Let’s say you care enough about a particular issue to open your wallet. How do you choose the best recipient for your donation? For an individual donor, this can be a surprisingly hard question to answer. “Financial information about nonprofits is available, but not much else,” says Deyan Vitanov, CEO of the start-up Philanthropedia.
“There’s no easy way to find out about impact, and that’s what matters most.” His new organization aims to bring donors expert opinion about who’s doing the best work in critical areas like education, climate change, and microfinance.
Instead of crowdsourcing this advice, Philanthropedia bases its recommendations on what Vitanov calls “expert sourcing.” More than 1,000 unpaid experts have signed on to help by responding to Philanthropedia’s surveys. They include program officers from foundations, professors, policymakers, journalists, and others “who have all this information in their heads,” Vitanov says. “The average person doesn’t have access to this knowledge. We’ve come up with a low-cost way to extract it, compile it, and create meaningful recommendations based on what the experts know.”
Philanthropedia uses its research to assemble a portfolio for each cause. Like mutual funds, portfolios list several nonprofits along with a recommended asset allocation. The climate change portfolio, for instance, currently includes 15 nonprofits. The Natural Resources Defense Council gets the biggest share—14 percent of the pie—while newer 1Sky gets just 3 percent. “Donors are welcome to follow the expert recommendation or create their own funds,” Vitanov says. “It’s up to you to choose which causes you care about and how you want to contribute.”
Incubated while Vitanov and cofounder Howard Bornstein were classmates at the Stanford Graduate School of Business, Philanthropedia launched in 2009 with a $300,000 grant from the William and Flora Hewlett Foundation. One of the newest entrants in the charityrating field, Philanthropedia takes a different approach from the better-known Charity Navigator, which bases its four-star system on analysis of financial reports from nonprofits.
Organizations don’t apply or ask to be reviewed by Philanthropedia. Nor is there a single evaluation formula applied across all causes. Instead, Philanthropedia offers the experts a blank slate and invites them to name highly effective nonprofits in a particular sector. “And then we ask why,” Vitanov says. “On the basis of what evidence of impact are you recommending?” For each organization listed, experts are also asked to cite both strengths and areas for improvement. Those comments are quoted alongside recommended nonprofits. Teach for America, for instance, is praised by education experts for “dramatically increasing the number and quality of people who go into the teaching profession,” but also criticized for high turnover rates among the teachers it places. A second survey asks the same experts to weigh in on the names that surfaced most frequently in the first round. The whole process takes a few months for each cause.
Philanthropedia began with three featured causes on its Web site and plans to expand to a dozen by early fall. The young nonprofit is also sharing its research with other organizations. GuideStar, for instance, has started featuring endorsements from Philanthropedia as well as from another new charity rater called GiveWell, which provides in-depth analysis of a limited number of nonprofits.
“Philanthropedia has hit on a constructive way to rate nonprofits,” says Sean Stannard- Stockton, CEO of Tactical Philanthropy Advisors. “The cost is low enough to quickly research a number of causes and organizations, but the information level is really quite high.” Donors are eager to know more about the effectiveness of organizations, he says. After the Indian Ocean tsunami caused widespread destruction in 2004, “the meme in the media was ‘Give,’” says Stannard- Stockton. “After the earthquake in Haiti [this year], it was ‘Give well.’”
For those who have the means to also give generously, Philanthropedia plans to offer an additional service called Expertise on Demand. This will connect major donors and philanthropic advisors with Philanthropedia’s stable of experts for in-depth conversations.