Supporting an organization either financially or with your time and expertise is an investment. And as with any investment, you want to be sure that the organizations you support are trustworthy and effective. Excerpted from Exponent Philanthropy’s “What Makes an Effective Nonprofit,” this article shares that nonprofits with these five qualities are positioned to be most successful in addressing the problems they are trying to solve or helping the people they are trying to help.
The most fundamental quality of an effective nonprofit is clarity about its mission—both what it seeks to accomplish and why this purpose is important. The nonprofit should communicate its mission clearly to all its stakeholders—board, staff, donors, volunteers, partners, and the general public—so that everyone understands its goals and works toward a common purpose. All the nonprofit’s programs and operations should be aligned to advance its mission.
In addition, effective organizations document the need for their services and explain the value they add. For example, human service organizations should be able to explain how their services meet real demands and fill gaps. Arts and culture groups should be able to describe how their work enriches the community and specific audiences.
Effective nonprofits also follow good practices in three functional areas: finance, governance, and organizational and program development.
You’ll want to see that solid fiscal management processes are in place. Good practices include a board finance committee, careful cash monitoring, and regular budgets monitored with monthly cash flow statements. Strong leadership should run the organization. The nonprofit should employ best practices such as having a board-nominations process, board term limits, and written policies on topics such as board governance, board term limits, personnel hiring and management, conflicts of interest, and investments. Younger organizations may not have all these policies in place, but they should be on the path to developing them. Finally, you’ll want to see signs of health in organizational and program development. The organization should use a strategic plan that is reviewed on a regular basis, and it should be able to demonstrate measurable outcomes of the work it is doing. Regular client input should be welcomed and used for program development. Staff should be able to articulate key accomplishments, lessons learned, and future directions. And while strong leadership is important, the organization should be recognized as an institution—one that is not solely identified with one or two individuals who work there.
Above all, nonprofits depend on one key resource to fulfill their missions: qualified, skilled, and talented board members, staff, and volunteers.
Boards should be diverse, talent-rich, informed, responsible about stewardship, dedicated to the nonprofit and not their self-interest, and, above all, engaged. When nonprofits lack the resources and know-how to recruit and train effective board members, their governance, oversight, and leadership suffer accordingly. In addition, the effectiveness of a nonprofit largely depends on employing an appropriate number of staff who are talented, adequately trained, and properly supported and compensated.
Since people are key to performance, look for nonprofits that invest in their human resources. Recognize that recruiting, training, and supporting board, staff, and volunteers require substantial investment. And realize that measures of nonprofit efficiency—the ratio of program expenses to total expenses, for example—might tell only one small part of a much bigger story.
The ability to mobilize and engage volunteers, other nonprofits, businesses, and government agencies is an essential skill for nonprofits seeking to address the root causes of problems and bring about long-term change. Building awareness and support among key audiences and bringing more people and resources to the table are essential to change. If change is part of your goals, look for nonprofits that have staff skilled in working with government or advocacy, a willingness to partner with business and other nonprofits working to address the same issues, and an ability to empower volunteers to be advocates.
The most effective nonprofits make it part of their culture to evolve their programs and operations as they learn from stakeholders, from their assessments of impact, and from new knowledge in their field. In short, the nonprofit should be a learning organization.
Use our worksheet to help you choose the right nonprofits.