Vetting on Good St.

To our awesome Streeters and dogooders all over the world —

We’ve spent 4 years vetting thousands of charities and we wanted to let you know what we have learned along the way and provide a more in-depth look at our thought process (as of November 2017). Our vetting and classification process is specific to the Good St. model, where Streeters can donate to one of two featured charities addressing the particular cause of the day, rollover the donation, or put the decision into the Street’s hands (where non-designated donations get split pro-rata to the two charities based on how Streeters gave). You can check out a daily email sample here.

Our goal in vetting: To maintain and honor the trust Streeters grant us to provide a meaningful experience that makes the greatest possible positive impact in the world.

Operational questions: When evaluating a charity, numerous assumptions — explicitly or implicitly — are made. To what extent should overhead matter? What’s the appropriate level of fundraising efficiency? Do large corporate grants unduly tie a nonprofit to commercial interests? There isn’t any consensus on these questions in the nonprofit space, with some taking stands on directly opposing sides.

Fundamental questions: And beyond more operational-oriented questions, not everyone even agrees on some basic theoretical goals of nonprofits, most significantly on what kind of impact one should aim for. There are those that see impact in very quantitative terms like in the effective altruism camp, often part of a broader utilitarian view of the world to maximize total happiness/utility. In this approach, one might be better off spending $100 on 20 bed nets than on a birthday party for a kid with cancer (assuming the raw utilitarian calculus favors that). Others reject this view, holding that charity begins at home, not abroad. Some disagree on a more basic level with the quantitive approach—believing that it treats people like numbers, collapsing hopes and dignity into flawed cold calculations.

Overarching approach: We’ve deliberately kept Good St. a big Street, avoiding narrowing ideological positions while maintaining our vetting procedure. Over time, we’ve distilled a good deal of the below into a vetting rubric (sample here). It isn’t perfect, and we look forward to continuing to improve. It’s important to note that there are many ways of assessing a nonprofit, and plenty more nonprofit indicators — from other metrics on the Form 990 to recent nonprofit newsletter analyses — that are not discussed below. We’ve constrained our scope to what at this time has shown to be a solid picture for Good St. purposes. With these introductory remarks in mind, let’s take a dive into the world of Good St. vetting.

The Axes of Good

There are three main axes upon which we vet an organization:

  1. The Legit Activity Factor
  2. The Transparently Effective Factor
  3. The Affiliated Works Factor

The Legit Activity Factor

We ask if the organization passes the bar where we can fairly assume the organization is doing legitimate work for the public good. It involves a few different criteria:

  • Activity. Is the organization currently active? Has it done consistent work? Can we gather that it will continue to do so in the future?
  • Support: Does the organization have public support? Any recognition for the work?
  • Cleanliness: Is the organization clean cut? Or is there something sketchy going on?

How we address these criteria:

