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GuideStar 2020: Building the Scaffolding of Social ChangeQ1 2014

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Contents

1 Vision and Goals

5 2020 Vision

6 The Nonprofit Sector’s Data Imperative

7 2016 Goals: Numbers and Stories

8 The Essence of GuideStar’s Strategy

10 GuideStar’s Context

2 GuideStar Strategic Plan: Three Pillars

14 Data Innovation

20 Data Collection

25 Data Distribution

3 Implementation

33 Why GuideStar

34 Our People

37 Strategic Processes and Solutions

39 Organizational Dashboard

40 Products and Programs

41 Capital

44 Caveats

45 Key Partnerships

47 Conclusion

4 Appendices

49 Appendix 1: GuideStar Board, Leadership, and Staff

53 Appendix 2: Internal Technology Infrastructure

54 Appendix 3: Finances

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1

… a nonprofit sector strong enough to tackle the great challenges of our time.

HOW TO READ THIS MEMORANDUM

this memorandum—GuideStar 2020—has four sections. The first section covers GuideStar’s vision for the field, current context, and basic strategic framework. the second section goes into detail on 17 specific initiatives to achieve that vision. the third section describes how we will implement and finance those initiatives. Finally, the appendices include additional complementary data.

In our planning process, we intentionally operated on multiple time horizons. Our vision is for 2020; our financial projections extend to 2018 to ensure a path to a next plateau of financial sustainability; and our operational plan extends to the end of 2016. As in any planning process, we seek to balance the imperative for long-term, goal-oriented thinking with the need to be iterative and evolve in the face of constant flux.

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The first revolution of nonprofit transparency was quite simple: nonprofit transparency can help drive nonprofit accountability.

Almost 20 years ago, GuideStar led this revolution by making nonprofit reporting forms available to the public.

Now, it is time to complete a second revolution: nonprofit transparency that drives nonprofit effectiveness.

This memorandum lays out a vision for that second revolution.

It shows how GuideStar can build the information scaffolding for social change, and how it can help ensure that the nonprofit sector is capable of tackling the great challenges of our time.

2020 VISION

section 1

Vision and Goals

Trust in nonprofit sector

Supportive policy environment

Donor decisions influenced by data

Simplified fundraising systems

Greater collaboration

Fast learning among nonprofits

QuantityMORE gIVINg

QualitySMARTER gIVINg

EfficiencyLESS WASTE

EffectivenessHIgH pERfORMANCE

Impact

Donors Nonprofits

+ + + è

Widely available information on nonprofit programs and finances

Standardized data systems Feedback loops with constituents and partners

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THE NONpROfIT SECTOR’S DATA IMpERATIVE

In the United States, the nonprofit sector accounts for almost $2 trillion in economic activity and employs nearly 10 percent of the workforce. It involves more than 1 million nonprofits, more than 80,000 foundations, thousands of vendors, and more than 100 million volunteers and donors. The sector’s reach into the lives of communities is deep, lasting, and multifaceted. But, for us to create the thriving society we all imagine, nonprofits need to step up our collective game. We need to squeeze more impact out of our work and our roles, acting like a thriving archipelago, not a mere collection of islands.

We see four drivers of greater impact in the social sector: (1) more giving—the financial capital that fuels the work of nonprofits; (2) smarter giving—a system that rewards performance; (3) reduced waste—less redundancy, busywork, and distraction; and (4) higher performance/effectiveness—greater results per dollar.

GuideStar’s opportunity is this: the organization of data can strengthen every one of the factors that lead to social impact.

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AnnieHEAD Of A fOOD BANKDALLAS, TX

Annie will be able to share information about her organization one time—on GuideStar —and know that it will automatically populate throughout the internet.

HectorWEALTHY DONORNEW YORK, NY

Hector will be able to find the information he needs about nonprofits in multiple places: his bank’s website, his favorite search engine, and his social media sites.

RobertHOMELESSTALLAHASSE, FL

Robert will be able to find vital services that improve his quality of life—and have a voice in how those services are delivered.

ReneefOUNDATION pROgRAM OffICERSAN FRANCISCO, CA

Renee will be able to quickly and easily understand the latest research in her field, locate potential co-funders, and track her grantees’ progress individually and as a group.

A NONpROfIT SECTOR pOWERED BY gUIDESTAR

2016 gOALS:NUMBERS AND STORIES

TOgETHER, ANNIE, HECTOR, ROBERT, AND RENEE will be part Of

2 million people will be directly connected to guideStar through social media, e-mail lists, and other media.

guideStar’s 4 billion pieces of data will be used 100 million times by at least 20 million people each year.

200,000 nonprofits will systematically share programmatic data with the field—including information about goals, strategies, and measurement systems.

Ultimately, these scaled “outputs” yield the lasting “outcomes” of better decisions by, for, and with nonprofits.

By streamlining processes, we will save nonprofits hundreds of millions of dollars each year.

guideStar will have data-sharing partnerships with 500 other platforms.

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THE ESSENCE Of gUIDESTAR’S STRATEgY

The opportunity before us is greater than just the linear application of a handful of inputs or outputs. Here we are talking about no less than the creation of a new kind of nonprofit sector: a community powered by information and characterized by smart decisions, open feedback, and efficient learning. This is an opportunity to upgrade the information scaffolding of social change.

Building a next-generation information scaffolding is not a task for just one organization. Later in this memorandum we will talk about the many partnerships we need to realize this vision. But there is one piece of the puzzle that we will take full responsibility for: the supply chain of nonprofit information.

GuideStar coordinates a set of inputs into that supply chain (Data Collection) and outputs from it (Data Distribution). On top of that supply chain, we build new tools to drive performance in the nonprofit sector (Data Innovation). Our 2014-2016 strategic plan is organized around these three pillars— and the ways we seek to strengthen each one:

guideStar 2016: Strategic framework

Data DistributionData Collection

More Data

Better Data

faster Data

Reach Depth Intercon-nection

Data Innovationprogram focus

Context

Convenience

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Data Innovation pILLAR ONE

We will develop new products, new tools, and new insight driven by:

ProGram FocuS conTexT convenience

… tackling the hard questions about the nonprofit sector—questions of nonprofit programs, performance, and impact

… connecting different types of data together; linking nonprofit data to information about issues, interventions, and capital flows

… making things much easier for our users—and integrated into their existing systems and processes

PrioriTy comPonenTS ProGram FocuS conTexT convenience

Common Profile

programmatic Data Tools

Cause pages

Nonprofit Mirror Funds

Nonprofit Sector Indices

Open Data Partnerships

Data Collection pILLAR TWO

We will improve our systems for collecting data across multiple dimensions:

more BeTTer FaSTer

…a greater number of organizations represented with more information about each

…higher quality information, especially with a programmatic focus

…delivered and available more quickly

PrioriTy comPonenTS more BeTTer FaSTer guideStar Exchange

data partner Network

Improved Digitization

Church/School/Politics Data

International Organizations

Data Distribution pILLAR THREE

We will expand our data distribution, creating a system defined by:

reach DePTh inTerconnecTion

... more users exposed to our data—either through GuideStar’s website or through GuideStar’s network of distribution partners

... deeper integration of GuideStar’s data in partners’ websites and products

… linkages across platforms and experiences, using GuideStar’s database as a central repository

PrioriTy comPonenTS reach DePTh inTerconnecTion Distribution Network (ApIs)

DonorEdge

Subscription products

guideStar.org

New Corporate Partnerships

Mobile Delivery

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gUIDESTAR’S CONTExT

GuideStar is privileged to find itself in a position of strength in the nonprofit sector. The numbers on the following page give a sense of our scale, reach, and interconnection.

We are further privileged that GuideStar’s operating budget is supported by almost $9 million in revenue from the sales of products and services. GuideStar’s core operations are essentially self-sufficient.

This earned income provides tremendous leverage: more than 98 percent of the people accessing data on GuideStar.org do so at no cost to them.

Earned revenue, however, only covers base costs—it simply does not provide enough income for innovation, expansion, and transformation. (See the Capital section for a detailed discussion of the economics of nonprofit data aggregation and the essential need for complementary philanthropic capital.)

Indeed, GuideStar is an actual organization operating in an actual market. Like any other nonprofit, we face organizational pressures. In fact, ours are especially acute and complex. The President’s Fiscal Year 2014 Budget includes a requirement for the IRS to distribute 990 data freely in digital form. That shift would bring significant benefits to the field and save GuideStar about $1 million a year in costs but would—by 2017—compromise a significant portion of our revenue. There are other potential challenges: the entry of a large private-sector player into our market, radical improvements in optical character recognition technology, or some unforeseeable transformation in the marketplace.

But in every case we see these external challenges as opportunities. They bring in new partners and resources, expanding collective assets to achieve collective goals. Further, these challenges offer focus and discipline, a mechanism to ensure that we reach our transformational potential. The strategic plan that follows will show exactly how we intend to do that.

