As with any investment, the decision to support a nonprofit should be grounded in empirical evidence. An organization is worthy of investment if it’s having a concrete, positive impact in the community and it’s run well enough to maintain operations sustainably. Exceptions include startups that have exciting potential but may not be far enough along in their lifecycles to show trackable, long-term impact or demonstrate sustainability. Organizations launched by, from, and in the communities being served are often the most deserving of investment interest and consideration.

There are many ways to determine the effectiveness of nonprofits (in terms of their impact and internal capacities), from reviewing their tax documents to observing their work directly. Funders should be well acquainted with a nonprofit’s leadership team, its strategic plan and the KPIs it uses to track progress toward its goals, and its culture. Lived experience among staff and board leadership is also an important ingredient in the mix. Instead of viewing support for effective nonprofits as mere charity, funders should view it as an investment in the communities and mission areas they care about. When they focus on culture, capacities, and impact, they’ll ensure that their investments are being put to good use.

  • Learn all you can about the organization’s culture
  • Focus on nonprofits’ capacities
  • Outcomes over outputs

Read the full article about assessing nonprofit effectiveness by Marta Ferro at PhilanTopic.