  • Website: A brief survey of their listed activity on their own site.
    Questions we explore — Is the organization’s site updated? Is the organization’s staff listed on the site? Is the donate link active?
  • Google Web Presence: A Google of the last several (~5) pages as well as the google news articles on them. Searching the “Organization Name” in quotations as well as any used acronyms. For the charities with popular names/phrases, (i.e. “Helping Hand”), we’ll search the name followed by the word “nonprofit”/“charity”, the organization’s city, and/or executive director until we pick something up. If it’s a charity that cannot be easily found online, we will not feature them.
    Questions we explore — Does the charity’s web profile appear normal? Are there any public foundations that support? If so, how big and well-respected are they? Any controversies? Any controversial figures who support the organization? If the U.S. president publicly supports the organization that’s a good sign in many ways, but it’s also a flag to dig further to see if there is some political agenda involved. Do any celebrities or corporations support the charity? A big endorsement or sponsorship is nice, but it requires further investigation as there are cosmetic charities that essentially serve as PR fronts. We also ask whether there are reputable institutions that partner with the organization. There are many small overseas charities without much of a web footprint, for example, but an active university-partnered volunteer program would be a good sign.
  • Recency and Relevance: A google filter of web pages from the last month while searching the organization’s name.
    Questions we explore — Is there a mix of the organization’s own activity and other third parties mentioning the organization as well? Any blog posts by volunteers talking about their experiences? Are there any upcoming events? If there are less than 2–3 quality pages of recent (~last month) web activity it is reason to hold off unless there is evidence that would give reason for a smaller recent web footprint, or other clear sources indicating recent impact.
  • Leadership: A search of the executive director’s name, and checking out the LinkedIn profile.
    Questions we explore — Does the executive director have a normal online profile? Is her/his nonprofit title clearly their listed and current position? Is it all aligned with the nonprofit’s website? If not, it’s a reason to look further as to why that might be the case. Sometimes the executive director is older or likely not tech savvy, in which case we’ll take that into account. And occasionally, when there has been a change of leadership, there can be a mismatch between the charity’s site and the web presence online. In those cases, we check out both persons.
  • Social media: A survey of the organization’s recent social media activity.
    Questions we explore — Does the organization regularly post on social media? Can we gather any impact from their page(s)? Are the facebook and twitter icons from their site pointing to the correct URLs? If there isn’t much activity or if there is an irregular social presence, is there a reason why the organization might not be as focused on it or have alternative channels to communicate with the public?
  • Controversies: We keep our eyes peeled to check that there is nothing controversial going on, especially for larger charities that can get caught up in all kinds of sketchy work. We google the charity’s name with the word “controversy”, and any other words that might pull up the particular controversy suspected. Sometimes we can pick up something on their wikipedia page and sometimes it’s a search result on the second page of google detailing a lawsuit.
    Questions we explore — Has the organization been caught up in any controversy at any point in its history? Are there reasons to think they might at some point in the future? There are certain cases where over the course of a nonprofit’s long history they will get involved with controversies. Yet if: the issues are appropriately resolved, the organization meets all other tests of demonstrated public support and effectiveness, and the email cause wouldn’t have been as meaningful otherwise — we’ll feature the organization. An example is the Rockefeller Foundation, which has a long history some of which includes some questionable activity that has since been left behind.

Effectiveness & Transparency Factor

We say both effective and publicly transparent, as if an organization isn’t transparent online about their work and finances, we won’t be able to determine from our online vetting research if they are effective — and our default assumption is that they aren’t. We explore this factor through two main modes:

  1. Primary source analysis: Form 990 returns or other financial material available online.
  2. Secondary source analysis: Platforms that analyze 501c3s, including: Charity Navigator, Guidestar, Give.org / BBB, GiveWell, CharityWatch, and other sites that have a smaller and less consistent list. (Guidestar serves as both a primary source for tax return data and as secondary source with its supplementary rating-related material.)

The primary source analysis
We only look at public charity (not private foundation) 501c3 organizations, and any 501c3 should be in Guidestar’s portal. If we need we’ll also cross-check with CitizensAudit. The first question is — is there a recent tax return available on Guidestar? Guidestar can pull tax returns into their portal fairly late. As of this writing in November of 2017, any charity should have a return from at least 2015. (The only exception, of which will come up later on, is when a 501c3 is small or hasn’t yet filed and provides us with alternative satisfactory financial material.) Once we get a hold of their tax returns, this is how we look at the Form 990:

Part I

  • Does the name and website seem correct, anything off?
  • Assuming it’s not a form 990 EZ, and has prior and current revenue, any sharp increase/decrease in program revenue, assets, or liabilities from year to year? What are the total net assets? Does the salary amount align with what would be expected given the nature of the nonprofit? And if the salary total isn’t listed — is the nonprofit all volunteer? If not, it’s a red flag.
  • What percent of total revenue is program revenue? We want to give where contributions are used, so if a majority of the revenue is program revenue, we will not feature unless it is publicly apparent the nature of the nonprofit and the contribution would be going to something other than an overhead black box. An example would be a hospital or member-based centers where donations are earmarked to a specific charitable program.
  • Is there significant Other Revenue on line 11? If so, we’re on the lookout for the breakdown in Part VIII.
  • Line 16a/b — any abnormally high fundraising expenses?
  • Line 17 — is there a high proportion of Other Expenses? If so we take special note in Part IX.

Part II

  • We make a mental note of the listed signatory name and if there is an accountant.
  • If it doesn’t align with what we would expect based on the leadership page on the organization’s website, more digging is needed to clarify why.

Part III

  • How detailed are the activities listed? Do the numbers look plausible with the breakdown?
  • If there are funds under Schedule O, we make sure those are listed towards the end in the Form 990 attachment as well.