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+ 2.3 billion pieces of data

+ 7.7 million image files

+ 2.2 millionorganizations

+ 1.5 million 501 (c)(3)s

+ 2.7 million registered users

+ 7.2 million unique visitors to guidestar.org

+ 20.8 million Web service and api hits through our

110 + “structural partners” Who use guidestar’s data on their oWn platforms

+ 96,363 nonprofits that have taken the time to give us additional data directly,

With 37,412 providing enough to meet our participation level requirements

+ 115 foundation members

+ 35,000 annual conversations With nonprofits

+ 721,000 e-mail list recipients; may be the single-most robust broadcast mechanism to the nonprofit sector

+ 71,000 social media folloWers

+ 72 staff, including one of the most robust distributed sales forces (full-time salespeople in four cities) in the sector (staff includes ftes, ptes, felloWs, and others)

GuideStar by the Numbers

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The three pillars of our strategic plan— Data Innovation, Data Collection, and Data Distribution—are organized to optimize the “supply chain of nonprofit information.”

These three pillars reinforce each other: Data Innovation feeds back to strengthen the very supply chain that makes it possible. Stronger Data Collection brings on new Data Distribution partners, in turn increasing the incentive for nonprofits to share data.

section 2

GuideStar Strategic Plan: Three Pillars

THE THREE pILLARS

Data Distribution

Data Collection

Data Innovation

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Data Innovation pILLAR ONE

We will develop new products, new tools, and new insight driven by:

ProGram FocuS conTexT convenience

… tackling the hard questions about the nonprofit sector—questions of nonprofit programs, performance, and impact

… connecting different types of data together; linking nonprofit data to information about issues, interventions, and capital flows

… making things much easier for our users—and integrated into their existing systems and processes

PrioriTy comPonenTS ProGram FocuS conTexT convenience

Common Profile

programmatic Data Tools

Cause pages

Nonprofit Mirror Funds

Nonprofit Sector Indices

Open Data Partnerships

Data Innovation The first pillar of GuideStar’s vision is the emergent

property of the other two. Building on top of our already

robust data supply chain, we have an opportunity for

immense data innovation, creating new forms of value

from our data. Operationally, we will execute this task

through GuideStar Labs, our cluster of research and

innovation functions. This section outlines the six core

initiatives that will form the heart of our Data Innovation

work over the next few years.

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COMMON pROfILE

As GuideStar succeeds in gathering more and better data about nonprofits and as that information is integrated into the sector’s existing processes, we will crystalize GuideStar’s current role housing the de facto common profile for nonprofits.

The creation of a lasting, comprehensive common profile offers immediate benefits to the sector in terms of efficiency and convenience, saving nonprofits from having to enter basic data in multiple places and ensuring the easy portability of data across platforms. A common profile may also serve as the seed of an eventual “common application” for foundation funding—though we are well aware of the challenges of building such a system.

In late 2013 we launched a partnership with the Technology Affinity Group, the association of the chief technology officers at foundations. This effort—called “Simplify”—will allow foundation grants management software providers to extract data from GuideStar’s database automatically. Thus, a nonprofit that keeps its GuideStar profile up to date will automatically keep its profile within foundations up to date as well. We have already secured commitments from grants management software vendors representing the majority of the market to integrate Simplify into their systems.

A stable common profile platform will allow several other kinds of innovation. For example, with the inclusion of a handful of image files (logos or photographs of an organization’s work and leadership), we will be able to auto-generate an annual report for any nonprofit, freeing organizations to focus on their work, not just on marketing.

THE NEED fOR A COMMON pROfILE

There are at least 171 online giving platforms. A conscientious nonprofit trying to control its presence across these platforms thus has to maintain profiles on dozens of sites—not necessarily an efficient use of time.

Ultimately, however, the true power of a common profile is not reduced waste; it is increased learning. Nonprofits will more easily compare programs, learn across sectors, and tap into the learning enabled by scale (of large nonprofits) or flexibility (of small nonprofits).

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pROgRAMMATIC DATA TOOLS

For decades, there has been a demand for the aggregation of nonprofit programmatic data—a demand that no organization has been able to meet. This should be no surprise; it is stunningly difficult to build such a system. The reasons are both legion and legend: (1) the nonprofit sector is immensely diverse, making comparability difficult; (2) many nonprofits lack the internal capacity to track programmatic indicators; (3) the time horizons of lasting impact are often very long; (4) there is no immediate business model to cover the costs of such a project; and (5) some social change strategies—notably advocacy and research—are notoriously difficult to quantify.

So it is difficult. We will not let that stop us; it is indeed possible to build such a system. To do so, we must leverage GuideStar’s immense scale while remaining flexible and humble (see sidebar). Our programmatic data collection tool would build upon the existing scale of the GuideStar Exchange (more than 90,000 nonprofits have already provided data), under the moniker of “GuideStar Platinum.”

This new GuideStar Platinum system will rely on three basic principles: (1) nonprofits can always choose which indicators to share; (2) the database of indicators will be seeded with existing aggregations of potential indicators; and (3) nonprofits can always suggest new indicators.

The only reason that the GuideStar Platinum system can work is our existing—and growing—scale. Without that scale, it would simply be too hard to build a critical mass of either users or providers. With that scale, we believe we could get programmatic data from a significant portion of nonprofits. If only one-tenth of the nonprofits that have already given us information provide programmatic data as well, that would be 10,000 organizations, an extraordinary step forward for the field and enough to start building momentum.

It is almost inevitable that some kind of programmatic data collection tool will emerge in the nonprofit sector over the next few years. Under the wrong circumstances—for example, if built by a private sector player without deep understanding of the field—such a tool could be dangerous for the field. But GuideStar is itself a part of the nonprofit community; our success is rooted in the success of the field. We believe we can build a programmatic data collection system that works for the nonprofit community.

COLLECTINg pROgRAMMATIC DATA

Any system to aggregate quantitative programmatic data across nonprofit categories must be both humble and flexible. It would need to offer a variety of types of data without privileging any one type:

• Outcomes data where possible; output data where appropriate

• Contextual language to, for example, emphasize the longer-term horizons of advocacy efforts

• Careful graphic design to demonstrate interrelations across various categories of data

• Where possible, demographic data about the population served by a nonprofit

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CAUSE pAgES

As the leading source of data about nonprofits, GuideStar’s “unit of analysis” has always been the individual organization. Imagine our database as a spreadsheet: the rows are organizations and the columns are different types of information about those organizations.

The challenge, of course, is that there are several other kinds of information that are relevant for social change, notably information about issues (what’s the status of a community or ecosystem?), interventions (what works?), and resources (who is funding what?).

Ultimately, each of these forms of data are “means” that are steps toward our desired “end”: a better world. Thus, the core unit of analysis of the nonprofit sector should really be the social issue, the problem that a nonprofit is working to solve or the opportunity it seeks to capture. A key part of GuideStar’s next phase will be to offer an alternate window into the work of social change: in addition to providing information one organization at a time, we will provide insight into groups or subsections of nonprofits as a whole that are larger than the sum of their parts. This new resource will both save time and improve decision making—think of a new private foundation trying to understand the context in which it will be making grants.

OpEN DATA pARTNERSHIpS

None of us is as smart as all of us. This truism has become even more valid as technology has provided new ways to share data and opened up new opportunities for innovation. For example, hackathons have begun to address problems in real time. Hackers and data scientists get together over the course of a day or weekend to tackle a challenge, radically opening the funnel of innovation. Hackathons by themselves do not create social change—they must be paired with lasting stakeholder engagement and operational stability to achieve this goal. But this kind of structured brainstorming offers immense potential for new kinds of experimentation and learning.

GuideStar has already provided free data to four hackathons and will continue to do so. In addition, we will search for ways to allow our data to be used in prizes, contests, and other new forms of distributed innovation—on top of our new APIs, which will allow any innovator to make use of our data for free for a limited time.

COMpONENTS Of gUIDESTAR CAUSE pAgES

• basic framework for understanding the social issue

• database of active nonprofits

• Key indicators

• list of interventions

• research about what works

• largest foundation funders

• News feed

• Available mutual funds

HACKATHONS AND DATA JAMS THAT HAVE USED gUIDESTAR DATA

• dC datadive (March 2012)

• Stanford Good Jobs data Jam (April 2013)

• National Day of Civic Hacking (May 2013)

• The Eric and Wendy Schmidt data Science for Social good Summer Fellowship Program at the University of Chicago (June-August 2013)

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The emerging science of data visualization offers another promising use of our data. We formed a partnership with an organization called Map of Science to take our data to create a complex visualization of the nonprofit sector similar to ones they have done for scientific and medical literature (see page 31 for Mapping Altruism graphic).

NONpROfIT MIRROR fUNDS

Every year, foundations spend billions of dollars researching issues and nonprofits—but the vast majority of what they learn stays trapped within their walls. Many have made valiant efforts to share what they are learning, but it remains difficult for individual donors—who, collectively, give five times more than foundations—to piggyback on that knowledge.

Just as an individual investor may seek to follow the expertise of Warren Buffett by investing in Berkshire Hathaway or track the overall market through an S&P 500 index fund, individual donors should have an easy way to build on the expertise of philanthropy professionals.

