the foundation community can improve their relationship with you based on your feedback How many people have been in those conversations? Right nine twelve fourteen. It's it's it's increasing Molly It's happening. It's having more today than it was happening before but it is absolutely not happening Systemically and I think frankly regrettably we are the practitioners have to drive the dialogue We have to find every opportunity to engage a funder and say we know you're tracking this Can we please help you understand that these are the seven other things that we're tracking? Which are the incremental benchmarks along which we understand whether we're going to be successful or not? provide the you we have to run the extra mile and Bear the extra cost and bear the extra burden in the short term and that short term may be one year three years five years 50 years we but we can't Stop and say it's not and it's not a it's not an effort that's worthwhile I would say that so ultimately I'm sad to say but it's our obligation Just in the same way that it's a company's obligation to demonstrate to a consumer that it's working in that consumer's best interest It's not the consumers the family the philanthropic community is the buyer of services It is the consumer we have to recognize where they are we have to meet them where they are and we have to do all The extra work to get them to think about the environment We serve in better than in a way that's more consistent with our needs and that and that I'll be honest most Organizations that I know don't work in this way either many people here are leaders of organizations And the distance between a leader and their practitioners From a data collection and intelligence gathering perspective is often equivalent to the distance between the nonprofit and The philanthropic community so you take responsibility for the distance within your own organization Bridge that distance and then can simultaneously bridge the distance to the philanthropic community two thoughts that I'd add and one is When you actually do your grant applications if it's not required are you actually putting in an M&E line item? You've got to right in other words and we budget for it and make sure that they pay for it So that it's actually something you're accountable for one piece then the other is I think the The bigger problem that you're calling out is that we have a very simple set of almost almost binary functions with numbers and Then we have something that is anything but binary and in impact None of us really get it and so we're coming up We need to have a collective taxonomy that we agree upon around impact and I don't think that that exists In any real way or let's say we even start defining that taxonomy within our cause areas and then get clear on that So that we can save what is a hundred percent because we keep trying to translate everything into a numeric We're taking qualitative and trying to go quantitative and it's that's not a meaningful discussion And so just stay in that uncomfortable area and Insist on having that dialogue. I would also add I think I speak for many in the room that sometimes the grant makers very generously offer feedback and when the grant Seekers request the feedback sometimes it just doesn't happen And I almost think we need to encourage ourselves to continue to be the squeaky wheel if they're gonna offer that feedback You got to hold their feet to the fire. Make sure you get that feedback It's not any good to offer something if you don't give it and it makes us all stronger And I've been in many rooms where I watch the feedback happen, and then I don't see it incorporated. I Mean gosh, we got to close that loop in the rare cases where you get that feedback Well, I have read so many grants from organizations who've solicited for Felt that as a grant review person and I'm reading the same thing over and over again And I say didn't we provide feedback that this wasn't what we were looking for do we provide feedback? This wasn't the structure of the application yet here it is again because Sort of we forfeited that smart space that gives us the opportunity to learn and show we're learning We have that obligation to you Hi, I'm Angela from Alpha home and and I just looked at challenging navigator and because 60% of my funding is government The million dollars I still need to raise means we don't get rated How do I get past that? So I'm upset I I'm sorry you're upset but no and I recognize that and that is When I was talking about what we're working on in terms of extending who we rate You're currently uneligible for a rating based on the fact that you get so much from government funding The the ratings or the analyst organization is actually this is one specific area that it's going to be Talk to me and at the end of June 2017 and I and I hope or maybe we'll talk to you before then but that's that's in process right now Okay, thank you because it's still a million dollars in the hole for us and it makes it sound like oh They've probably got like five pence to raise or something. So that worries me Understood. Hi, Chris Carmona. Thank you for being here today Angela if that's your Upset voice. I've heard it several times over the last month. So I'll do better next time So the question I have is is I'm an I'm an auditor. I audit. I'm a CPA. So financials is that's what we do That's what we love but also keeping in mind that Also serving on boards that I have to wear my nonprofit hat and look at both sides of the coin So the question I have is this the 15% right? I think I know what it is because I think I've read the data of research that But what is it how is that measured? What what is the the simple? Calculation for that the overhead It Is there a simple calculation? It's fundraising and admin costs taken away from program expense So it's the program not total revenue because I've seen it that way as well Yes, isn't it revenue revenue? Okay So going back to what which is what I thought it was fundraising M&A M&G divided by revenue, right? so When you have a multi-year pledge and you have to recognize the revenue all in one year Your overhead ratio is going to be great Right, but because you have revenue that you you have the funding coming in in several years down the road You're not raising the money. So I don't know if I really have a question I'm just trying to make a point or how do we get past that because I'm as I'm Delivering information to the board and saying these are metrics you want to look at and I know we're trying to move away from looking and Start the conversation on on outcomes and performance base But at the end a that's what folks are looking at today and now and so it's kind of like I'm talking under my breath I'm saying okay. Well, this is your ratio, but you know what? It's overhead we need to kind of move past that even as an auditor even though numbers is what we stick to We also need to start this change that conversation within board rooms when we present As well, but how do you get around that in your measurement in charity navigator? So that was the three-year averaging is what we're doing We're not giving the absolute change from one year to the next