Part IV-VI

  • We skim through to see if anything looks off — any further explanations needed by the IRS should be included as attachments at the end. Though we aren’t cross-checking each question to see whether any associated attachments are completed based on what they checked off.
  • We do take particular note, however, of the section on political-involvement/lobbying (IV: lines 3-4, Schedule C) and the series on potential self-dealings (IV: lines 25–28, Schedule L).

Part VII

  • Less than 5 board members is a red flag.
  • We look at the CEO/executive director, cross-referencing with the website. Checking out salaries. (Generally will only see info on IRS-specified employees in their defined categories of “Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors.”)
  • We check if any numbers are out of whack, or if a large portion of the compensation is coming from a related organization — knowing what that organization is and if it makes sense. (A lot of times it’s a related association. So the head of the ABC Foundation gets a lot of his/her money from the related ABC Association, for example.)
  • If there’s ever a need for more info, we’ll check out the other persons listed on the 990.
  • We look if there is anything off with any independent contractors listed— are they giving a disproportionate amount or subcontracting out their whole operation?

Part VIII-XII

  • We check to see if anything is out of the ordinary, especially if there were unusually large expenses/revenues flagged in Part I.
  • For organizations that we have reason to look into the accounting further (smaller with less detail) we’ll take greater consideration of the program, management, and fundraising expense ratios (IX; column B, C, D) is against the total expenses (IX; column A).
  • We don’t expect the numbers to fit a predefined box, but instead the multifaceted picture with all the info already gathered and to be gathered.

Additional Schedules

  • Beyond the above, if there are additional attachments (usually for larger organizations) we scan them to see if it looks normal.
  • For a grant-making focused organization we do not go through and add up the numbers of each grantee listed. We assume if there were any mathematical errors that was because an accountant didn’t catch it, not because something sketchy is going on. (Unless, of course, we would have any other reason to believe that something sketchy is in fact going on.)

Form 990s don’t always help so much though: There are cases where an analysis of the tax returns for these purposes are not too helpful. If we are giving to a hospital and designating the donation to a particular research lab, for example, it’s unlikely the 990 will have any helpful information on the lab.

The secondary source analysis 
Beyond the above primary analysis, we leverage the other platforms out there.

  • Guidestar: Beyond the Form 990s provided on the site, the rating system and accompanying nonprofit-provided information serves as a secondary source of analysis. A platinum rating is a strong plus, gold is positive, silver is good/neutral. Bronze or null we’ll still consider but it doesn’t increase our confidence .
  • Charity Navigator: While the selection is limited to charities on the larger side, a rating is still a helpful stamp to guide the vetting. A rating of 4 is a strong plus in our books, 3 is good/neutral and 2 is a red flag.
  • BBB / Give.org: A bit trickier of a vetting platform. Like Charity Navigator, many charities aren’t on the platform. If all criteria are met and it is vetted that’s a nice plus in our books. If a few criteria aren’t met or if the organization didn’t respond/disclose it’s a red flag, but in the former case if there is some sort of satisfactory reason behind it, we would still feature. Like if an organization’s CEO is also the chairman of the board it can cause a flag for BBB. The jury isn’t clear though if/how much of an issue that really is — so if an organization by all other accounts is doing good work and is transparent about it, we will still feature. It comes back to making sure the ratings are taken in context of all the other information we have, to ensure a meaningful and impactful giving experience.
  • GiveWell: They review and conduct in-depth analyses of a select few charities. The organization is part of the larger ecosystem of effective altruist approaches to nonprofit evaluation. We look at their recommendations and extensive research from a non-ideological lens. Taking their empirical research but not necessarily the normative conclusions.
  • CharityWatch: There are a limited number of charities listed and we don’t look at as regularly. But the platform provides a supplementary take on any charities they do have. If an organization has a rating below B it’s a red flag.
  • GlobalGiving: We don’t actively search to see if an organization uses any crowdfunding platform like on GlobalGiving, but if we notice and it has been given certain accreditations, we account for that. GlobalGiving has several different badges that a nonprofit could earn as well, and each one is a small plus.
  • Review sites: GreatNonprofits, Yelp, Glassdoor, Indeed, Google/Facebook Reviews — all provide a different perspective on the nonprofit and how it is being managed. But like any review or review aggregator platform, the content needs to be put into context. An anonymous negative Glassdoor rating touting a burnt-out high-turnover culture and micromanaging CEO (plenty of those) doesn’t by itself mean the charity shouldn’t receive any funds. It’s something to take note of and put in perspective with all the other vetting information. Occasionally these sites will bring to our attention some more hidden issues, like unsolicited telemarketing practices that can find their way to the review platforms. It’s also a way to pick up on unreported or unrelated activity that doesn’t align with the tax returns / web presence.