We will create a set of nonprofit mirror funds (also known as “sidecar funds” or “nonprofit mutual funds”) to help donors tap into this existing expertise. These funds are essentially a new kind of financial instrument meant to systematically leverage the immense knowledge that already exists in philanthropy. Because the initial market for such funds is likely to be small, we will take a careful, iterative approach in developing them. But, in the longer term, we believe it is possible that billions in philanthropy could eventually be routed through such an instrument. And, even with less significant uptake, mirror funds could serve a unique function as a form of philanthropic information, a way of structuring knowledge that may prove worth the investment on its own.

HYpOTHETICAL fUNDS

the Gates foundation Public Health Fund (gPX)—structured with input from Gates foundation staff for optimal impact

The ClimateWorks Fund (CCW) —mirrors the geographic distribution of ClimateWorks to regional climate foundations

The global Fund for Children (gCF) Mirror Fund—structured investment in gFC’s portfolio

The Social Innovation Youth Development Fund (SYF)—mirrors the proven youth service interventions chosen by the regranters in the US Social Innovation Fund

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NONpROfIT SECTOR INDICES

GuideStar’s current data looks at one organization at a time. But many of our users are interested in groups of nonprofits— the nonprofit community in a particular location, an issue area, or the sector as a whole.

We will build a set of indices that will track the health, growth, and change of groups of nonprofits—a tool to help us understand the evolution of the field and to guide and spur structured research.

These indices will be part diagnostic tool—a mechanism for the organizations to track collective action, understand resource allocation, and plan for the future. But they also will be a mechanism for the creation of identity—just as other indices have (Fortune 500, Dow Jones Industrials, Forbes 400).

SAMpLE NONpROfIT INDICES

• Overall sector size index (mix of financial and employment data)

• State-by-state nonprofit employment indices

• State-by-state issue spending indices

• Transparency index (index of overall sector transparency)

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Data Collection pILLAR TWO

We will improve our systems for collecting data across multiple dimensions:

more BeTTer FaSTer

…a greater number of organizations represented with more information about each

…higher quality information, especially with a programmatic focus

…delivered and available more quickly

PrioriTy comPonenTS more BeTTer FaSTer guideStar Exchange

data partner Network

Improved Digitization

Church/School/Politics Data

International Organizations

Data Collection GuideStar has built a strong platform of nonprofit sector

information by collecting data about the sector from multiple

sources: IRS Forms 990, other government sources,

nonprofits themselves, and our data partners.

And while almost 20 years of data collection have left us with

a 2.3 billion data point gold mine, we know that we must

have constant mechanisms to refresh and improve that data.

Most notably, we must build upon our historic focus on

financial data from the Form 990. IRS data will continue

to form a foundational layer for our database, but ultimately

the nonprofit sector exists in order to achieve programmatic

impact—and our data systems must reflect that.

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gUIDESTAR ExCHANgE

The GuideStar Exchange is our program for collecting and storing information about the organizations doing social good. Organizations come to GuideStar to provide more up-to-date and additional qualitative and quantitative data about the work they do to drive social change. As of April 2014, 96,363 nonprofits have directly provided data to GuideStar, with 37,852 providing enough to earn one of our “participation levels.”

GuideStar is redesigning the Exchange from the ground up to make it more attractive for participating nonprofits, easier to use, attractive for higher levels of data sharing, more widely distributed across network partners, and more useful for organizations making funding decisions.

GuideStar projects at least 200,000 active GuideStar Exchange member organizations by 2016. We have achieved our current levels of participation with only minimal direct incentives. Nonprofits provide data to GuideStar simply because they see it as a good practice.

Soon, we will be able to announce a set of much more direct incentives: the use of GuideStar data on prominent consumer-facing technology platforms (as of this writing we are contractually prohibited from sharing these details). We expect an additional surge of GuideStar Exchange data upon these announcements.

As the GuideStar Exchange improves, the data will enable very different uses—and users—for our tools and services. For example, foundation program officers have used GuideStar’s data for basic financial and compliance analysis but typically did not use that information to guide programmatic decisions. High-quality GuideStar Exchange data (i.e., at the Gold level) will be enough to meaningfully inform strategy and, over time, could become indispensable for program officers and others needing deeper data beyond financials.

gUIDESTAR ExCHANgE pARTICIpATION LEVELS

The guideStar Exchange is the program through which nonprofits share data directly with GuideStar.

There are three levels of participation:

BRONzE

Nonprofits provide basic descriptive information

SILVER

Nonprofits provide detailed, up-to-date financial information

gOLD

Nonprofits provide effectiveness information, including answers to Charting Impact’s five questions

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gUIDESTAR DATA pARTNER NETWORK

Social change is complex. There are many kinds of information that can be relevant to a decision.

At GuideStar we do not expect that we will directly gather all of the relevant data. Other organizations are collecting and structuring many forms of information—from stakeholders, academic researchers, government agencies, and others.

We have already started to compile data from partner organizations for a program we call TakeAction (see sidebar for a list)—but we recognize that such information will be far more useful if it is integrated into our core products and data distribution mechanisms.

In our next phase, we will deepen this data partner network—adding new sources, making the data more prominent, and figuring out how we can aid in the distribution of not just our data, but others’.

The longer-term potential of the integration of multiple types of data is to put nonprofits in context. Consider a literacy organization in Chicago. Now, data about that organization exists in a vacuum. But with the right data partnerships, we can offer a wrapping: What is the literacy rate in Chicago? What foundations are funding literacy programs? What does social science research tell us about what works to improve literacy rates? That kind of context is essential for good decisions by all stakeholders of social change—it takes us beyond isolated islands of data to a network of meaning.

gUIDESTAR DATA pARTNER NETWORK

the GuideStar data partner Network is the set of other organizations that provide information to GuideStar—analysis, badges, contextual data, etc.

Today it includes:

• greatNonprofits (stakeholder reviews)

• Philanthropedia (expert surveys)

• giveWell and Root Cause (third-party analysis)

• Innovations for Poverty Action and the Coalition for Evidence-Based Policy (research about what works)

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IMpROVED DIgITIzATION

The core of GuideStar’s data collection work over the past two decades has revolved around the IRS Forms 990—collecting, distributing, and then digitizing the individual forms for more than 300,000 organizations in the nonprofit sector.

GuideStar has worked closely with our digitization partners to find more efficient ways to digitize the returns, while being careful to not sacrifice accuracy. But we recognize that we are operating in a changing environment. As noted, within a few years the IRS will likely provide a bulk download of digitized 990 data. The technological context is changing even more rapidly. New optical character recognition technologies (and hybrid approaches like the one used by Berkeley, CA-based startup Captricity) offer immense potential to digitize more data, more quickly. We are already ramping up the scale and speed of our digitization and will continue to do so, potentially with the additional acceleration offered by new technologies.

CHURCH, SCHOOL, AND pOLITICAL ORgANIzATION DATA

When examining the available data about the nonprofit sector, the largest portion of charitable giving is made to the portion of the sector about which the public has the least information: religious organizations and educational institutions. Over the next few years, GuideStar will make a focused effort to reach out to these communities and engage them in responsible, transparent philanthropy.

Another category of nonprofits with oversized importance but undersized transparency are political organizations. Since the Supreme Court’s Citizens United decision, a greater proportion of political contributions are filtered through nonprofit organizations, notably 501(c)(4)s and so-called “Super-PACs.” In both cases there are statutory limits to the available information, but—in partnership with the Center for Responsive Politics—we are exploring how we might better gather and distribute what is available.

ExpANDINg OUR DIgITIzATION EffORTS

We expect to increase our digitization work significantly over the next few years:

• Digitizing additional forms 990

• Digitizing new sections of the form 990

• Digitizing other kinds of documents, such as strategic plans, annual reports, and audited financials

SCHOOLS AND CHURCHES

Systematic acquisition of data about schools and churches is difficult but not impossible.

• Private nonprofit schools are already in guideStar’s database, because they apply for tax exemption. Public school information is readily available from the federal government but will require some legal work to ensure appropriate display.

• Church information is not available in bulk, but many denominational associations have databases. with targeted outreach, we believe we can get some denominations to share their data—eventually moving toward a new set of assumptions around transparency in the religious community.

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INTERNATIONAL DATA

GuideStar has always focused on U.S. nonprofits. But philanthropy has never been confined within the borders of nation-states. And as the bulk of economic and philanthropic growth is happening outside the United States, GuideStar USA must address the question: what about nonprofits in the rest of the world?

To answer this question, GuideStar does not necessarily need to begin collecting data on nonprofits across the globe, but we must have a focused strategy for the right kind of partnerships to ensure interconnection among different data sources. (See sidebar.)

In the long run, the creation of a global data system for civil society is the source of both the greatest potential and the greatest uncertainty.

INTERNATIONAL DATA

To gather international data, guideStar will have to work with a variety of partners, including:

• TechSoup global (including guideStar International)

• foundation Center

• globalgiving

• WINgS—Worldwide initiatives for Grantmaker Support

• Local and regional players (China foundation Center, AVINA, etc.)

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Data Distribution Data does the nonprofit sector no good sitting in a

database. Information is valuable when it enables better

decision making —and that happens when it is available

where, when, and how a user needs it.

Our current distribution mechanisms reach close to 10

million people each year—but to reach the transformative

potential we imagine, we need to increase our distribution

by an order of magnitude. The combination of strategies

outlined below offer us a path to do exactly that.

