Today, I’m going to give you an equation that you should use when considering which nonprofit you should give to since it could be difficult to get guidance about donations for the poor. I’ll use Bright Hope as an example, but you’ll quickly get the concept.
Trust Formula Applied to Nonprofit Giving
I didn’t come up with this equation or the formula, Charles H. Green created the formula in 2000, but I’ve applied it to nonprofits and I think it’s very helpful.
Trust = C + R +I
C is for Credibility
How do we measure credibility in nonprofits? We look at who is approving or evaluating them. Who’s looking into their finances and their methods of work and giving independent reviews.
I believe there are three credibility elements:
- Annual independent audit (downloadable from an organization’s website): An audit is a review of how the organization is doing and where their money is being spent. It isn’t a guarantee against wrong doing, but it’s as close as we can get to looking under the hood.
- Watchdog and credibility organizations. At Bright Hope we belong to ECFA, which is the Evangelical Council for Financial Accountability. They’re a Christian watchdog organization. They give you assurances that organizations belonging to them are honest and solidly Christian.
- Number three, Charity Navigator looks into the finances of all sorts of nonprofits and says, “Are they using their donations well?” For the last 16 Charity Navigator reporting periods, Bright Hope has been a four-star charity for 11 of them, and never lower than three-star for the other five. So we are up there. For sake of evaluation; I believe three stars from Charity Navigators is good, four stars is better. If your organization is a three or four star, you can feel good about supporting them. Zero, one or two stars should lower your trust level.
R is for Reliability
How do you measure reliability for a non-profit? Well, simple. How long have they been around? Unreliable organizations don’t stay around. In two or three years they’re out of business because if they don’t help whoever they’re trying to help they won’t last.
At Bright Hope, we’ve been around for 50 years. I’ve been the leader for 25 years. That’s a long time in the non-profit world and should raise the level of trust among our constituents.
I is for Intimacy
In the non-profit world we should ask the questions, “How well do you know the organization? How well do you know the people in it?”
We’ve got donors that have been 10 years or more with Bright Hope, and we feel very intimate with them. We love them, and they love us. Maybe you’re brand new to Bright Hope; our goal for the next few months is to raise your intimacy level.
S is for Self-orientation
I’ll call this self-interest. The final step is to take the credibility, reliability and the intimacy and divide it by self-orientation. Charles Green states that self-interest “refers to the person’s focus. In particular, whether the person’s focus is primarily on him or herself, or on the other person.”
So how do you measure that while evaluating a non-profit? Self-interest means, what is the organization getting out of it? Look at the percentage that goes to their administrative costs verses program costs. Some organizations are very high in administrative costs, 70 or 80%. I would say their self-interest is very high, so high that I would never give to them. Others are lower, so low you wonder how they even exist or if they are cooking the books. I believe any organization with administrative costs between 5-25% is a good indication of a well-run organization. We need to recognize that some missions are more expensive than others, and newer organizations are usually less efficient than older ones.
At Bright Hope, 85% of every gift you give goes to the people that we’re trying to help who live on less than $2 a day. 15% goes to administrative costs. I could bring that number down to two or three percent if all we did was deliver food aid or medicine and material goods, because that’s very cheap to do. But the kind of work that we want to do with Hope for today, Hope for tomorrow, and Hope for eternity, takes a lot of time, and more expense, because we are helping the whole person, physically, economically and spiritually in very remote locations representing the poorest of the poor. I believe the results are life-changing for those who live on less than $2 a day.
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“So Which Nonprofit Should I Give To?”
Which nonprofit should I give to this year? Credibility, reliability and intimacy, divided by self-interest should help you evaluate your level of trust and giving to causes you care about. So if you are informed and sympathetic to the real needs of the poor, ask yourself which nonprofit fits the fill based on this formula as a guiding principle.
Let me end by saying, I am thankful that many of you have super high trust levels in Bright Hope. Many have said to me, we trust Bright Hope and believe in you and the mission you are on.
If you’re new to Bright Hope, and your trust level is medium or maybe even low, all I ask is for you to give us a chance. Take the time to get to know us, check out our credibility and reliability. Do you have a question about the way we do something, or about one of our programs? Send me an email at CH@BrightHope.org. I might not be able to answer each email personally, but I do promise that if not me, then one of my trusted staff members will reply to each question I receive.
Together we can be wise and godly stewards of money to fulfill the Biblical mandate to help the poor, see their lives made better and show the love of Christ and in doing so, our own hearts and faith will grow.
Want to learn more? Click here to download a free resource on how to trust an organization with your donation.
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