And we are learning over time: We are currently exploring adjusting the 501c3 requirement so we can feature other non-501c3 campaigns and international efforts. (In the early days of Good St. we would feature Canadian/British charities, using the financial material provided by their respective governments.) We will keep Streeters posted should this requirement ever be up for greater consideration.

Affiliated Works Factor

The third main factor we consider is whether the organization is affiliated with any particular political or religious agenda, either engaging directly in related activity or leveraging their platform to advocate for such. It’s important to stress that there are many charities that we do not feature that still do amazing work. There are countless incredible charities that those on the team personally donate to, but we wouldn’t feature on the Street.

Most of the time we’ll pick up any religious/political affiliation in searching through the websites and social media to see if they meet the legit and effective factors. But even if the organization appears to be ok, if we have any reasons to believe the charity is engaged in any affiliated work, we will take additional steps. Here are some of the main signs in which we dig further for a second pass.

  • Possible signs, political: Any advocacy/legal/policy-related charity, an environmental charity, a maternal health charity, charities where the word “justice” is brandished in a polarizing manner, and immigration-related causes.
  • Possible signs, religious: An organization that works overseas, in community homes or shelters, or if the organization has words like water, bread, hope, mercy, strength, ministry, inspiration, light, fellowship, covenant, house, grace, Sarah, Abraham, Angel, and any other religious-connoted words in their name.

Here is how we dig further beyond the initial first pass while browsing their site/social media.

  • Second pass : If we come across any of the above possible signs, we search the website (site:website.com) preceded by the search terms that would pick up affiliation in the respective area (putting “OR” between search terms). For politics right now that would include: republican, democrat, trump, obama. For religious that would include: god, faith, bible, jesus, christ, church, ministry, lord. (And because it doesn’t cost extra to add on additional search terms, we end up just searching for all potential terms regardless.) Most of the time for U.S. charities, religious affiliation is more likely with a Christian denomination, but it goes without saying we treat religions equally, and add whatever search terms are most relevant.
  • Third pass : If we still don’t pick anything up and we still have reasons believe the organization might be affiliated, we google the charity outside of its own website, with the relevant keywords.
  • Fourth pass: If we still don’t pick anything up after three passes and we still have reasons to believe the organization still might be affiliated, then we email the charity and ask them.

Gray areas: If only it were that simple. There are plenty of gray areas. Here are some of them to give you a sense for how we navigate.

  • Activism/Lobbying: Whatever the legal definition of activism or lobbying, de facto many charities use their platforms to push a particular agenda directly through Capitol Hill or amongst voters. Imagine a charity that focuses on cleaning up beaches, but in a recent post on Facebook the organization deplored the decision to pull out of the Paris climate accord. In some way we are supporting the agenda-driven speech by donating, but on the other hand it is an auxiliary part of their work. When the Affordable Care Act was in the headlines, the same thing happened with charities in the healthcare space.
    How we address — By seeing if the organization is actively engaged in opposing or supporting affiliated legislation/regulation (policy whose support falls on Republican/Democrat lines). If there’s any indication of active ‘online lobbying’ of its supporters — a few posts in the past couple of months — it’s a no-go. If a charity makes one or two mentions expressing its view, without the clear intention to mobilize the public or those on Capitol Hill, that’s ok. Bottom line, the organization shouldn’t be using its platform as a microphone for an agenda.
  • Presidential/Party Opposition: Especially this past year there has been increasingly charged sentiment expressed on both sides of the aisle towards the current and previous U.S. president. Similar to the above, if the organization is actively using its platform to oppose a U.S. president, we will not feature them. We are not, however, searching a year back through their social media history to see if at any point in time the organization might have said something negative.
    How we address — We are looking for any recent social media activity, and any historical opposition through their website (with the keyword searches).
  • Spiritual: There are charities that may not affiliate with a particular religion but support a generalized ‘spirituality’. While we aren’t against spirituality in the least bit, the lines can get blurry when it becomes part of a specific religious agenda. We want to ensure folks on Good St. are comfortable knowing funds aren’t being used to fund particular religious activities.
    How we address — The way we deal with this is by seeing if that spiritual sentiment is baked into any of their programs. If it is actually part of their activities (like hosting spiritual guidance sessions), and by donating we would be furthering that, we will not feature. But if it’s a general principle/value of the organization that’s fine.
  • Area of Operation: Often nonprofits will operate or base some of their activities out of temples of worship. As nonprofits themselves, temples are a great place for affordable rent or partnering to further mutual missions of social impact.
    How we address — If an organization is simply using the space for secular purposes, that’s fine. If there’s any individuation that it might be used for a dual purpose to preach or minister, it’s an no-go.
  • Focused Religious Demographics: Many organizations focus on helping particular demographics. Even when an activity might not be religious in nature, sometimes the target demographic is split along religious lines. An example would be an international NGO that provides clean water to churches.
    How we address — If the organization is focused on one particular religious group, we will not feature them. If it is a mix, it’s ok in our books. So if the charity drills wells throughout towns, and some of them are nearby churches, that’s fine. As long as it’s not the focus of their mission to help one religious group exclusive of the broader public.

