Efforts to rate charities expand in Israel

I received an email newsletter today from DAI - Donor Associates in Israel, a consulting firm that helps donors make gifts in Israel. You can check out their website at http://www.donor.co.il/index.php. This is the first of their newsletters I've received, and I'm not sure how I got on the mailing list.

The newsletter cites the development of a new initiative. The following is a quote from the newsletter:

"Midot is a new joint initiative of the Meitav Group, a private investment house, and the JDC-Israel that aims to carry out multi-dimensional, professional evaluations of Israeli nonprofit organizations, and to share its ratings and profile with the general public on the Internet, free of charge.

Midot is being established to meet the needs of donors, nonprofit organizations, and the general public, all of whom will benefit from an increase in the quality and quantity of information available on Israel's nonprofit organizations.

Midot's research and development team is busy learning about existing nonprofit evaluation tools currently being used in the US and UK, and plans to distill the best elements of each to develop their own evaluation instruments. Several conclusions to date:

• Findings will be presented primarily in a quantitative format, with occasional explanation. This enables the same tools to be used for all organizations.
• Social analysts (like stock analysts in the finance world) will be charged with carrying out the actual grunt work. Midot's evaluation will rely heavily on the analyst's professional assessment.
• Evaluations will be multi-dimensional, rather than based purely on raw financial data, such as the ratio of program to administrative expenses. An organization's effectiveness cannot be measured by numbers alone.
• The organizations being evaluated will be heavily involved in the process.

During the course of 2008, Midot plans to carry out several pilot tests, and intends to begin full operations in 2009. Given the depth and intensity of the process, Midot will not be able to cover all of Israel's nonprofit organizations, but nonetheless plans to rate hundreds and perhaps thousands of nonprofits over the next 5-10 years.

How it will work: two social analysts will carry out an in-depth evaluation of a nonprofit organization over a period of 4-6 weeks, during which time they will meet with various stakeholders, observe the programs in the field, and review internal documents. This team will submit its findings for review by Midot's other social analysts. A committee will then rate the organization and share the rating and report with the organization for comments before posting the rating and an executive summary of the findings on the Midot web-site. Interestingly, organizations that don't fare well in the report may be spared the online listing.

The organizations that were rated must update Midot on major changes, and may be placed on a watch-list in certain circumstances. They are also subject to an annual review, which Midot expects to be 20% of the time and effort of the initial evaluation.

Worthy of note: Midot does not consult or advise donors or organizations. Its focus is on rating and evaluating organizations according to multi-dimensional criteria. The end-product is a rating of the specific organization, rather than a comparative ranking to other organizations. The social analysts will be barred from evaluating organizations in which they have a conflict of interest.

Midot is in the process of establishing itself as a Public Benefit Company, and will eventually be able to provide tax deductions to donors who sponsor the evaluation of particular organizations or fields of nonprofit activity."

This note in the newsletter follows an announcement that Guidestar is coming to Israel. It seems there is a burgeoning, public interest in and efforts to reveal more information on the nonprofits in that country. The newsletter cites several recent stories in U.S. papers about similar trends, including several stories that ran in the Wall Street Journal in December.* Israel provides an interesting place to watch for these developments, as it is a small country with robust organized diaspora philanthropy.

*The articles cited in the newsletter, and the newsletter itself, note several organizations with which I am affiliated. I am on the Board of Directors of GiveWell and on the advisory board of the Nonprofit Reporter. A list of my professional and voluntary associations is available here.

Tags: philanthropy, guidestar, accountability, Israel