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Let’s be Candid: What the big new merger promises nonprofits

Early this year, a new force for sector outreach and information came into being. Called Candid, the freshly-minted national resource is the result of a merger between two organizations that have been vital to the sector’s ongoing evolution toward greater transparency and professionalism: GuideStar, which gathers, organizes, and distributes information on nonprofits nationwide; and Foundation Center, which does the same for philanthropies.

GCN CEO Karen Beavor sat down with Candid Executive Vice President Jacob Harold, formerly President & CEO of GuideStar, to find out what went into the team-up, and what their combined efforts mean for the sector’s future.

Karen Beavor: This merger has been a long-term process – I read a story that mentioned The Lodestar Foundation was supporting this work back in 2013.

Jacob Harold: It's been quite a journey, and arguably began a decade ago. The first conversations were just raising the question: Could we do more together? We’re two sides of the same coin: data about grants, data about nonprofits. Together, could we offer better services to the nonprofit sector?

Beavor: Was that organic? Was it encouraged by donors?

Harold: There's no doubt that donors have asked us the same question. But it was organic. Both organizations recognize that, as we move into this technological era, scale really matters. The nonprofit sector deserves to have organizations that are operating at scale and with excellence, which is hard to do when you're small. Even as Candid, we're still relatively small – the Googles of the world are a thousand times bigger than us – but we recognized that the whole could be greater than the sum of the parts.

The nonprofit sector deserves to have organizations that are operating at scale and with excellence, which is hard to do when you’re small.

It wasn't until about 2012 that there was the first attempt to say, "Let's look at this closely and think if this makes sense." At that moment, the answer was "Not quite yet." The two organizations were still undergoing transformations, and there were a lot of things we could do together short of combining.

Beavor: That makes all kinds of sense – and a little bit easier at the end of the day to put together.

Harold: Yes. That gave us an opportunity to spend a few years aligning some of our back-end systems, which saved both organizations a lot of money, and only led to better data. We worked on a number of projects together, we got our teams together to begin brainstorming. Then, a couple of years ago, we brought back the same consulting firm, talked to our boards, and they said, “You're ready.”

It's still new – Candid became official on February 1, 2019 – so we're very much in a listening mode, and an explaining mode. We're trying to be humble, recognizing it's going to take a little while for us to know exactly where we will go. But we’re also ambitious in terms of what we hope we can do for the field.

Beavor: How do you see yourself listening? What's the process for that?

Harold: We created an internal committee to address this exact question, because it's not a simple one. There are several different mechanisms that we will be using. One is an in-person listening tour. We have people in Jamaica right now, setting up a listening session at an international meeting of global philanthropy-supported organizations, and tomorrow we have another here in Atlanta.

Although this isn't final yet, most likely we’ll have an external survey as well, and probably some focus groups. The current plan is to share a draft of our thinking early next year, then have another round that's more of a reaction.

Beavor: Any advice to agencies that are contemplating mergers? What would you avoid? What would you do more of?

Harold: One is to do it on purpose, optimally from a place of strength. So often, mergers and acquisitions in the nonprofit sector are tackled from a place of weakness: One organization is about to go under, so it becomes about taking on problems, instead of creating opportunities.

Board engagement is also really important. We were particularly lucky that both boards of the parent organizations were engaged and very thoughtful, and helped us get a bunch of the tricky questions out of the way from the beginning. That freed us up to focus on things like legal due diligence, fundraising to cover additional costs, and preparing our staffs for the transition.

The other thing I'd say is to get outside help. Everyone's going to need at least some help: Some people will need it during the negotiation period, some will need it during the integration period.

Beavor: I’ve read some of the recent interviews where you discussed your dreams for Candid, like a common application process. I know there’s still some discovery to do, but can you talk about some of those specific ideas?

Harold: Yes, with the caveat that we aren't we aren't positive yet about our future.

In the past, our tools have been fragmented: grants data in one tool, organizational data in another, practice data in another, issue-level data in another.

First, we need a basic tool that allows people to access to the information they need to do good. In the past, our tools have been fragmented: grants data in one tool, organizational data in another, practice data in another, issue-level data in another. Often, what people really need is to see that information together: to discover, for example, that there's greater need for a solution in a rural area, but that the capital is going mostly to an urban area. Between our two organizations, we have most of those different kinds of data, but it's an immense job to figure out how to bring that together in a way that's not overwhelming for the user.

Beavor: We just had a local corporate donor call and say they’re looking to partner up with another grantmaker and the area of “water.” So we were in several different databases trying to figure that out: Who funds water? Who funds water here? Who's received grants from them?

Harold: And then, where are water issues most urgent? That's the first thing: a web tool that combines the different perspectives of our current tools.

The second is a true “common profile” for organizations. Just thinking about the time that people spend telling their own story, through a variety of different formats, again and again and again: It doesn't help nonprofits or grantmakers do a better job. So at the very least, we need a true common profile. At GuideStar, we were actually getting pretty close to that: 150,000 nonprofits have added additional data to their profiles on top of what we have from the 990, and that data then flows out through grants management software vendors, Facebook, Google, donor advised funds, and community foundations. This idea is not a new one, but it's one that I think we can accelerate as a combined organization.