Applies only to the organization, not the people: We are not screening against the beliefs of individual persons. We are not the speech police, cannot possibly police, and we do not think that is a good idea. An executive director may be world’s most vocal supporter of their religion or political party, as long the organization’s funds aren’t going to support that leader’s political opinion or religious affiliation. It’s about ensuring the organization’s platform isn’t being used to further a view that might not be shared by the public.

Gray areas in gray areas (Gray²): Sometimes it isn’t even clear what is considered affiliated with an agenda to begin with. When a charity supports legislation that is being fought over in Capitol Hill, that’s an easy one. But let’s say there’s a maternal health nonprofit that provides contraception counseling? What about an environmental charity that stands against fracking? There are plenty of different cases that don’t fall into a neat box.

Gray² Heuristic: We are guided by all of the above and use this heuristic: In a random sampling of 100 people from across all backgrounds/countries, could we imagine that more than 25 would vocally oppose if their funds furthered the effort? If so, we’ll shelve it. It might seem weird, that means that we’ll be featuring some charities that some people vocally don’t support? Yes. And why 25%? If the bar was 15–20 or lower many charities that would contribute meaningfully to the Good St. experience would be pushed out (such as organizations doing overseas work and larger organizations like the Red Cross). We wouldn’t want Good St.’s vetting to be beholden to the swing of 15/100 theoretical people, ensuring the Street is wide enough. There are checks against this heuristic with the above vetting procedures, we aren’t blindly following without maintaining the spirit and goal of this whole vetting process.

Implied laïcité, light: In some ways, we are equally affiliated with a political/religious agenda — one that biases parve/secular charities (a more moderate Americanized form of French’s laïcité approach). Perhaps sometime in the future as we work to develop some automated backend tech we will have adjusted the Good St. model to better accommodated funding affiliated organizations. But at this moment we haven’t figured out way to address it.

Counterweight: Not only are we not personally against religious/political charities, but we see a nonprofit’s agenda as a potentially powerful counterweight to the public and private sectors. In some way helping build up the space may lead to certain public/private ends that aren’t neutral in a public/private realm. It goes both ways, to the left/right, north/south. The key is that we keep the means (charitable giving) neutral.

Vetting-Wide Approaches

So far we’ve spoken about making sure an organization ‘passes the bar’ through the Three-Axes factors, but with Good St.’s model that’s not enough. There are other considerations that we account for that are more particular to Good St.’s microgiving choice-driven platform.

Small vs Large Bias

When vetting on Good St. there is a bit of a bias against smaller charities, part of an unfortunate catch-22 where a charity’s size limits their ability to attract support. In some ways, one might see every additional dollar donated to a charity as another piece of implied social proof of the charity’s impact. Yet that can be misleading. What got an organization into that self-fulfilling social-proof-driven support could have been through unscrupulous means.

How we deal with it: While we don’t compromise on the vetting, we place emphasis on criteria that still allow an effective small nonprofit to shine. Charity Navigator won’t look at smaller nonprofits, for example, but any organization can get the platinum rating on Guidestar that reflects positively in our criteria. And though we do not actively search for smaller nonprofits that don’t file Form 990’s, if we learn about a smaller or new organization that hasn’t yet filed a full 990 but appears to be doing great work, we’ll request an alternative financial document — such as a recent balance sheet. We do what we can, accounting for the above concerns. And insofar as it provides a meaningful and impactful experience on Good St., we’ll try to feature smaller organizations to bring awareness to their work.

