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GuideStar Completes $2 Million Financial Turnaround and Increased Nonprofit Engagement in 2013

Burgess COMMENTARY

Peter Burgess

GuideStar Completes $2 Million Financial Turnaround and Increased Nonprofit Engagement in 2013

More than 480 Participated in First Impact Call as the Leading Source of Nonprofit Information Evolves the Definition of Nonprofit Transparency

Release date: March 4, 2014

Washington, D.C.—On February 24, GuideStar—the leading source of nonprofit information—hosted the organization’s first-ever Impact Call, during which its leaders provided programmatic, operational, and financial outcomes for 2013. With more than 480 attendees participating, the Impact Call was meant to provide results to constituents quickly and proactively and begin a systematic dialogue that encourages data-driven decision making across the nonprofit sector. Moderated by communications director Lindsay J.K. Nichols, GuideStar's Impact Call presenters included GuideStar's board of directors chair Mari Kuraishi, president and CEO Jacob Harold, and CFO James Lum.

Mari Kuraishi, co-founder and president of GlobalGiving Foundation and GuideStar's newly elected board chair, began the Impact Call by setting the context for the discussion stating, 'A core part of GuideStar's business model is sharing nonprofit information forms. These are a very powerful baseline for its database; however by their very nature they tend to be a year out of date. GuideStar wants to pilot a mechanism for timelier reporting and they want that reporting to be more than financials and inclusive of programmatic outcomes and a prospective discussion of where the organization is heading.' The Impact Call was meant to provide that very mechanism.

Jacob Harold then reported on GuideStar's outcomes by first providing an overview of GuideStar's new 2020 strategic plan, which focuses on building the 'information scaffolding' for social change so that the nonprofit community is powered by information and characterized by smart decisions, open feedback, and efficient learning. On the Impact Call Harold stated that GuideStar's overarching goal is to be 'the hub of a supply chain of information,' and that 'GuideStar is not important in and of itself. What is important is the work that we enable others to do.' Detailing a redefined vision and strategy, Harold then discussed 2013 operational and programmatic outcomes, which included measured improvements in data collection, distribution, and innovation. 'Philanthropy is always going to be a deeply emotional and personal act,' said Harold. 'There are no numbers without stories, and no stories without numbers. Our job is to match your stories with numbers.'

GuideStar's 2013 program analytics measured the organization's goal of efficiently delivering clear and comprehensive information to a broad audience. Indications of progress included a 26 percent increase in GuideStar DonorEdge profiles, the knowledge and technology platform for community foundations; a 58 percent increase in social media followers, a sign of increasing engagement with the nonprofit community; and a 23 percent increase in nonprofit reviews since 2012, which provide organizations with valuable feedback and help others make better giving decisions. Harold also presented product and service launches in 2013, recent hires with specific skillsets and in key geographic areas of the country that meet explicit organizational needs, and GuideStar's goals for 2014.

Harold acknowledged that the organization had encountered challenges in 2013, specifically pointing out that pricing delivery of GuideStar's data through new application programming interfaces (APIs)—which allow one computer to talk to another—was never determined last year as he had hoped. 'In 2013 I think one place where we didn't succeed was in figuring out how to structure the pricing around those APIs. We're almost there now but going forward we're going to be smarter [about our pricing strategy],' Harold stated.

After Harold spoke, CFO James Lum reviewed GuideStar's preliminary 2013 financial results. Lum highlighted GuideStar's efforts leading to multi-million dollar turnarounds in cash flow and operating income over the past two years. Although total top-line revenue has been flat or slightly decreasing, GuideStar has made a concerted effort to 'tighten its belt' by adopting a more financially astute culture focused on metrics and analysis. 'While not taking away services, but actually increasing them, we were able to reduce expenses by $1.7 million,' said Lum during the Impact Call. According to Lum, this was only the second time in GuideStar's 19-year history that they have had consecutive years of positive bottom-line results. During the turnaround, GuideStar posted GAAP operating income of $1.3 million compared to a loss of $1 million over the prior 17 years, and cash flow during the turnaround was $1.1 million compared to $1.4 million over the previous 17 years. Putting these operating gains in context, Lum said, 'These financial results were born of necessity and in total give GuideStar a fresh start, rather than a head start, for the substantive investments we are planning in support of our strategic plan.'

Harold and Lum then participated in 30 minutes of discussion with the Impact Call's participants and answered questions ranging from GuideStar's own results, procedures, and programs to general philanthropy trends and ideas. People were encouraged to ask questions and provide feedback via Twitter, the GuideStar Blog post on the event, and on the Impact Call itself using a chat feature in WebEx.

GuideStar's first Impact Call was experimental and an attempt to address the lack of real-time feedback loops across the nonprofit sector. The overarching idea of the Call, which was loosely based on the quarterly earnings calls held by publicly owned companies, was to reframe nonprofit transparency to include information that is more timely, interactive, inclusive, and comprehensive. 'It is our hope that GuideStar can help the nonprofit sector find quantitative measures on our impact on society,' said Harold. 'More transparency makes us more effective, more trustworthy, and lowers costs.'

This is the first of many Impact Calls for GuideStar, which plans to report outcomes on a quarterly basis to maintain a consistent feedback mechanism.

For further information on GuideStar's results and outcomes, visit its impact page: http://npo.gs/impactpage. To access the recording of the live presentation and PowerPoint slides, visit its webinar archives: http://www.guidestar.org/rxg/news/webinars/webinar-archive.aspx. Anyone wishing to provide feedback about the Impact Call is encouraged to leave a comment on the GuideStar Blog: http://npo.gs/icye2013.

About GuideStar

GuideStar, www.guidestar.org, connects people and organizations with information on the programs, finances, and impact of more than 1.8 million IRS-recognized nonprofits. GuideStar serves a wide audience inside and outside the nonprofit sector, including individual donors, nonprofit leaders, grantmakers, government officials, academic researchers, and the media.

Media Contact

Lindsay J.K. Nichols 202-637-7614 lnichols@guidestar.org