Beavor: The real difficulty there is that, a lot of times, a profile generated from readily available data is going to be primarily financial. How do you see Candid pushing beyond financial metrics to get to impact metrics?

Harold: Over the last few decades, the one common source of data about nonprofits is the 990. Imagine if we, as American citizens, told our stories only through our 1040. It's such a betrayal! The work that nonprofits are doing is far too complex to be captured in a tax form. That's why GuideStar invested so much in allowing nonprofits to add programmatic data to their profiles.

So we're making progress there, but we've got a long way to go.

Imagine if we, as American citizens, told our stories only through our 1040… The work that nonprofits are doing is far too complex to be captured in a tax form.

Beavor: We give so many reports to foundations, but we rarely understand what is working – it’s like the information goes into a black hole. We’d all love to put some of that information into innovation practice or design practice, or just a feedback loop in general. Have you thought about that?

Harold: Absolutely. I worked at a foundation for six and a half years, and I know that there are sometimes good reasons not to share that data. But most of the time it would be totally fine. We still have to figure out how to organize it: It would be hard to make sense of if you just dump the data out there.

There's some mechanisms in place that we'll be experimenting with to begin getting us there. One is a tool developed by the Foundation Center, called IssueLab, that's gathered and tagged about 20,000 research reports by nonprofits or foundations on particular issues. That's not always the secret “insider knowledge” of foundations, but it's a good start.

Another piece is about learning across organizations, but in particular across borders. I think we need to avoid any sense that the U.S. has figured out philanthropy. We are regularly seeing innovations outside of the U.S. that are way more interesting than what we're doing.

Beavor: Our model as a version of philanthropy, rather than "the model."

Harold: Exactly. Like in China right now: They are skipping a generation of online giving through computers. It's going straight to mobile, at immense scale – I can think of at least three platforms in China where more than a hundred million people have made a donation.

Beavor: You're kidding!

Harold: There's a lot that we can learn there, so the thing to do is start to think globally about how we share information. We know that, at our scale, Candid will be responsible for serving many different stakeholders, so what we can do is offer tools that make sense for all use cases: individual donors, grantseekers, a nonprofit trying to benchmark itself against others, a journalist trying to understand a field, a researcher looking for trends.

Beavor: Within that range I'm sure you have a core constituency, which is probably not too different from your core constituency now – foundations and nonprofits. But there's a growing movement towards individual empowerment, so I can imagine one huge stakeholder of the future is an empowered individual.

Harold: That's probably right. An interesting question for us is, are we serving them directly or through partners? Right now, Facebook, Amazon, Google, Salesforce, and others are already using GuideStar's data in bulk. We have less control over how the information is presented that way, but we're able to reach more people. We're thrilled by these partnerships, but we’re still discovering how to work with them to make sure they present the information in a way that helps their users make good decisions.

Beavor: In aiming toward this new horizon of data transparency, where anyone can get in-depth information about an organization, how do you think nonprofits ultimately benefit?

Harold: We believe that an integrated system of information-sharing, across the field, is democratizing: The smallest neighborhood nonprofit has the exact same amount of real estate as the largest nonprofit on our servers, our tools, and our website. And we are able to get their information into these other platforms very efficiently.

An integrated system of information-sharing is democratizing: The smallest neighborhood nonprofit has the exact same amount of real estate as the largest nonprofit on our servers, our tools, and our website.

But you have to provide context to help people. We don't necessarily see that as our job, but we do see it as something that we can facilitate. For example, we've added commentary from the Nonprofit Finance Fund to help people understand how they should look at the financial data. We’ve also been very aggressive in running some information campaigns, like our Overhead Myth Campaign, which explains why we shouldn’t think of “overhead” as a proxy for quality.

Something else we’ve invested in is graphic design, which I think one of the most important skill sets of the 21st century: the ability to take complex information and present it in a way that makes sense to people, that tells a story.

Beavor: Can you provide any advice to nonprofits as they position themselves for this data-first world?

Harold: Take control over your own story. If you are allowing a tax form to be the primary way that people are learning about your organization, you're missing an opportunity to take control. If you're letting donors tell you what you should be measuring, you're missing an opportunity to take control. Be proactive about choosing how you want to be judged, and explaining that to the world. Otherwise, people will look for their own ways – which probably won't be the right ways.

There are a number of ways you can do that. For example, if your annual report prominently displays your overhead ratio, you are contributing to a myth that's hurting the entire nonprofit sector. However, if your annual report says explicitly, “These are the metrics that show our progress against our mission,” you're controlling your own story.

Beavor: Is there anything that you wish folks knew about this merger?

Harold: We need the help of the field if we're going to succeed. We exist in order to serve the field, but we have to have organizations willing to step up and share information, willing to buy into a shared system of the flow of information. We also need you to provide feedback and input. We have lots of our own ideas, but we need to check those with the people who will be affected by them.

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