May 29, 2009 | Read Time: 1 minute
A recent article in The Wall Street Journal with advice for donors on “smarter giving” got it mostly all wrong, says Saundra Schimmelpfennig, a former nonprofit employee who is writing a book about the failings of foreign aid.
Ms. Schimmelpfennig says on her blog that three questions the article recommends donors ask of charities “perpetuate poor donor practices.”
She says inquiring about a charity’s administrative costs isn’t the right question, because overhead expenses are necessary to help a charity function effectively. Instead, donors should ask for a copy of the nonprofit group’s most recent audit.
“Even if you do not understand the audit, this will tell you whether the aid agency does yearly audits and whether they are willing to share financial information,” says Ms. Schimmelpfennig.
The Journal article further suggests asking about a charity’s challenges and accomplishments. But Ms. Schimmelpfennig says an organization can too easily gloss over their failures in response to questions like those.
Donors should instead ask for independent evaluations conducted of the group’s work, she says. “Look for evidence that senior management has developed ways to address whatever negative findings were in the report,” she continues, “and that the solutions have been implemented in the field.”
Finally, Ms. Schimmelpfennig wants donors to inquire about needs assessments that charities have conducted, rather than asking if there are specific programs they can support. Earmarking money can lead to too much money going to high-profile projects, and not enough directed toward important, but under-the-radar, work.
A needs assessment, says Ms. Schimmelpfennig, can tell a donor if a charity understands the problems it is tackling and is avoiding duplicative projects.
What do you think of Ms. Schimmelpfennig’s advice? What would you advise donors to do?
