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About Bob

Bob serves as President and CEO of GuideStar and serves on the boards of Vision TV, Grameen Foundation USA, and the AAFRC Trust for Philanthropy. More...

About GuideStar

GuideStar gathers and publicizes information about nonprofits. We advocate that nonprofits share information openly and completely. Any nonprofit we track can update its report for free. More...

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Driving toward Donor Confidence

What does Toyota’s sticky gas pedal problems have to do with the nonprofit sector?

The February 6 Washington Post reported that "Toyota’s recall of millions of cars … could also be undermining public confidence in the system of independent ratings and reviews that consumers have come to rely on and that for decades gave Toyota vehicles high marks for reliability and safety." The article continues:

The consistently strong ratings Toyota vehicles have received over the years from Consumer Reports, Edmunds.com and other consumer auto sites have fueled sales and helped the Japanese company surpass General Motors last year as the world’s largest automaker. …

Auto safety experts say consumers might need to adjust their expectations about ratings from private groups because of the limited nature of their testing and the degree to which they rely on government and industry testing that itself is in large part based on trust. And their recommendations are no substitute for proper surveillance by regulators and manufacturers. …

Randy Whitfield, who runs a Crownsville statistical analysis firm, Quality Control System, likens what Consumer Reports does to a small-scale clinical drug trial, which makes it unlikely it will uncover every potential problem that is liable to crop up when the drug is used by millions. "Everything changes when you put something out in the field," he said. Whitfield’s firm, which has done work for Consumers Union, said a better surveillance system is needed to track problems such as sudden unintended acceleration.

We in the nonprofit sector like to compare ourselves unfavorably to the for-profit world when it comes to reviews and ratings. There’s no doubt that we have a long way to go and much to learn. But it’s good to remember that producing meaningful reviews takes a lot of effort and is always evolving. There is much trial and error. We at GuideStar recognize that our partnership with Great NonProfits still requires improvement and refinement. Each year it will get a little better.

Here’s what we need to recognize: The American public wants reviews and has grown to rely on them in every facet of their lives. We in the nonprofit sector need to respond to that market demand.

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Another Way to Help as the Crisis in Haiti Continues

It seems that everyone—including GuideStar—has a list of organizations helping in Haiti. And with these lists come questions. From donors: Which organization(s) should I support? From nonprofits: How does my organization get the public’s attention?

Working with our partner GreatNonprofits, we have created a Haiti Disaster Action Center. This page lists more than 40 organizations working in Haiti. Here’s where you can help in a different way. If you have personal experience with any of these organizations—as a donor, volunteer, board member, or person helped out in a time of need (but not as a paid staff member)—share that information by writing a review. Your rating and comments will help donors decide which nonprofits to contribute to and also provide valuable feedback to the organizations themselves.

The reviews appear on both GreatNonprofits and GuideStar. And their impact will last long after the relief workers leave and Haitian citizens are able to resume their regular day-to-day activities. For there will be other disasters in the future, and these organizations will be there to help. Your reviews will help create a complete picture of each nonprofit’s effectiveness in times of crisis and great need.

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Taking on the Ratios Myth Once Again

I was happy to be part of a news release issued yesterday that dispels the myth of using ratios as the only valid way to evaluate a charity. For more than a decade, GuideStar has preached the mantra that judging a nonprofit’s effectiveness is based on how well that organization delivers on its mission and not by running overhead or other ratios based on Form 990 financials. It’s one of the most frequent issues I speak to reporters about.

As a pioneer in the field of nonprofit transparency, GuideStar has collected information well beyond financials from thousands of nonprofits. Our data collection tool has always included a section where organizations can elaborate on their missions, program activities, and annual outcomes. You might also be interested in checking out two of the many resources we make available on our site: "A Donor’s 10-Step Guide to Giving Wisely" and "Why Ratios Aren’t the Last Word."

Finally, this year, through a partnership with GreatNonprofits, we’ve added third-party reviews to our nonprofit report pages as another way to help donors evaluate how well a charity accomplishes its mission. Thousands of reviews are now available.

We are excited that others share our view, and I commend my colleagues who collaborated on this release for standing together to deliver this very important message.

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