How Effective Nonprofits Work: A Guide for Donors, Board Members, and Foundation Officers

 "Imagine if your support of the agencies and individuals in your life was one hundred percent voluntary. You would go to the dentist to get your teeth cleaned, and, afterwards, maybe you'd write a check, and maybe you wouldn't. At the grocery store, you'd fill your cart, and if you'd had a good week, maybe you'd make a contribution on your way out, and maybe you wouldn't. Clearly, the world couldn't operate on such a system, and although the examples above may seem exaggerated, they provide a taste of what life is like for nonprofit organizations."

 This is just one of the many insights the reader will find in How Effective Nonprofits Work, the result of a collaboration between two professionals with much expertise in the field of philanthropy. Marcia Festen was formerly a senior program officer at the John D. and Catherine T. MacArthur Foundation, and Marianne Philbin served as development director for the $50 million Chicago Annenberg Challenge. Both authors have a long list of publications to their credit, and here they share their professional knowledge of the attributes that make a nonprofit compelling to prospective funders. Thanks to those insights, this book should be an important reference tool for donors, foundation officers, nonprofit leaders, and even grantseekers (proposal writers, in particular).

The authors shed light on the nature of nonprofit organizations and their urgent needs for everything from volunteers to general operating support. Faced with so many nonprofits competing for grants, how do foundation officers spot the ones that glow? What are the signs of a healthy nonprofit organization that would benefit the most from financial support? Unfortunately, not all donors are clear on how nonprofits are run and which ones merit funding.

Addressing these questions with great clarity, the authors also offer a response to a recent study that discovered that more than half of all donors would give more if they understood better how nonprofits worked. Playing devil's advocate from the donor's point of view, Festen and Philbin write: "[W]hy should they? Do I need to understand the dry cleaning business just because I drop off a batch of clothes at the cleaners each week?" Nevertheless, the authors passionately maintain that donors must make exceptional efforts to question and to understand how successful nonprofits work in order to better help them make an impact on society.

Donors especially may find this book indispensable, because it covers the essentials of nonprofit management in an attractive format chock full of manageable information. For example, there are separate sections on "Starting Points: How Nonprofits Begin and Grow," "What Does an Effective Nonprofit Look Like? An Assessment Tool for Donors," "Signs that Trouble is Brewing," "Understanding a Nonprofit's Vision and Mission: Four Questions to Ask," "What Should Effective Nonprofits Strive to Give Donors," "What Donors Can Learn from Financial Reports," "Financial Red Flags," and other issues. Each topic is addressed in a short chapter that the reader can turn to for easy reference. The appendix includes two documents formulated by the Association of Fundraising Professionals: "Ethical Fundraising Principles and Standards of Professional Practice" and the "Donor Bill of Rights." In addition, the reader will find a glossary of nonprofit terminology at the end.

Although How Effective Nonprofits Work is recommended for funders facing difficult decisions, the authors also suggest ways donors can help when the organizations they care about are in trouble. "Contact the Executive Director or a board leader, and raise the issues that concern you," they advise, or "Ask how you can pitch in." Those and other suggestions empower philanthropists to consider themselves partners in the building of an effective nonprofit.

 For citations to additional literature on this topic, refer to Literature of the Nonprofit Sector Online, using the subject heading "Nonprofit organizations — administration" or "Philanthropy-donor advice."