Why there’s no small-bias: This might be counter to some people’s intuition. Wouldn’t we try to feature as many small charities as possible to ‘maximize’ the impact of the micro donations on Good St.? The flip side to seeing every dollar donated as social proof, is that it is also a dilution of impact relative to the scope of the organization. We do not take this approach, though we do not take the opposing approach either. We view impact as measured by outcomes. As an analogy, when it comes to measuring fish size, we don’t ask whether it’s a big fish in a small pond or a small fish in a big pond. We ask how big the fish is. There are arguments made on both sides whether ‘pond size’ matters. Many smaller charities claim they have less overhead as a percentage of income. Many larger charity’s counter that their budget allows them to produce a ‘multiplier’ effect, where with raising $1 they can get government grants and other services worth $10, for example.

Time-sensitive issues: We recognize organizations like the Red Cross or hospital research programs aren’t as nimble or efficient as a small all-volunteer run nonprofit out of a person’s basement. But when there is a crisis and there is an established large organization addressing the issue along with a much smaller one without a clear picture of its leadership, who do we give to? No charity is ideal. Using the heuristics and guidance in the above, and given that we do not have as much time to reach out to the charity for any red flags, we opt for the established Red Cross. Our level of confidence (to be explained in a bit) when an organization does not have much secondary analysis/proof is higher with the Red Cross.

Putting charities into context: While organization size isn’t a factor in determining whether or not to feature a charity, it still helps us put other criteria into context. We would expect a larger organization to have more web hits, for example, and we place greater reliance on the charity platforms to help evaluate. And the same way we put small and large charities in context, we do the same for charities that serve in different regions. A charity working in Africa is different from a charity working in Los Angeles. Many overseas charities, for example, do not have as much coverage or exposure. And like a smaller charity, it’s something to be cautious about. So whatever the the nature of the charity, we analyze with the most fitting tailored lens.

In context of the Good St. model: The fact that Streeters have the opportunity to choose which charities to donate to gives us flexibility in featuring charities that address causes in different ways. When it comes to addressing a particular disease some might not be a fan of hospital research programs, others might be more into support-groups, and that’s ok. We want to give the choice to address an issue as Streeters see fit. Better to have the choice be between how a large and a small charity address a particular issue than two smaller charities where we aren’t confident they are both legit.

Confidence

Whenever we feature a charity, we need to do so with confidence that the organization is going to use the funds appropriately.

It aint all roses : While we aim to limit the number of assumptions while vetting, it’s probably clear by now there are many assumptions being made by anyone who may give to a charity. We currently limit our vetting to online/remote means of research, which has its limitations. The charity evaluation space is a matter of degrees of confidence: those reviews online could be faked, the website could be a sham, and the tax returns could be forged. You can never be 100% certain, there is always the possibility for fraud or some piece of information that is either intentionally or unintentionally hidden from view. It’s unfortunate, but there are probably nonprofit staff out there misusing funds unbeknownst to even their closest friends.

For example: When Good St. donates to a hospital, there is the possibility that instead of buying immunological assays a researcher is using it for his/her vacation fund. Cancer research would still be in the dark ages, however, if everyone assumed medical researchers were hiding all kinds of illegal activity. And so on Good St., unless we have any reason to believe there might be criminal activity, we will assume such activity is not hidden from public view.

We don’t assume direct lies: We also assume charities will not lie to us when we might reach out to them for questions. Let’s say, for example there’s a charity we want to feature but the organization’s website has a different executive director listed — it’s a red flag. But if we call or email and they give a satisfactory answer (ex. “we recently hired a new exec director and are updating the website shortly”), we assume they aren’t lying.

Our confidence heuristic: To navigate the gray areas here, we have a little heuristic to think about how high of a confidence level we are comfortable with. We ask: would someone with an average risk-appetite familiar understanding of the charity space (say, they have served as a volunteer) be comfortable giving a contribution to the organization — confident that the funds are being used in good faith — at the amount that stands by the 70th percentile across all personal annual donations to the organization? We say 70th percentile as the relative degree of confidence someone might need to donate may depend on how big the donation is considered relative to the other donations. We see it somewhere between the median donation amount and the max, and use 70th percentile as the rough guide. So if a person gave $10, $50 $100, $200, and $1000 dollars for that year, it’s the confidence needed to justify giving about $200.

