It was only because of the various philanthropy news subscriptions I maintain that I became aware of something we ought to be seeing as a game-changing occurrence in the advancement business. In this public letter, the very leaders of the very organizations that created the cost-per-dollar-raised metric that has plagued the nonprofit world and convinced the world that charity effectiveness can be boiled down to this one statistic – countless donors have made decisions to give or not to give on the basis of the presence or absence of the seal of approval from these “watchdogs” – have done an about-face and have disavowed their own creation.
That’s right – GuideStar, Charity Navigator, and the BBB Wise Giving Alliance have publicly proclaimed that cost per dollar raised is a poor measure of a charity’s performance and have conceded that the obsession they helped create with this metric has hurt nonprofits considerably, particularly by completely hamstringing their ability to invest in growth and capacity, since every dollar not going “directly to programs” was denounced as “overhead.”
While there is certainly much to discuss in the wake of this important change of direction, my initial reaction is “why isn’t everybody talking about this?” It’s a major moment that could open the door to a real sea change in the way everyone thinks about investing in nonprofit growth. The first step is to spread the word. Tell your colleagues about it. Bring it up in your next meeting. Share a link to the letter. Maybe even remove those graphics on your webpages that declare your organization to be accredited by one of the watchdogs.