5 Standards of Excellence for Non-Profits

5 Standards of Excellence for Non-Profits

July 14, 2016 Lynette Garet Business Basics 0 Comment

Standards of Excellence: A Donor’s Guide

With the advent of more easily accessible  information, nonprofits and their standards are being held more closely accountable than ever. The Red Cross, an international nonprofit, faced public outrage over the funds it raised in the wake of the 9/11 attacks when donors discovered a significant portion of the money was earmarked for programs not directly linked to addressing the needs of those affected in the attacks. Learning from that lesson, Doctors without Borders ceased fundraising when it surpassed its fundraising goal in response to the 2004 tsunami.

Increasingly, the nonprofit sector is moving away from its traditional reliance on fundraising revenue in favor of earned income. In doing so, NPOs are moving toward clearly defined, measurable standards of performance in the areas of strategic planning, leadership, legal compliance and ethics, finance and operations, public awareness and resource development.

The Maryland-based Standards of Excellence Institute offers highly sought-after accreditation and recognition to U.S.-based nonprofits based on its Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector. The code has standardized benchmark and measurement goals across 27 topics dealing with the governance and management of NPOs by which donors can measure nonprofit stability and sustainability.

While charitable foundations and government funders may rely on these standards in their grant decision-making, smaller donors are less likely to conduct such rigorous investigations. Small donors, whether one-time or recurring, use standards that are more subjective. The different natures of these standards are not mutually exclusive; in fact, without measurable standards for performance, there can be no recognition of excellence.

Mission

An NPO’s movement toward earned income places demands on its management and policies that may lead to for-profit goals, activities and methods that diverge from its stated mission. Habitat for Humanity provides simple, sustainable housing for poor families; it does not sell them to the highest bidder to fund more construction.

 

Outcomes

Donors place a greater premium on nonprofits that not only do the right thing, but also do it the right way. Community food banks provide a valuable service—support for food security. However, the increasing emphasis on healthier diets means increased distribution of fresh vegetables and complex carbohydrates.

 

Transparency

Neither individual donor nor major grantor should have to dig for information about the culture of an organization. A nonprofit’s operational, management and governance policies are freely available and its ethics are clearly stated. When Oxfam International uncovered financial irregularities following its 2004 response to the Indonesian tsunami, it ceased fundraising and investigated, as well as shared its findings.

 

Respect

Small or large, donors expect a nonprofit to honor their intended purpose when they make their donations. They also expect nonprofits to respect their wishes with regard to their identity and donor history. Bernadine Healey’s presidency did not survive the backlash following disclosure of the Red Cross’ intention to divert two-thirds of the $564 million raised following the September 11 attacks. The controversy has continued to affect the nonprofit.

 

Sustainability

Competent leadership, cost-effective operations and clearly defined objectives are the hallmarks of a worthwhile nonprofit. An organization that fails to set goals and identify the means to achieve those goals runs the risk of losing its focus and subsequently its momentum. Strategic planning, financial management, as well as ethical and legal compliance are guarantors for an NPO’s sustained development.

 

The codified benchmarks larger donors and grantors rely upon provide assessment tools for small donors. Through adoption and implementation of specific, measurable objectives for all areas of nonprofit operations and governance, NPOs and their donors recognize when organizations meet standards of excellence.

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