okay, so that is it's going to be a mortise over the three years and If you want to get into I can I can walk you through the details probably do that offline But it's it is we're trying to smooth that because that the spike clearly is not representative of your business So there's no point in actually rendering that in that way. Okay. Thank you Let me say though that that so let me offer a counterpoint to that. I think that's a great point As a practitioner many of us here know That the spike is representative of our business right in other words as an employee of a non-profit If I'm running to the end of the year and we're not going to make our number I'm gonna there's going to be a reduction in force now over a three-year period There may be no net change in FTE with that organization But within that in within that three-year period We are looking at a sector that's fragile enough that doesn't have enough operating capital and cash flow Reserves to be able to sustain itself over a 90-day period where grants revenues may fluctuate, right? They might come in and they might go the chip why I say that out loud is because We have a talent Retention and acquisition problem in this sector and part of the talent acquisition and retention Challenge is that the highest quality new talent that's coming into the sector You take them through a three-year cycle of boom and bust and boom and bust And they see the organization appearing to be mismatched. It looks great on a 990. We've amortized. Oh look, we're doing great But what does it feel like it feels like oh my god? We're counting staples. I Can't continue to work for an organization that can't reimburse my gas This month because we don't have enough cash in the bank So I think there's an important acknowledgement that a three-year average is a great thing from a sort of global Perspective understanding the health of the sector and the financial sustainability of that organization But let's not forget that within that three-year period in the nonprofit sector in particular There are ebbs and flows that demoralize and cast an emotional pall on the organization if it if it's going through these peaks and valleys at the only sort of Have a bit of a reaction to Adrian's statement there in the sense that depending on the size of the organization Those peaks and flows are going to be felt You know in a major way or or much less much less substantial So I think size size does have an impact on that And and looking at the larger organizations. I think it's less volatile in that respect It's a little after 1015 and we still have good questions coming So I propose that we take one more question and then we'll invite Scott to make some closing remarks And I know that our wonderful panelists are willing to stick around and answer any additional questions y'all may have Then I guess I get the final question. Okay. I think that speaking From a smaller organization, you know, we're usually the little fish in the big ocean trying to just get from point a to point b and it's really a struggle because It tends to be that the smaller organizations are the ones that need the visibility They don't have money to do marketing that so how do you get that visibility for a cause? That's worthy that needs funding that doesn't have three years to like you were talking about You know, you might be counting your staples and things like that it's a very big frustration for a small organization to stay afloat and so if we're never recognized because I can't see Me filling your criteria ever, you know, so You know, what do we do to get the word out because we don't even have the funds to get the word out? So how do you? Suggest that maybe there's a way that you can help smaller organizations the charity navigator because we're a guide star And we have our thing all filled out and we're doing what we can to help get the word out about what we're doing we're I Ran a dance company for ten years with my wife and We were under a hundred thousand annual revenue. We toured all over the world. We couldn't pay ourselves We survived we never ever would have qualified for any kind of evaluation. I live that felt that and And I know we were a good organization and I know that they and we and we solicit to funding at very actively what I Care about this and I think one of the things we're looking at is charity navigator was created to Look at the large players and that is where we're and that's the ratings if to apply the ratings that we have today on a Small organization would actually be very unfair to a small organization and they wouldn't do very well that said Coming up with a validation and that was another didn't really speak about this But this is something that I've got Tremendous interest in in that there are more small nonprofits than there are large nonprofits And they're more actually really Qualified good nonprofits. They may still fail long term But there's there's an opportunity that if I'm if I'm a donor advocate as sort of one of the one of the primary hats We wear a charity navigator. I Want people to feel okay about giving to small organizations. We don't have a methodology today in place It's going to actually address that we are looking at a at a almost a certification Only in the positive so rather than sort of banning But we know how could we give sort of a an accreditation this organizations worth your funding? Part of the problem is scale and then how do I get information in so we're looking at how do how do I Create either a mechanism for for you to provide information to charity navigator for peer assessments for community foundations to work with you We're we're there's a team. I actually have a business development team that we've just created in the last year That's focused fully on Rating the unratable and I I think personally, you know from my standpoint when I look You know on charity navigator is having it be grayed out and say it's not rated is worse than not having anything there Just if it's just blank and then you have your disclaimer about this is why we don't evaluate is much better than having everything great out saying this Non-profit is not rated Thank you. All right. Thank y'all very much Great questions. Thank you to the panelists and to Anne for moderating I just have a couple of things to say to wrap up before y'all leave Number one. Don't forget on our website TN council.org. We have our nonprofit Defense committee page which has some great resources power points on debunking the overhead myth and a great Infographic that you can use in your board meetings for presentations and we also have the I am overhead video that we premiered two years ago That is still up there and Very much relevant and we are now in the process of producing our second video Which we will premiere at the big gig next year on March 25th Which you have the sign on your table save the date So it is the true cost of fundraising because we all know is that it takes money. We all know it takes money to make money So I appreciate y'all being here again. I want to thank our panelist or Michael and Adrian Thank you so much for coming and we will see you all hopefully at the big gig on March 25th. Thanks again