Data Distribution pILLAR THREE

We will expand our data distribution, creating a system defined by:

reach DePTh inTerconnecTion

... more users exposed to our data—either through GuideStar’s website or through GuideStar’s network of distribution partners

... deeper integration of GuideStar’s data in partners’ websites and products

… linkages across platforms and experiences, using GuideStar’s database as a central repository

PrioriTy comPonenTS reach DePTh inTerconnecTion Distribution Network (ApIs)

DonorEdge

Subscription products

guideStar.org

New Corporate Partnerships

Mobile Delivery

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DISTRIBUTION NETWORK (ApIs)

The Internet has transformed our ability to make data available, and, indeed, GuideStar.org is used by more than 7 million people each year. But we recognize that just because information is available on a website does not mean that it enters the lived experience of the stakeholders of social change. There are, after all, 600 million websites in the world.

So GuideStar cannot—and will not—rely purely on a “pull” strategy (“Hey! Come over to our website!”). Instead, we need to expand our existing “push” strategy of getting the data to where users already are: on social networks, interacting with their financial institutions, consuming media, and using a variety of sector-specific tools. With 60 such partnerships already in place—using a variety of technologies—we have a significant head start. We believe, though, that there is a tipping point lurking in the system, one we could reach once we have secured hundreds of partnerships (though it is, of course, impossible to predict exactly how many). The largest of these partnerships will continue to result from contractual arrangements with major players. But for the countless new players, we need a simple, low-transaction-cost alternative. Accordingly, we have built a suite of APIs (application programming interfaces) that allow our data to be integrated automatically into a partner organization’s website, tool, or platform without manual intervention by GuideStar staff.

Notably, this API suite includes the ability to access some of the data for free for a limited time (see sidebar). This access will provide a way for researchers, academics, and start-ups to begin to use our data, even if they cannot—at the moment—afford the licensing fees required for deeper access to our database. This practice, of course, serves our social mission. It is also consistent with our business strategy, as it strengthens our position as a kind of connective tissue for the social sector, which then further advances our social mission.

gUIDESTAR ApIs (AppLICATION pROgRAMMINg INTERfACES)

In the summer of 2012 we soft launched our new suite of APIs. guideStar is including a free option for limited use of our Search api. we want to ensure that a partner that wishes to experiment with our data—or cannot yet afford full access—can still have fast, easy access to basic data for a time.

the GuideStar Search api includes the following fields:

• Organization Name

• GuideStar id

• eiN

• Mission Statement

• City

• State

• Zip

• Ntee Code

• guideStar Exchange participation level

• Nonprofit Report URL

• MSA (metropolitan statistical area)

• irS subsection

• logo

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DONOREDgE

DonorEdge is GuideStar’s local partner network—a platform we offer at the community level through relationships with some of the nation’s leading community foundations. This platform enables these community foundation partners to manage the data and stories the nonprofits in their local communities tell the public and integrate better, richer data into the grant-making processes of member foundations and the individuals, corporations, and partners using DonorEdge data as part of their due-diligence processes. (And, indeed, as a comprehensive solution, DonorEdge is also a key piece of our Data Collection and Data Innovation pillars.)

GuideStar is simplifying and strengthening the DonorEdge experience for the benefit of users and streamlining our development process. These changes will simultaneously make DonorEdge more flexible for community foundations and nonprofits as well as GuideStar. The end result is that DonorEdge will be more cost-effective for GuideStar to administer. We project passing along an average of 43 percent savings over current annual rates to member organizations.

We project that the new DonorEdge will have close to 100 community foundation partners by 2020, working with more than 100,000 local nonprofits to create detailed, up-to-date profiles of their programs and outcomes in their local communities.

Although DonorEdge was originally designed to serve geographically based community foundations, we also believe that it could be used to help organize the work of other intermediary organizations—for example, community foundations organized around identity (e.g., the Parsa Foundation, which serves the Persian community, or the Horizons Foundation, which serves the LGBT community).

CURRENT gUIDESTAR DONOREDgE pARTNERS

• greater Kansas City Community Foundation (data on 641 nonprofits)

• San Diego Community foundation (data on 473 nonprofits)

• the boston foundation (data on 821 nonprofits)

• Community Foundation of Middle Tennessee (data on 1,352 nonprofits)

• Community Foundation of Sarasota County (data on 335 nonprofits)

And a dozen other community foundations that have, in total, aggregated data on 6,218 nonprofits, with 92 percent of those reaching at least the Bronze level of the guideStar Exchange.

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SUBSCRIpTION pRODUCTS

GuideStar’s subscription products have been the core of our data-distribution strategy for nearly a decade—especially our flagship products, GuideStar Premium Search and GuideStar Charity Check.

These subscription products have also provided the bulk of GuideStar’s earned revenue during the past decade. As GuideStar looks forward, our subscription products will remain a significant source of revenue for the organization. But we recognize that our offerings must evolve if we are to maintain—and grow—the reach, impact, and revenue they provide. The recent launches of Financial SCAN and GuideStar Pro Search have allowed us to maintain momentum—and our product pipeline is full of tools both to advance our mission and bring in additional revenue.

gUIDESTAR.ORg

Even with our shift in emphasis to distributing data through partner platforms, our website—GuideStar.org—will remain an integral part of our distribution strategy. With almost 1 million unique visitors each month, our site can be called—depending on how one chooses to count—the most visited website in the nonprofit sector. And we continue to see steady growth.

We recognize, though, that the site needs a refresh. A major priority in 2014 will be to have the quality of GuideStar.org match the scale of our vision.

IMpROVEMENTS TO gUIDESTAR.ORg

• Simplified navigation

• Refreshed visual scheme

• Enhanced use of photos and video

• Systematic integration of a/b testing and heat maps for ongoing improvement

• Specialized user experience for core segments (foundations, nonprofits, journalists)

SUBSCRIpTION pRODUCTS

guideStar’s subscription products have been at the center of our business model for a decade. They include:

• GuideStar premium Search

• guideStar Charity Check

• Financial SCAN

• GuideStar pro Search

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NEW CORpORATE pARTNERSHIpS

For years, we have provided data to corporate partners. But the immense technical innovation in the private sector offers remarkable new opportunities for transformative corporate partnerships.

The emerging sector of master data management providers promises to integrate multiple streams of data from across sectors and sources—including a user’s proprietary data—offering end users a multi-dimensional experience. To a certain extent, GuideStar is playing that role within the nonprofit sector by integrating data from our Data Partner Network. But other providers seek to do the same thing across various niches and sectors. We want to be a part of this evolution, even though it will create business model challenges for us. As many have noted, the challenge in the social sector is no longer about having enough data; it is about having the right data. More, it’s about making sense of the right data when you have it. New techniques in data visualization offer immense potential. To achieve this potential, we will continue partnerships with major private sector players such as Palantir.

Finally, there remains immense opportunity to better integrate nonprofit data into personal finance. We have existing relationships with most of the large national donor-advised funds—those partnered with Fidelity, Vanguard, and Schwab—as well as players like Network for Good and JustGive. These entities help to offer donors information about nonprofits as part of their current donation experience. But we know there is an additional opportunity to integrate our data into a broader personal finance experience—whether online banking (e.g., Wells Fargo), tax preparation (e.g., Turbo Tax), or data aggregation (e.g., Mint). We are exploring all of these angles, each of which could offer an extraordinary linkage of nonprofit data to existing personal finance systems that total hundreds of millions of users.

SOME CURRENT pARTNERSHIpS IN pERSONAL fINANCE

National donor-advised funds Fidelity Charitable gift Fund, Vanguard Charitable Endowment Program, Schwab Charitable, National Philanthropic Trust

Retail banks Bank of America, Wells Fargo

personal credit American Express

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MOBILE DELIVERY

With the incredible increase of mobile devices—notably smartphones and tablets—in the past three to five years, people’s usage of data and services is shifting drastically from computers and Web browsers to mobile and responsive Web applications. In order to reach these (increasingly younger and increasingly global) users GuideStar must embrace a mobile-first development strategy during the next five years.

GuideStar will release a responsive redesign of its current website, presenting the best possible user experience regardless of platform. GuideStar will also target Partner Network members building rich mobile applications that specifically embrace mobile delivery solutions.

Over the next few years, we expect that about half of GuideStar’s traffic will be from mobile devices—whether that traffic is to GuideStar’s website or through a Data Distribution Network website or application.

gOINg MOBILE fRIENDLY

Like all other data providers, we need to think about the mobile delivery of our content. There are about 6 billion mobile phone subscriptions globally—including about 1 billion smartphone subscriptions. There may be three different channels for this delivery:

• Restructuring our existing Web tools to be mobile friendly (e.g., HTML 5)

• Creating native apps for specific mobile operating systems (iOS, Android, Windows Mobile)

• using GuideStar data on partners’ mobile applications (which is already happening in some cases, such as Microsoft’s HelpBridge disaster-response app)

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1 Mapping Altruism, Richard Klavans and Kevin W. Boyack, based on guideStar data

Mapping Altruism

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3

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section 3

Implementation

WHY gUIDESTAR

GuideStar is now fully immersed in the process of implementing our strategic plan. In many ways, GuideStar is already well positioned, given our core strengths.

