Nonprofits should focus on getting the word out about impact and effectiveness if they want donor dollars go where they are needed most, says a study commissioned by the William and Flora Hewlett Foundation.
It is also essential for nonprofits to communicate how they are run, measure results accurately, boost transparency, and support donor education and networking, says “The Non-Profit Marketplace: Bridging the Information Gap in Philanthropy.”
Unlike for-profit investors, philanthropists often make multi-million-dollar decisions without the benefit of accurate and timely information, the study says.
Foundations, corporations and individual donors in the U.S. give a total of more than $300 billion annually to more than a million nonprofits, often without knowing much about what the organizations are able to achieve.
“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,” Jacob Harold, program officer with the foundation’s Philanthropy Program, says in a statement.
A free flow of information might also help nonprofits improve their performance and engage in more meaningful dialogue, the study says.