Report: Nonprofits need to improve supply of accurate information

A new report from the William and Flora Hewlett Foundation is likely to spur controversy among the nonprofit sector, according to a February 2 article in Philanthropy News Digest.

Created in collaboration with McKinsey & Company, the report, The Nonprofit Marketplace: Bridging the Information Gap in Philanthropy, sought to answer two questions: What do donors need to make smart decisions about giving, and how can the philanthropic infoworld ensure that the strongest, most effective nonprofits get the resources they need?

In response, the report argues that the philanthropic community should work to improve the supply of accurate, credible information about how well nonprofits are run, including their impact and goal-tracking; encourage donor demand for such information; and strengthen organizations that vet and advise charities and connect them to donors.

According to the report, individuals, foundations and businesses in the United States distribute more than $300 billion annually to more than a million nonprofits despite knowing little about the effectiveness of the organizations to which they donate.

“The stakes for increasing the effectiveness of philanthropy are very high,” said Jacob Harold, program officer of Hewlett’s philanthropy program and a co-author of the report. “We’re not going to solve complex problems like climate change or AIDS unless we’re much more serious as a sector about getting resources where they can have the most impact.”

To encourage discussion about issues raised in the report, the foundation has launched a new Web site, givingmarketplaces.org.

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