GuideStar, founded in 1994, has a strong history and has played a crucial role in creating an information infrastructure for the social sector. The early work of the organization focused on persuading the IRS to release scanned images of the forms that nonprofits file with the agency to the public (i.e., 990s and others). The IRS began releasing these images in 1997, and GuideStar began digitizing large portions of them into a machine readable database, which was launched on the GuideStar website in 1999. In those early years, GuideStar survived largely on grants, but the episodic nature of that funding required a shift toward generating earned revenue from portions of the data (e.g., GuideStar Premium). By 2013, GuideStar’s website was visited by more than 7.2 million unique visitors, an increase of nearly 50 percent from 2012. Ninety-eight percent of website visitors access basic information on nonprofits for free.

GuideStar has procured more than 2.3 billion pieces of nonprofit data, and that number grows larger every day. Our databases go far beyond the basic Forms 990—much of it comes from the GuideStar Exchange (GX), our program that enables nonprofits to update and supplement IRS information, all at no cost to the organizations. Nonprofits voluntarily fill out a GX profile at various levels (Bronze, Silver, and Gold), providing increasing levels of financial and programmatic data at the higher levels. More than 95,000 nonprofits have participated in this program

at varying levels, and the information they have provided has become vital to the work of foundations, nonprofits, and others.

GuideStar has a large presence and connections throughout the nonprofit, government, and for-profit sectors. We have maintained a strong partnership with the IRS for almost 20 years and have been cited in Senate Finance Committee reports. Additionally, we have strong relationships with for-profit customers across several industries.

GuideStar is an internationally recognizable brand in the sector. We have a history of being an unbiased, nonpolitical source of nonprofit data. We are regularly featured in leading outlets such as the Washington Post, Alliance Magazine, Nonprofit Quarterly, Nonprofit Times, and Chronicle of Philanthropy.

No man is an island, and no organization can create innovation on its own. GuideStar has strong partnerships with other leading organizations to advance the sector. For more information, please view the Key Partnerships section of this memorandum.

As we move toward our Vision 2020, however, we know we must be intentional about enhancing our implementations efforts. We are aligning our strategic processes and solutions to meet the challenges of the sector more effectively and securing exceptional new talent to develop our products, while taking care to watch our revenue and expenses carefully. In the following pages, please find updated implementation information from our Human Resources, Strategy, Products, and Finance Departments.

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OUR pEOpLE

The center of any organization is its people. At GuideStar, we value our people and understand that through their success we can create a nonprofit sector capable of tackling the great challenges of our time. Our staff represents people of all ages, races, sexes, national originals, religions, and sexual orientations.

GuideStar has three offices: Washington, DC; San Francisco, CA; and Williamsburg, VA. In addition, we have remote employees in New York, NY; Portland, OR; Kansas City, MO; and Oxford, United Kingdom.

For a full list of our staff, please see Appendix 1.We hire people with strong analytical and communication skills, enthusiasm, creativity, and intellectual curiosity. Our team comprises individuals who understand people, process, technology, operations—and most of all, are driven to achieve GuideStar’s mission. We are guided by four values, which we call “The 4 Cs”:

• Clarity. We strive to communicate in a concise and respectful manner.

• Collaboration. We work through, with, and for our internal and external partners.

• Compassion. We are kind to each other, ourselves, and our communities.

• Courage. We do what is right regardless of consequences.

In order to execute our strategic plan, we require additional capacity and skill sets, and thus, new hires. We have already begun to expand our staff and will continue to do so over the next several years.

The GuideStar community goes beyond our paid staff.

• Our board of directors includes leaders from different sectors and is chaired by Mari Kuraishi, the president and co-founder of GlobalGiving (not to mention one of Foreign Policy’s 100 Most Influential Thinkers).

• We also rely on our 200-person User Advisory Panel to ensure that the voice of our users is always present in our work.

• In addition, we are launching the GuideStar Academic Advisory Board to ensure that we tap into the knowledge of academics and researchers around the country.

See Appendix 1 for details about GuideStar’s leadership team and board of directors.

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ClarityWe strive to communicate in a concise and respectful manner.

CollaborationWe work through, with, and for our internal and external partners.

Compassion We are kind to each other, ourselves, and our communities.

CourageWe do what is right regardless of consequences.

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Staffing needs to execute GuideStar’s Strategic Plan

Current staff

Proposed staff for 2014

Proposed staff for 2015-2016

Marketing & Communications

Chief Executive Officer

Information Technology (engineering)

Products

Development (fundraising & membership)

Data Operations

Nonprofit Programs

Research

Information Systems

Nonprofit Services

Strategy

Business Intelligence

Human Resources & Administration

Finance

Business Development (product sales)

snapshot

GuideStar staff in 2014tentative needs

GuideStar staff in 2016

Current staff

Proposed staff for 2014

Proposed staff for 2015-2016

Marketing & Communications

Chief Executive Officer

Information Technology (engineering)

Products

Development (fundraising & membership)

Data Operations

Nonprofit Programs

Research

Information Systems

Nonprofit Services

Strategy

Business Intelligence

Human Resources & Administration

Finance

Business Development (product sales)

snapshot

GuideStar staff in 2014tentative needs

GuideStar staff in 2016

Proposed staff numbers are estimates, and may change by number or exact department, especially among related functions and teams (as represented above by color families).

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STRATEgIC pROCESSES AND SOLUTIONS

2 The Lean Startup, http://theleanstartup.com/ 3 The implementation engagement with Net Results (funded by Hewlett Foundation) was modified to focus on providing assistance in the roll-out of OKRs and development of critical products strategies from the plan.

In many ways, GuideStar is a service organization: we serve the nonprofit community by providing information and tools for the sector. As such, we must be flexible and adapt to the changes in the circumstances around us. To best accomplish our work, GuideStar has adopted Lean principles and the Agile methodology.2 This strategy allows us to take an iterative approach to our products and services and provides a continuous feedback loop for us to learn and improve.

Although our adoption of Lean principles and the Agile methodology began in our Technology Department, we are now applying it throughout GuideStar. Across the organization, we are focused on implementing our vision with a more flexible, iterative approach. We are also developing processes and tools to help our staff achieve greater impact. We are redesigning our monitoring and evaluation framework, implementing an internal goal-setting process with OKRs (objectives and key results), and aligning the tools and processes that we use (see Appendix 2 for internal technology infrastructure changes). Below, please find a brief description of the strategies we are implementing to carry out our mission more effectively.

Aligning guideStar

GuideStar is evolving, and our systems and culture need to evolve with it. We have worked to align our departments, increase effectiveness of goal setting, and reinvigorate the organization for an exciting future.

For the first time in its history, GuideStar formed a dedicated Strategy Department to promote alignment of vision and mission with financial planning, business execution, programmatic operations, and monitoring and evaluation systems.

In order to increase alignment across the organization, starting in January 2014, the Strategy Department implemented a new goal-setting framework: objectives and key results (OKRs). OKRs formulate big qualitative objectives with quantitative results. Key principles include transparency, consistency, and focus as well as an explicit bottom-up/top-down process. OKRs promote team collaboration and reduce silos across the organization.3 The OKR process operates along a quarterly cycle, which is also in line with a new cadence of organizational reporting described in the next section.

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Redesigning the Monitoring and Evaluation framework

In order to assess organizational health and make data-informed decisions in a timely manner, GuideStar is redesigning our monitoring and evaluation framework.4 The redesign includes (1) delineating the various metric types by evaluation, organizational (“decision making” at the leadership level), tactical (at the department level), and quick facts (or “vanity” metrics), and (2) creating a collaborative five-part process for reviewing the various metrics along a coordinated timeline with the involvement of appropriate individuals.

GuideStar is now in the process of developing an initial version of its organizational dashboard and will continue to make improvements over time (see next page). The organizational dashboard along with the OKRs will be the primary focus of monthly, quarterly, and annual review and planning meetings attended by GuideStar’s leadership team and key team leads.

ACRONYMSImplementation SectionObjectives & Key Results; Responsible, Accountable, Support, Consulted, Informed (project management responsibility framework); Metric types: Impact, Organizational, Department, Quick Fact

4 A monitoring and evaluation engagement with Hope Consulting (funded by the Hewlett Foundation) helped to determine the most appropriate guideStar metrics and process enhancements.

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ORgANIzATIONAL DASHBOARD [Excerpt]

The layout and contents of the following dashboard excerpt are meant to illustrate the progress of our monitoring and evaluation framework enhancements. We are continuing to improve upon the collection methods, underlying data sources and technology platforms, frequency of reporting, and presentation format. As such, we expect that future iterations will enable us to better manage to outcomes, foster greater organizational learning, and increase accountability.

