Here we discuss the details of how we found potentially relevant charities and invited them to apply for our grants.
In a nutshell
The steps we took were as follows:
- Articulated general principles of eligibility.
- Used public tax records to scan ~3500 charities for those that might fit our principles.
- Contacted over 1000 charities requesting that they fill out an online survey providing more information.
- Analyzed the 320 records of charities that responded, and named our five causes.
- Invited the 248 charities that fall within our five causes to apply.
- Received applications from 136 charities.
More detail follows, as well as a complete list of all charities that we contacted.
Details of our process
General principles of eligibility
Covering all of the many problems that charities address would not be practical; any "one-size-fits-all" metrics we generated would leave too much out of the picture. Instead, we sought to focus in on a small set of causes, and expand if there is demand for our kind of analysis.
In choosing causes for our startup year, we began with the following principles, which are based largely on what kinds of charities we are most passionate about:
- Help disadvantaged people. This excludes organizations focused on public goods (museums, parks, etc.), whose donors generally benefit from them directly, and are thus well-positioned to evaluate them without help.
- Translate money directly and reasonably quickly into improving people's lives, without reliance on changing others' opinions or laws. This excludes organizations focused on public awareness, outreach, and political advocacy; organizations devoted to environmental protection; and organizations devoted to research. Although we think all of these activities can be extremely valuable, and we may cover them in the future, these sorts of organizations are much harder to evaluate (because they cannot demonstrate past results). Excluding them is thus appropriate for our startup year.
- Include both developed-world and developing-world causes. Helping people in the world's poorest countries is philosophically different from helping people in the U.S., and the two appeal to different sets of donors (and both appeal, in different ways, to us personally).
- Focus on relatively large organizations. Our goal is to serve individual donors; that means being able to recommend a charity that has proven methods of helping people, and likely already has the ability to expand with more donations. We believe that a lot of valuable work is done by small, innovative, experimental projects, whose funders personally believe in the people involved (indeed, the construction of this website fit that description). But when publicly recommending a charity to any and all interested parties, we find it appropriate to focus on charities that can (a) demonstrate past results; (b) accomplish more good with more funding, without the fear that an influx of individual donations will flood them.
- Narrow our geographical focus for our first year. Comparing two different charities' results is always complex, but focusing on certain parts of the world reduces one set of complicating factors. When comparing education charities, the legal environment is essential; when comparing job training programs, the labor market is essential; when comparing global-health charities, it is essential to have some sense of what health issues clients face.
- For developed-world charities, we focus on New York City. Since we are located in NYC, this has the advantage of making site visits more practical, and the advantage of creating more appeal for our likely donors.
- For developing-world charities, we focus on Africa. We would have liked a narrower focus than this, but we quickly found that most potentially relevant charities have mandates to serve the entire world or to serve Africa, not to serve particular countries.
None of these principles is meant to imply that we disparage charity in other causes and regions. In fact, we hope eventually to research many causes that fall outside our initial criteria. These principles were chosen to make our startup year practical.
We used these principles, along with our own intuitions and passions, to generate a preliminary list of seven causes for our business plan, though we did not finalize our list of causes until later in the process (see below).
Finding potential applicants
We used a combination of methods to find as many charities as possible that might possibly fit with the principles above, so we could contact them for more information.
Scanning tax records
We contacted GuideStar, which provides data on charities taken from the IRS Form 990 (a form all US-registered public charities must file annually). We purchased a set of 3502 records, using the following criteria (derived from our above principles):
Developing world charities:
We purchased a record for each charity that:
- Filed a Form 990 in 2005
- Had 2005 total expenses of $1 million or more
- Is classified as "Q - International, Foreign Affairs, and National Security" according to the NTEE classification system. We excluded those in subcategories Q20 (Promotion of International Understanding) and Q40 (International Peace and Security), as we found these categories unlikely to fit within our decision (outlined above) to focus on direct aid.
We purchased a record for each charity that:
- Filed a Form 990 in 2005
- Either is located in New York City, with 2005 total expenses of $1 million or more, or is located anywhere in the US, with 2005 total expenses of $50 million or more. (We aimed to capture both citywide organizations and major national organizations working in NYC.)
- Is classified in one of the following NTEE classifications:
- B (Educational Institutions) excluding B30 (Vocational Technical), B40 (Higher Ed Institutions), B50 (Graduate, Professional), B70 (Libraries, Library Science)
- E (Health - General and Rehabilitative) excluding E20 (Hospitals and Primary Medical Care Facilities), E40 (Reproductive Health Care Facilities and Allied Services), E50 (Rehabilitative Medical Services), or E60 (Health Support Services).