As an operations team, we try to increase the confidence level efficiently while mitigating the risks in the assumptions. And while making a perfect bulletproof vetting platform is impossible, we are always exploring improved processes, including software-based aids/solutions.

The Balance

So two charities pass the bar, and we are confident they are doing great work. But we aren’t done just yet. Any two charities will not work for a Good St. email. We need two charities that work well addressing the cause of the day.

The 5 W’s: You can think of the cause as encompassing the 5 W’s, ‘who-what-when-where-why’. And both charities featured in the email should be addressing the same 5 W’s of the cause:

  • Who — affecting the same demographic
  • What — the same problem
  • When — taking place in the same time (whether a current events or ongoing issue)
  • Where — in the same scale/location (international, national, regional, etc.)
  • Why — with the same particular driving motive behind it.

The charities represent “how” those 5 W’s are being addressed.

Let’s say we’re trying to do a cause on a rare disease, and there are only two charities addressing it. One charity is a support group for children with the disease, the other is a group for the adult/general population with the disease. 4 W’s are the same, the “who” part is not. In this case, Streeters are being asked not how to address the cause, but who to help: kids or adults. And that’s not an appropriate choice to offer. So if we cannot find another charity or angle to the cause, we will not feature the charities. The decision isn’t always clear. And so we keep the balance with the end goal of making the experience meaningful and impactful.

Earmarking: Often, however — and especially with rare diseases — there aren’t two effective charities solely dedicated to addressing the issue. There are, however, often organizations whose programs address the particular issue. And so we leverage the ability to earmark to an organization’s specific programs, if:

  • The organization clearly allows for donations to be designated to particular programs on their online donation form.
  • Or if the organization does not clearly allow for donations to be designated, with written or verbal conformation on the ability to earmark the donation.

There is quite a bit of discussion in the nonprofit community on whether fund-restriction through earmarking is appropriate, and so we avoid the issue when possible. At the moment, we’ll only earmark when the alternative (if any) would not be as meaningful and impactful.

Keeping it fresh: Another balance we do involves trying to keep the daily giving routine fresh. In furthering this, we will not repeat charities within the past year except in certain circumstances. Those circumstances right now are:

  • Current Issues: There are a limited number of charities addressing time-sensitive current events issues like natural disasters, discussed a bit earlier. And if there are multiple disasters within the year, the pool of charities to pull from can start to run dry. Especially with the time-sensitivity, waiting until we find a fresh charity could mean losing the window of meaningfully addressing an important issue. And so while we will still try to find fresh charities, we will re-feature a charity during a time-sensitive current events issue.
  • Chapters: Organizations like Habitat for Humanity have multiple affiliated organizations. While they have separate tax ID’s and we can donate to them separately, in the spirit of trying to keep things fresh we will hold off from re-featuring charities from the same chapter affiliation within the last 3 months.
  • Duplicates: Sometimes there are just two charities we can find addressing a particular issue. Does that mean we should only feature the issue once a lifetime? Before refeaturing the same two charities, we’ll give it at least 14 month and ask both organizations if they know of other organizations in the space.

Cause repeats: We also seek to avoid repeating causes within the same year. The line between one cause and another, however, can be blurry. If we have a cause on “Youth Education”, is that really the same as “Teacher Support”? They kind of have the same 5 W’s. There is some overlap, but they aren’t quite the same issue. See below for one particular way to slice the intersection of youth education, teacher support, and — to make things fun — environmental stewardship. (While the actual size of the bubbles would denote the rough scale of the cause, how they intersect is the key point here.)

Basically

If this long-winded post is a testament to something, it’s to how the charity space can be complicated. We deal with the complexity by consistently asking how we can stick to furthering Good St.’s mission.

A big street: Good St. isn’t about one particular approach to charitable giving — we paved a street wide enough to accommodate the various approaches, and maintaining our vetting standards along the way.

A developing street: The charity space is ever-evolving, and with that so will how we classify and vet charities to ensure our commitment to making charitable giving easy and meaningful. There’s a lot of stuff for us to learn and grow. We’re excited for what is to come, from the role artificial intelligence will soon play to the new funding models popping up. Along this epic journey, we will keep you posted as things develop.

If you have any feedback or if you want to get involved — drop us a note at hey@goodst.org. Thanks for being awesome.

— Joe Benun
Team Good St.