Description

Historic current target

Q1 2013a Q4 2013a Q1 2014a FY 2014e

Products

users/customers

Retention Rate (on website)Ratio of daily to monthly returning visitors NA 3.3% 3.3% 3.2%Number of Customers (by Segment)Number of paying customers by segment NA 3,882 3,308 4,200

sales ($)

Revenue (by Customer Segment)Revenue of paying customers by segment NA 2,843,394 2,463,349 8,476,219

engagement

general

Share of ConversationGS mentions as a percent of total conversations related to data in philanthropy 42.1% 43.1% 42.2% 55.0%

nPo

NPO Update RatioAmount of NPO profile updates / Total NPO participation levels 19.8% 15.8% 17.1% 16.0%

internal operationsTotal CashAmount of all cash on hand 2,122,838 2,478,290 1,786,578 2,914,611

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pRODUCTS AND pROgRAMS

Defining a New Products and Programs Strategy for guideStar

GuideStar’s products are crucial both for providing the stakeholders of social change with the information they need to help drive nonprofit effectiveness and for generating earned revenue for GuideStar. We provide products directly through our website (e.g., GuideStar Premium Search, GuideStar Charity Check, Financial SCAN, the annual GuideStar Nonprofit Compensation Report), as white label software as a service (SaaS) platforms (i.e., GuideStar Donor Edge and Hosted Solutions), and as direct data services (i.e., Web Services and APIs) for use within other websites and applications. Our products are used by a wide variety of stakeholders, shown on the sidebar.

These diverse stakeholders use GuideStar’s data to support different decisions and have different price sensitivities for acquiring that information. For example, some need raw data (e.g., technologists, researchers), and others need data analyses for actionable insights (e.g., foundations, nonprofit organizations). Some are primarily data providers (e.g., nonprofits, researchers), and others are primarily data consumers. Finally, our stakeholders play different roles in supporting nonprofit effectiveness: generating awareness on the impacts of nonprofits, diagnosing organizations, creating a vision for the kinds of impacts an organization could achieve, helping organizations with strategic planning toward a vision, or by providing financial and human capital to support nonprofits.

To provide our stakeholders with the most valuable products for their work, at prices that they can afford, we need to deeply understand the challenges they face in their efforts to support nonprofit effectiveness, the current tools and workflows they are using, their resources and constraints, and the similarities and differences between the different stakeholder types (aka customer/user segments). This understanding will help us map out the product features we (or our partners) could provide to create value for them, what marketing messages and channels most effectively communicate that value, and what price points would capture sufficient value for us. Getting this formula right will improve both the value and viability of GuideStar’s products and the effectiveness of the sector.

In 2013, we began conducting extensive surveys on our site (e.g., user exit surveys and page-specific surveys), customer surveys via e-mail, usability testing with representative individuals who are not current users, and in-depth reviews of our website analytics (e.g., Google Analytics, CrazyEgg, Mixpanel, and Visual Website Optimizer). From this initial research, we have identified a number of key opportunities for improving the user experience in our free and subscription products on the site. We’ve also begun to address key navigation challenges, messaging, and pricing issues. In addition to this relatively broad approach, we have also begun in-depth research into the workflows, challenges, and current tools of key segments of our users (e.g., small-nonprofit executive directors, foundation program staff, nonprofit accountants). The findings

Stakeholders

NONpROfIT ORgANIzATIONSNonprofit organizations

Healthcare organizations

Religious/faith-based organizations

INSTITUTIONAL fUNDERSprivate foundations

Community foundations

Corporate foundations/corporate giving programs

government and public administration

pROfESSIONAL SERVICE pROVIDERSadvertising and marketing

Consulting

Financial services

fundraising/grant writing

Legal/accounting

TECHNOLOgY pROVIDERSCause-related marketing platforms

Philanthropy software

Other data providers on Nonprofits

Corporate Social Responsibility Platforms

donation / fundraising Facilitation

grants Management Vendors

RESEARCHERSMedia

Schools & universities

INDIVIDUAL DONORS AND VOLUNTEERS

OTHERS

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from this research will provide us with new feature and product ideas as well as new ideas for integrating our products with other data and technology organizations.

We have increased both the pace of our build-measure-learn Lean cycle (as depicted above) and our use of supporting analytics and A/B testing tools. From our early research, some of our biggest opportunities for product improvements are clear, and the Lean approach will enable us to iterate rapidly with data driving our decisions.

CApITAL

guideStar’s Business Model

GuideStar has evolved significantly over its nearly 20-year history, not least in terms of its business model. Initially, GuideStar was 100 percent funded by foundations who shared our vision. It was not until around 2000 that we moved to expand our financial options by creating the first of our paid products.

We experimented, we learned, we iterated—and today GuideStar has reached a momentary equilibrium where our paid products, supplemented by grant funding and memberships, are enough to offset our ongoing operational expenses. Indeed, in 2013, GuideStar was 95.6 percent operationally sustainable—even without philanthropic support.5

But any attempt to innovate—whether to evolve in the face of a changing market or to increase social impact—will require additional capital. We could maintain financial stability for several years with our current revenue mix and balance sheet. But that would be a betrayal of the nonprofit sector—and a likely route to our eventual obsolescence.

Thus, as outlined in this memorandum, we are planning on an aggressive program of innovation. To support that innovation, we will need outside capital—we need the help of foundations, donors, and impact investors to realize this vision.

Over the next few pages we offer a more detailed (and visual) look at GuideStar’s finances (see Appendix 3 for Financial Statements).

Learn BUILD

MeaSUre

CoDeData

IDeaS

Minimize the total time through

the loop

5 In precise terms, we define operational sustainability as gAAP Unrestricted Revenue less grants and Contributions/Total Expenses before capitalization and depreciation.

ON THE ECONOMICS Of NONpROfIT DATA AggREgATION

If it were possible to make a lot of money selling nonprofit data, it is likely that a private-sector player would have made a deeper push into guideStar’s market. but the truth is that guideStar operates amidst a tangle of market failures:

• As with other philanthropic services, people tend to underestimate the costs required to provide a quality experience—thus often undervaluing the services themselves.

• An unpredictable regulatory context and evolving donor expectations have contributed to an unstable market.

• An explosion of online giving platforms (171 by most recent count) has made it more difficult for existing platforms to capture network effects, dampening the acceleration typically made possible by platform economics.

• The natural process of consolidation one tends to see in a crowded market has slowed because of the isolation and perverse incentives of the funders of nonprofit platforms.

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12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0 2001 02 03 04 05 06 07 08 09 10 11 12 2013

Contributed income

Earned income

Total expenditures

2a. GuideStar 2013 revenue by products, membership, and grants1. income and expenditures, 2001-2013

2b. 2013 revenue by user segment

GuideStar Premium Search

Data

GuideStar Charity Check

Web Services/APIs

Compensation Report

DonorEdge

Advertising

Hosted Solutions

Financial SCAN

Match & Verify

Membership

Grants

Revenue by Product

0

Advertising and Marketing

Consulting

Financial Services

Fundraising/Grant Writing

Legal/Accounting

Cause-related Marketing

Philanthropy Software

Healthcare Organizations

Nonpro�t Organizations

Religious Organizations

Media

Schools and Universities

Indiv. Donor & Volunteers

Other

Financial & Professional Services Institutional Funders Nonprofit Organizations

Other

100%

80%

60%

40%

20%

0

Technology Providers

ResearchersIndividual

Community Foundations

Corp Foundations and Giving Programs

Government & Public Administration

Private Foundations

fINDINg #3:

The 17 activities outlined in this memorandum will involve significant costs—totaling about $15 million over the next three years.

fINDINg #2:

Our revenue base is diverse.

fINDINg #1:

GuideStar has built a sustainable business model.

Note: This graph reflects cash flows; GAAP financials available upon request.

Financial Findings

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Mirror Funds

Match & VerifyFinancial SCANHosted SolutionsAds, etc.

DonorEdge

Compensation Report

Web Services/APIs

Data

Charity Check

GuideStar Premium

Membership

Baseline Grants

Future Products

Current Products

Transformational Capital

Total Expenses

100%

80%

60%

40%

20%

0

Data Innovation Data Collection Data Distribution

Open Data Partnerships

Nonprofit Sector Indices

Nonprofit Mirror Funds

Cause Pages

Programmatic Data Tools

Common Profile

International Organizations

Church/School/Politics Data

Improved Digitization

Data Partner Network

GuideStar Exchange

Mobile Delivery

www.guidestar.org

Subscription Products

DonorEdge

Distribution Network (APIs)

$5,610,000 $5,205,000 $4,470,000

Total =$15,285,000

New Corporate Partnerships

fINDINg #4:

We believe we can steadily grow our earned income in both existing6 and new products.

fINDINg #5:

With a short-term capital infusion, we can accomplish the plans in this memorandum while maintaining financial sustainability.

$10 million in transformational capital required over a three-year period.Projections for 2017 and 2018 are particularly speculative.

6 Match and Verify, FinancialSCAN, the Nonprofit Compensation Report, and guideStar Charity Check are all current products in guideStar’s portfolio. For more detailed information, please visit guideStar.org.

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The Transformational Capital Campaign

Our current projections show that the additional activities outlined in this memorandum require approximately $15.3 million in capital over the next three years (2014–2016). We can subsidize a modest portion of this innovation through our own earned income, but we need partners to fulfill the entire plan.

