Tuesday, November 25, 2008
According to the Washington Post, a group of "prominent Philanthropists and entrepreneurs" will soon unveil a "radically" new way for donors to rate charities:
An alliance of prominent philanthropists and entrepreneurs is developing a rating system that they hope will radically alter the way donors evaluate whether a charity is worth their money. The Social Investing Rating Tool would assess not only how nonprofit groups spend their money but also whether their work is making a difference. The goal is to encourage donors to think more like investors -- to consider their charitable donations social investments, complete with risks and responsibilities. "There are commonly accepted metrics to be able to say this is a good corporation or a good restaurant or a good movie, but there are none of those metrics for the nonprofit sector, and there have to be," said Robert Egger, president of D.C. Central Kitchen, who participated last week in the first meeting of the Working Group on Effective Social Investing.
The most foreboding point of the article is that it reports that 40% of the biggest U.S. donors stopped giving to charities because of a belief that charities are poorly managed and ineffective. Not good news, considering the other financial problems facing charitable organizations.