President's statement: creating an online information marketplace  (Page 2/4)

The advantages of good information

In an ideal world, donors would have information about both the costs and the actual outputs and results achieved by nonprofit organizations in their areas of interest. Costsare pretty easy to measure and are in fact reported in organizations’ tax returns. Some outcomes, such as the number of individuals served by a homeless shelter, or thenumber of acres protected by a land trust, are almost as easy to ascertain—though many organizations do not systematically report on them. But measuring the ultimateimpact of most major social interventions—whether in health, education, or the alleviation of poverty—is usually complex, expensive, and feasible only in the longterm, if at all. (In any event, such measurements are beyond the capacity of most organizations directly engaged in this work.)

In the absence of knowledge about actual outcomes, there are two reasonably good proxies that can help a donor decide whether or not to invest in an organization:information that the organization itself can provide about its goals, theories of change, strategies, capacity, and progress; and the views of various stakeholders.

Information provided by the organization would answer questions such as: What are the organization’s goals and its strategies for achieving them? Why does it think thestrategies will succeed? What evidence is there that the organization has the capacity and resources to achieve its goals? And what indicators does it use to measure progresstoward its goals? Clarity about these matters is hardly an infallible predictor of actual impact. But an organization’s inability to provide this information should give a donorserious pause about its likelihood of success.

Information provided by stakeholders would answer questions such as: What do the beneficiaries of an organization’s work think of the organization? What do employees,volunteers, donors, journalists, and other organizations think? If there’s cause for worry that an organization’s self-reports are self-serving, there’s always a danger thatstakeholders’ views will be uninformed, malicious, or designed to curry favor. But a donor is probably better off relying on corrections from the free marketplace of ideasthan not having such views at all.

Consider, then, a Web site where donors could compare nonprofit organizations that do similar sorts of work. For each organization, the screen might display:

• Basic organizational and financial information from its IRS 990 tax return.
• A description of the organization’s goals and strategies for achieving them. For example, an organization dedicated to eliminating polio in a developing countrywould describe the scope of the problem and how it plans to tackle the problem. (How many children does it plan to vaccinate, and what steps are necessary todo this?)
• Indicators to track the organization’s progress toward its goals and a description of what progress has been achieved. (How many vaccinations have actually beenadministered?)
• Evidence of actual impact, where available, and lessons learned. (In the long run,did polio decline in the country? In the short run, what obstacles were encountered, and how were they surmounted?)
• Reviews of the organization by its beneficiaries and other stakeholders and interested parties. (How do families, communities, governments, and others viewthe vaccination program?)