Split among the three pillars, we estimate that we need:

• Pillar One—Data Innovation: $5.6 million • Pillar Two—Data Collection: $5.2 million • Pillar Three—Data Distribution: $4.5 million

Accordingly, we are seeking to raise approximately $10 million in transformational capital between 2014 and 2016.

We need the bulk of this capital in the form of philanthropic grants but are absolutely open to discussions about impact investment7 as a part of this campaign.

Given the scale of our operations—close to $100 million in aggregate projected revenue between 2014 and 2020—this investment offers tremendous leverage. Our earned income model may not be able to cover the fully loaded cost of organizational transformation, but each philanthropic dollar is a multiplier, helping enable 10 times its value in organizational scale and impact.

CAVEATS

The world is evolving at a stunning pace. No one can predict the evolution of any market, sector, or community. Strategic planning is an utterly essential exercise in wishful thinking. In all of our projections we have attempted to be both optimistic and realistic. We fully expect actual results to differ from predicted results.

We will seek to adapt early and often to maintain our overall trajectory. Organizationally, we are implementing Lean/Agile processes to ensure an organizational capability to evolve quickly—and have built in the sensing mechanisms we need to absorb information and act on it.

7 We assume that impact investing will come in the form of debt, but we welcome other opportunities for investment.

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CHARTINg IMpACT

Multi-year project to settle on five questions every nonprofit should answer about their work.pARTNERS: BBB Wise Giving Alliance, Independent Sector

THE OVERHEAD MYTH

Campaign to remind donors and nonprofits that financial ratios do not tell the full story of nonprofit performance.pARTNERS: BBB Wise Giving Alliance, Charity Navigator

BRIDgE

Global project to create a unique identity number for nonprofits around the world.pARTNERS: GlobalGiving, Foundation Center, TechSoup Global

SIMpLIfY

A data-sharing and standards-setting process that eliminates the repetitive elements of grant applications.pARTNER: Technology Affinity Group

KEY pARTNERSHIpSThe diagram below illustrates a select set of GuideStar’s partnerships.

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Acknowledgements

This strategy owes a significant debt to the Markets for Good initiative co-funded by the William and Flora Hewlett Foundation, the Bill & Melinda Gates Foundation, Liquidnet for Good, and the F. B. Heron Foundation.

The essential framework of Markets for Good:

Our work has been made possible by generous contributions from our foundation funders and individual donors—not to mention the fees paid by our customers.

Ultimately GuideStar only exists to support the people, communities, and ecosystems served by nonprofits.

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CONCLUSION

The nonprofit sector finds itself on the cusp of a second

data revolution, a shift in how the story of social change

is written and told.

We are both proud and humbled to have accomplished

what we have achieved: proud to be a vital resource for

millions of people every year—and humbled at the scale

of the task before us.

GuideStar is uniquely positioned to help shepherd this

second data revolution. It is a responsibility we take very

seriously, and a chance to make a lasting contribution to

the scaffolding of social change.

Let’s get started.

4

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Charles Best Nicholas Lovegrove Founder and CEO, DonorsChoose.org Senior Director, Albright Stonebridge Group

Alix Guerrier Sunand MenonCo-Founder, LearnZillion Founder, New Media Insight

Jacob Harold, ex officio Katherina Rosqueta President and CEO, GuideStar USA Founding Executive Director,

Center for High Impact Philanthropy at the University of Pennsylvania

Feather Houstoun Tom TinsleySenior Advisor, Wyncote Foundation Advisory Director, General Atlantic

Mari Kuraishi Dalila Wilson-ScottCo-Founder and President, GlobalGiving President, JPMorgan Chase Foundation

gUIDESTAR BOARD Of DIRECTORS

AppENDIx 1: gUIDESTAR BOARD, LEADERSHIP, AND STAFF

Jacob Harold is a social change strategist, grantmaker, and

author. He joined GuideStar from the Hewlett Foundation,

where he led grantmaking for the Philanthropy Program.

Between 2006 and 2012, he oversaw $30 million in grants

that, together, aimed to build a 21st-century infrastructure

for smart giving. Before that, he worked as a consultant to

nonprofits and foundations at the Bridgespan Group and as

a climate change strategist for the David and Lucile Packard

Foundation based at The Energy and Resources Institute in

New Delhi, India. At the beginning of his career he worked

as a climate change campaigner for Rainforest Action

Network and Greenpeace USA and as organizing director at

Citizen Works.

Jacob has written extensively on climate change and

philanthropic strategy. His essays have been used as

course materials at Stanford, Duke, Wharton, Harvard, and

Oxford. He earned an AB summa cum laude from Duke

University and an MBA from the Stanford University

Graduate School of Business with a certificate in public

management. Jacob has further training from Green Corps

in grassroots organizing, Bain in business strategy, the

Chinese Academy of Sciences in complex systems science,

and the School for International Training in Tibetan

studies. Jacob was born and raised in Winston-Salem,

North Carolina, where his parents ran small community-

based nonprofit organizations.Jim is the heart and soul of the technology behind

GuideStar’s solutions and manages the organization’s

Information Technology Department. He has more than

25 years of experience in the fields of telecommunications,

technical systems management, and applications

development. Before joining GuideStar, Jim served as

the vice president of Technical Operations for DS3 Data

Vaulting, a start-up company specializing in off-site, on-line

network backup; as chief information officer for McGuire

Woods LLP, an international law firm based in Richmond,

Virginia; and the Southeast regional vice president of

operations for Systems and Computer Technology in

Malvern, Pennsylvania. He holds a BS degree in Computer

Science and Management Science and an MBA, both from

Kent State University.

GUIDESTAR LEADERSHIP TEAM

Jacob HaroldPresident and Chief Executive Officer

James DobrzenieckiVice President, Information Technology

Miz brings 15 years of international cross-sector

management experience across the philanthropic, nonprofit,

and financial services sectors. She leads GuideStar’s

strategic planning, internal communications, monitoring,

and evaluation systems. Before joining GuideStar, she

served as vice president of operations, strategy, and talent at

Global Citizen Year, a fast-growing and acclaimed nonprofit

social enterprise in youth leadership development. Miz

also managed nearly $1 billion in investments and led

philanthropic initiatives in the chairman’s office at Usaha

Tegas, a $10 billion business conglomerate in Malaysia,

and spent time at the Fannie Mae Foundation, Citigroup,

and social investing firm Acumen Fund. She holds a BS in

Commerce from the University of Virginia’s McIntire School

of Commerce and an MBA from the Stanford University

Graduate School of Business.

Mizmun KusairiVice President, Strategy and Finance

Debra is at the heart of GuideStar’s operations.

Joining the organization as PR Manager in 1999, her

exceptional communication, writing, management

skills, and business savvy quickly moved her up the

ladder to get her to where she is today—managing

GuideStar’s D.C. and Williamsburg facilities as well as all

administrative activities, human resources, sales, internal

communications, and business operations at GuideStar.

Due to her long career with GuideStar and her involvement

in every facet of the organization, Debra has deep insight

into its inner workings and cultural value. Debra has

35 years’ experience in the communications and sales

management fields, having worked for Gannett, Inc. and

a number of catalog companies and public relation firms.

Before joining GuideStar, she was a communications

consultant, served as an elected school board member in

upstate New York, and was a board member of Camp Chin

Gu, a camp for Korean adoptees. She holds a Bachelor’s

degree in journalism from Southern Illinois University.

For his entire career, Evan’s work has focused on engaging

diverse stakeholders using cutting edge technologies to

enable large-scale decision making and collective action.

Evan is responsible for GuideStar’s product design and

development as well as marketing and communications and

e-commerce.

Before joining GuideStar, Evan co-founded the first software

as a service Web application in the University of California

system, called SeaSketch, which is used by agencies around

the world for collaborative planning of ocean resources.

He has written multi-stakeholder negotiation simulations

published by the Harvard Program on Negotiation and

worked with leading stakeholder engagement firms such

as AmericaSpeaks, the Consensus Building Institute,

Kearns & West, and Concur. His work has enabled diverse

interests to reach agreement on issues including climate

change adaptation, disaster recovery, and health care. At

the beginning of his career, Evan worked as a campaigner

for ForestEthics and field organizer for the Public Interest

Network. He has a master’s in City Planning from MIT and a

BA in Political Science from the University of Missouri.

Debra SniderVice President, Operations

Evan PaulVice President, Products and Marketing

Adrian leads GuideStar’s strategic partnership and

business development team. Before joining GuideStar,

Adrian co-founded Social Solutions, establishing the

sector as a marketplace committed to using data to

generate intelligence that improved results for individuals,

families, and communities. More than 15,000 nonprofit

organizations use Social Solutions’ software across

the United States and internationally. He also brings

keen insights into the practical needs of nonprofit and

philanthropic organizations, as well as the businesses that

are built to serve them, having worked with thousands of

nonprofits during his tenure at Social Solutions. Before

co-founding Social Solutions, Adrian taught suspended

and expelled middle school students and led adult literacy

and workforce development organizations in Baltimore.

He attended the Naval Academy and holds a BA from

University of Baltimore and an MLA from St. John’s

College in Annapolis.