- J (Employment, Job Related)
- K (Agriculture, Food, Nutrition)
- L (Housing, Shelter)
- M (Public Safety, Disaster Preparedness and Relief)
- O (Youth Development)
- P (Human Services) excluding P20 (specific service organizations such as the Red Cross and Salvation Army - we considered these organizations separately, rather than purchasing the record for each local chapter), P40 (Family Services), P50 (Personal Social Services), P70 (Residential, Custodial Care), P80 (Services to Promote the Independence of Specific Populations)
- S (Community Improvement, Capacity Building) excluding S80 (Community Service Clubs such as Kiwanis, Lions, Jaycees, etc.)
- T30 (Public Foundations)
- Z99 (Unknown)
Some of the above exclusions were made in back-and-forth negotiations with GuideStar, in an attempt to keep our volume down (due to both costs and time constraints).
The result was a set of 3502 records; for each charity, we had the name, location, mission statement, and list of accomplishments (from its IRS Form 990). We then went through this information and eliminated just over 2500 charities that clearly fell outside the criteria specified above (for example, organizations devoted exclusively to advocacy or research, or devoted exclusively to serving the disabled or elderly).
We also consulted several other sources for potential applicants:
- The grantees, listed online, of the Tiger Foundation, Robin Hood Foundation, Edna McConnell Clark Foundation, and Gates Foundation, all of which have similar areas of focus to ours (in terms of location and a focus on directly helping disadvantaged people) as well as reputations for rigorous, results-oriented grantmaking.
- Winners of the FastCompany 2006 Social Capitalist Awards.
- Our friends, donors, and readers of our blog (note that all recommendations from these sources had already been found by our other investigations).
Getting more information on potential applicants
After the above steps, we had a list of 1072 organizations (359 in international causes, 663 in US causes), but very little information about their activities. The IRS Form 990, which we used in most cases to get our information, requests a mission statement and list of accomplishments, but provides very little space to answer these questions, and in many cases an organization's answers do not make it clear whom it serves, what it does, or even where it operates. (This is one of the reasons we oppose attempts to rate charities using this form exclusively, as "charity watchdogs" and magazine rankings of charities generally do.)
The Form 990 rarely provides an email address or website, but it reliably provides address information, so we sent a letter to each of the 1072 organizations, briefly explaining our mission and our plan to award grants and requesting that the organization fill out a brief online survey to give us more information about its activities (as well as a contact email address). The letter we sent is reproduced here:
The survey we pointed these organizations to aimed to collect basic information about what activities they conduct, where they conduct them, and whom they serve. The survey is reproduced here:
We contacted some organizations by phone in addition to the letter (generally organizations we considered "big names," had had recommended to us, or otherwise wanted to make sure we considered). A full summary of which organizations we contacted is available below.
310 charities completed our survey (123 in international causes, 187 in US-focused causes).
Setting our five causes
We reviewed the survey data of our 310 registrants, with the aim of creating a list of causes that would:
- Represent a variety of different philosophical goals, and thus appeal to a variety of donors.
- Yield many applicants per cause.
We held a board meeting on June 22 to discuss our options and finalize our list of five causes. Full details on that meeting - including all the materials we reviewed at the meeting, minutes from the meeting, and a full audio recording of the meeting - are available here.
We settled on the following five causes:
- Help people in Africa avoid death and extreme debilitation.
- Help people in Africa become economically self-supporting.
- Improve early childhood development for economically disadvantaged, but not special-needs, children in New York City.
- Improve academic opportunities for economically disadvantaged, but not special-needs, K-12 children in New York City.
- Help disadvantaged adults in New York City become economically self-supporting. "Adults" in this case does not include the elderly, and organizations in this cause must include (though not necessarily focus exclusively on) direct help with finding permanent employment.
Inviting organizations to apply
Not all organizations that registered with us fell within one of our five causes; some were outside our geographical focus (for example, working in New York State but not New York City), and others did activities that we had originally considered including, but fell outside the scope we settled on in our Board meeting.
Those that did not qualify were notified by email. Those that did qualify were sent an email containing the following documents:
- Overview of our application criteria and process
- Round 1 application - these varied by cause, and each organization was sent an application for each cause it qualified for.
Our emails were sent on July 5, announcing a due date of August 3. We requested that charities notify us of whether they planned to apply.
During the following weeks, we followed up with unresponsive charities by email or phone, and also contacted a few more charities that we had overlooked in our initial mailout (this table gives the details of which organizations were contacted using which methods). Some charities requested time extensions for Round 1; all of these requests were granted without exception and without negotiation.
Ultimately, 134 charities applied (some in more than one cause - details below). It was at this point that we had a substantive set of information about charities' activities and outcomes (as opposed to basic information from surveys and tax forms), so it was at this point that we began to evaluate them substantively. The details of how we narrowed the field from Round 1 applicants to finalists, and then from finalists to recommended organizations, are available separately for each cause (see the links above). The complete list of contacted charities is in available here.