Carnegie
Corporation
of New York
Winter 2005
But GuideStar itself isn’t immune to the laws of the marketplace, either. Hemorrhaging money for most of its life—and determined to sustain itself through profit-oriented services— GuideStar’s history makes it a worthy case study of the modern entrepreneurial nonprofit organization. Born at the height of the dot.com bubble, GuideStar is also a sobering lesson in the costs of good intentions. Internet users have rallied under the motto, “information wants to be free.” But making reliable and useful information available turns out to cost plenty. The challenge for GuideStar—and others like it—is finding a way to do just that on a not-for-profit basis.
At the same time, GuideStar’s very existence challenges donors, nonprofits, journalists and the public at large to make intelligent use of the information it offers. Assessing the performance of a nonprofit, after all, is not merely a matter of looking at what it spends on administration, any more than it is a matter of how much money was raised, how many meals served, or how many acres protected. The real question is how effectively it fulfills its mission, at what cost, and whether that mission is worthwhile to begin with. