How We Give
This Standard evaluates overall charitable program impact from the perspective of program investment as a function of overall operational expense. We also consider the organization’s operating environment and other qualitative factors that may highlight particular program successes and challenges.
Compliance and Reporting
Regulatory compliance and transparency in reporting are hallmarks of impactful organizations. This Standard involves a review of all publicly available regulatory filings (charitable registrations, Forms 990 and the like) and key materials disseminated by the organization (annual reports, donor updates, strategic plan, financial statements, etc.).
Low debt service plan demonstrates an organization may accomplish its goals independently and without undue debt service cost. We employ both quantitative and qualitative methods in this Standard to understand how an organization finances its programs, and ideally an organization would have fewer debt obligations proportionate with its overall operational expenses.
Operational Expense Profile
This Standard informs us as to how an organization gets the job done. By analyzing operational expenses, we begin to understand how organizations with similar missions make impact and accomplish goals.
How much does an organization need to invest in order to earn donations, grants, and contributions? An organization spending relatively less to raise revenue that isn’t earned from service fees or sales may devote more of its resources to its programs – and therefore maximize impact.
This Standard takes a look at the organization’s overall fiscal health beyond its current year of operations. Can the organization satisfy liabilities and debts with available resources? Did the organization operate with a surplus or deficit in prior years? Are there any operational or administrative expenses that appear extraordinary?
How an organization raises and manages revenue is key to understanding charitable operations. What are the organization’s revenue sources – grants and donations? Earned income from fees or royalties? A combination of raised revenue and earned income? This Standard provides insight on what’s needed to support an organization’s programs and helps forecast fiscal sustainability.
Net Assets and Institutional Endowments
This Standard asks, “how much is in the bank”? Organizations with net assets increasing over time tend to demonstrate responsible financial management and effective fundraising strategies. Organizations that have established an endowment further demonstrate strategic financial planning. Fluctuations over time in net assets or endowment are additional indicators of sustainability and the ability to continue making an impact.
Overall, could the organization fund its programs without having to rely on donations, grants, and contributions? Does the organization have one or more revenue sources from earned income that may provide a financial “cushion” should fundraising performance decline over time? This Standard evaluates an organization’s overall reliance on donated revenue and the impact that reliance could have on sustainability.