Adrian BordoneVice President, Strategic Partnerships

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Erinn Andrews Senior Director Nonprofit Strategy

Christine Aube Director Data Management

Betty BafferNational Sales Director

Dorothy Bailey Accounting Manager

David Barr Senior Database Administrator

Tom Barr Sr. Director Data Ops

Don Baynard Systems Administrator

Melanie Beaumont Director Nonprofit Support

Sarah Blackwelder Business Intelligence Report Developer

Matt BrooksEnterprise Scrum Master

Whitney Brooks Assistant Nonprofit Program Manager

Carol Brouwer Research Assistant

Bob Bryant QA Eng./Software Tester

Cody Cassady Marketing Associate

Courtney Cherico Communications Coordinator

Suzanne Coffman Editorial Director

Gilbert Colon Database Intern

Jack Cowardin Software Engineer

Paimon Darugar Systems Engineer

Jim Dobrzeniecki VP Technology

Kjerstin Erickson Special Projects Fellow

Craig Ferguson QA Eng./Software Tester

Joe Ferguson Systems Engineer

Bryan Godwin Business Development Assoc.

Don Gray Sr. Software Engineer

Jacob Harold President CEO

Virginia Holmstrom Sr. Software Engineer

Bill James Database Administrator

Judy Jennings Sr. Director Human Resources

Princess Johnson Data Editor/Software Tester

Diane Joyner Data Editor/Software Tester

Krystal Kavney Director Business Development

Hyung Kim Sr. Software Architect

Diana Knight Data Services Coordinator

Mizmun Kusairi Vice President, Strategy

Mike Lambert Sales Engineer

Lori Larson Sr. Director GuideStar DonorEdge

Kit Letchworth Data Services Product Manager

James Lum CFO

Sarah Madden Director of Design

Jasmine Marrow Manager Philanthropedia Research

Shannon McKnew Business Systems Analyst

Chuck McLean VP Research

Scott Menzel Product Manager

Robin Miller Nonprofit Support Specialist

David Mundy E-commerce Manager

Ben Negron Software Engineer

Lindsay Nichols Senior Director, Communications & Marketing Team

Macie Osborn-Chavers Client Services Coordinator

Rich Paradis Sr. Database Administrator

Evan Paul Vice President, Products

Doreen Pressey Customer Care Representative

Tim Reifschneider Director Business Dev.

Andrew Richardson Sr. Software Engineer

Shonte Riddick PR Intern

Bunkie Righter Sr. Director Business Dev.

Tony Rodriguez Sr. Director Business Dev.

Carson Saunders Business Intelligence Architect

Anisha Singh Strategy Analyst

Brandon Smith Database Intern

Debra Snider VP Operations

Bobbi Jo Stevens Operations Support Administrator

Palmer Stickley Director Information Systems

Diane Stricklin Business Dev. Support Admin.

Beth Suarez Director of Development

Jenny Taylor Community Manager

Jessica Walker Development Coordinator

Shane Ward Database Architect

Janice Wheeler Executive Coordinator

Barbara Wilbur Data Editor

Laura Williams Payroll/Benefits Administrator

Tanya Wood Nonprofit Support Specialist

gUIDESTAR STAff LIST

Thank you to all the members of the guideStar staff who contributed to the development of this memorandum.

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System Update Timeline Vendor

E-mail Marketing Tool Q2 2014 Core Motives

general Ledger Q3 2014 MS Dynamics is preferred vendor

Customer Relationship Manager (CRM) Q4 2014 Remain with Microsoft CRM

batch runner Q4 2014 In-house development

E-commerce System Q1 2015 BVC

Product Purchase E-mail System Q1 2015 Microsoft CRM

Sales Management Tool Q2 2015 Microsoft CRM

Search engine Q2 2015 tbd

Content Management System (CMS) Q3 2015 umbraco

AppENDIx 2: iNterNal teCHNOlOGY iNfraStruCture

Every organization depends on a multitude of hardware and software systems. For GuideStar to be successful, it will need to have adequate systems to meet the needs of our strategic plan. All systems need ongoing maintenance and upgrades, and many are overdue for replacement. Others will need to be modified or implemented in order to have scalable solutions for the strategic plan. In order to meet the objectives of the strategic plan, we need to upgrade our technology infrastructure, a sample of which are listed below:

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AppENDIx 3: fiNaNCeS

Statement of Operations (non-GAAP)

Actual Actual2012 2013

Revenue

Product Sales 8,135,171 8,300,425

grants (all) 1,387,500 1,525,000

Membership 1,230,438 1,114,937

Other 92,059 94,063

Subtotal Revenue 10,845,168 11,034,425

Expenses

Expenses 9,829,534 9,422,148

Net Operating gain/Loss 1,015,634 1,612,277

Cash Flow

Actual Actual2012 2013

from Operations

Net Gain/loss 1,015,634 1,612,277

Change in ar/ap (22,512) (309,278)

Net C/F from Operations 993,122 1,302,999

from Investments

Purchase of Property and Equipment (20,414) (33,129)

Purchase of Software (development) (205,435) (154,848)

Net C/f from investments (225,849) (187,977)

from financing

Cash proceeds from New debt 0 0

Debt Payments (250,000) (400,000)

debt interest (40,569) (33,333)

Net C/f from financing (290,569) (433,333)

NET Cash flow 476,704 681,689

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Statement of Financial Position

Actual Actual2012 2013

Assets

Cash 1,629,544 2,311,233

grants Receivable 275,000 0

Accounts Receivable 640,642 776,355

Net ppe 912,526 550,978

Other assets 253,231 164,847

Total Assets 3,710,943 3,803,413

Liabilities

Accounts Payable 514,129 511,612

deferred program revenue 1,371,713 1,510,105

debt 1,850,000 1,450,000

Other Liabilities 257,841 0

Total Liabilities 3,993,683 3,471,717

Net Assets (Deficit)

unrestricted (668,240) 284,232

Temporarily Restricted 385,500 214,521

Total Net Assets (Deficit) (282,740) 331,696

Total Liabilities and Net Assets 3,710,943 3,803,413

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The GuideStar staff at a semi-annual retreat in February 2014

57 \ Gu

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GUIDESTAR WEBSITEFree & Paid Services

PARTNERS & THEIR CHANNELS

Powered By Guidestar Data

Websites, Services,

Products & Solutions

OUR VISION FOR THE FUTURE

Data & Information Flow in the Social Sector

DONORS

EXPERTS

VOLUNTEERS

BENEFICIARIES

FOUNDATIONS

OTHERIndustry Professionals, Partners,

Prospect Researchers, Journalists, Policy Maker, Media, Researchers/ Academics

GUIDESTARDATA HUBIRS

IRS

FOUNDATIONSIncluding Community

Foundations

RESEARCH GROUPS

Foundation Center, World Bank

INDIVIDUAL REVIEWS

PARTNERSBBB Wise Giving Alliance, GiveWell, Philanthropedia, Root Cause, etc.

NONPROFITS

“ Now I know mymoney is making a !”

“ I discoveredsomething new!”

“ I know whereI want to help!”

“ I know whereto !”

co-founders &track progress!”

“ I never thoughtabout it that way!”

“ Now I know how I could be

!”

Aha!

DONORS

EXPERTS

VOLUNTEERS

BENEFICIARIES

NONPROFITS

CommunityFoundations

Grant Management

Financial Institutions

TechnologyCompanies

ResearchPlatforms

WHATWORKS

DATA

RESOURCESDATA

SOCIALISSUES

DATA

FINANCIALDATA

OPERATIONALDATA

NONPROFITDATA

PROGRAMMATICDATA

GUIDESTAR WEBSITEFree & Paid Services

PARTNERS & THEIR CHANNELS

Powered By Guidestar Data

Websites, Services,

Products & Solutions

OUR VISION FOR THE FUTURE

Data & Information Flow in the Social Sector

DONORS

EXPERTS

VOLUNTEERS

BENEFICIARIES

FOUNDATIONS

OTHERIndustry Professionals, Partners,

Prospect Researchers, Journalists, Policy Maker, Media, Researchers/ Academics

GUIDESTARDATA HUBIRS

IRS

FOUNDATIONSIncluding Community

Foundations

RESEARCH GROUPS

Foundation Center, World Bank

INDIVIDUAL REVIEWS

PARTNERSBBB Wise Giving Alliance, GiveWell, Philanthropedia, Root Cause, etc.

NONPROFITS

“ Now I know mymoney is making a !”

“ I discoveredsomething new!”

“ I know whereI want to help!”

“ I know whereto !”

co-founders &track progress!”

“ I never thoughtabout it that way!”

“ Now I know how I could be

!”

Aha!

DONORS

EXPERTS

VOLUNTEERS

BENEFICIARIES

NONPROFITS

CommunityFoundations

Grant Management

Financial Institutions

TechnologyCompanies

ResearchPlatforms

WHATWORKS

DATA

RESOURCESDATA

SOCIALISSUES

DATA

FINANCIALDATA

OPERATIONALDATA

NONPROFITDATA

PROGRAMMATICDATA

GuideStar

Arts & Culture

Civil & Human Rights

Animals

Children & Youth

Disaster Response

Economic Development

Environment & Climate Change

Education

Health & Wellness

Human & Social Services