← Blog · August 14, 2022 · Leaders Worth Following

Nonprofit Comprehensive Social Impact & Effectiveness Audit

Nonprofits. So many exist. It’s a good space, as help is needed and the current solutions fall miserably short. This will particularly focus on the tax-exempt organization in the USA, not internationally, though much would apply.

It’s hard to know if you should donate to an organization. And if you do, what difference does it make? Should you donate to Org A or Org 2? Should you volunteer? What do they even do? Does it make a difference? Should you donate with conditions to make sure it’s not abused?

The majority of for-profit businesses thrive in simplicity; provide a service, a product, and make that process more efficient and more enjoyable, but to what end? Profitability. There is much good that happens along the way in many cases, but not being profitable closes doors.

From an activity perspective, each nonprofit is so different and unique. When you look at nonprofits, there are a few things to consider that for-profits don’t have to think about. First, their customer is not singular. The one who pays for a service/product is often not the one receiving that service/product. Second, nonprofits don’t primarily exist to take advantage of a lucrative opportunity; they usually have discovered a need that is not financially viable to meet. Third, competition isn’t straightforward. Fourth, organizational models can be extremely complex. Profitability and efficiency aren’t the goal; impact, results and change are the goals. The list goes on.

I’ve worked in the nonprofit sector for a number of years with a variety of nonprofits. I’ve learned a lot along the way. I’ve seen a lot along the way, both good and bad. I’ll write more on the different facets of the nonprofit universe. The point of this post is to answer the questions posed above, and more. Financial audits will let you know something about the health of the organization, but oftentimes even those fall drastically short of helping someone understand even the actual financial state of the organization, much less anything else about it.

I developed this rubric of sorts to measure and begin discussions around all the different parts of an organization. The people who lead and work at the organizations often are giving up much to do this work. Some of them get rich off donors, grants and the government. Some just need a job. Whatever the staff motivation, there can be very helpful and good work done to make change in this world. I don’t see this as a finished product, just a beginning to help us all get better.

Scale is 1 to 8

1. Completely Failing — Completely ineffective
2. Mostly Failing — Mostly Ineffective
3. Moderately Failing — Moderately ineffective
4. Marginally Failing — Marginally ineffective
5. Marginally Succeeding — Marginally effective
6. Moderately Succeeding — Moderately effective
7. Mostly Succeeding — Mostly Effective
8. Completely Succeeding — Completely Effective

Weighted sections for the report. Weighted questions for each section. Would need to access the opinions of experts in appropriate fields/sectors.

Must measure:

1. Effectiveness of the dollar use to the accomplishment of the mission
2. The mission in relation to its worthiness
   • a fundraising organization that supports other organizations that provide emotional support to rabbits with PTSD would score a 1 — CF. This organization has a weak reason for existence.
   • an organization that rescues and provides rehabilitative support to child slaves would score an 8 — CS. This organization has a strong reason for existence.
3. Wildcard section to give room for the specific work of the organization
4. Impact within its sector. How is its sector impacted by its work?
5. Leveraging resources: Donations, volunteers, revenues
   • How long does a dollar last? How far can the dollar go?
6. Providing solution — does the organization work itself out of a job? Is there an end in sight? Or does it continue/enable/worsen the issue?
7. Development rating — is it creating dependence or independence? When this organization leaves or stops, will the change remain stable? Will it decrease or increase?
8. How do they involve donors? (Low weight. Shouldn’t be a huge factor). Donor satisfaction rating.
9. Financial responsibility — audited financials, low mishandling risk
10. Long-Term viability
    • is the model for change dependent on 1 person? Can it be continued beyond the current setup?
11. Mission — implementation fidelity. Does this organization do what it says it’s doing?
12. Baseline data — # of people affected by issue addressed. How rampant/widespread is the issue? (If services are provided for other beings, such as animals or trees, how many animals or trees are affected by this issue?) Who would benefit if it was fully solved?
13. Satisfaction ratings of donors, employees, volunteers, board members, program recipients.
14. Mission saturation: How do involved & related parties understand the mission? Are they congruous in their understandings? What is the passion/belief levels of these parties in the mission?
15. Redundancy of services provided (target area, demographic, type of service, etc.)
16. Partnerships — how many, how functional, how effective
17. Secondary effects of mission achievement — we know the prog recipients will be affected, but how will those indirectly connected be affected, if at all? (Can’t destroy the garden to save a plant; cascading change)
18. Have a section for anecdotal data.
19. Highlight innovative best practices
20. Final rating shouldn’t be just a number (like 76.43). It is a scale of recommendation, based on activity. As in, we strongly recommend you donate. Or strongly recommend you volunteer, but the return on donation is low. Or, it could be a mixture of a number and qualifications for that number. Maybe even letter grades per section (b+ in fiscal, d- in mission implementation). In this order: Should it exist? How effective could it be? How effective is it?
21. Make recommended changes to the organization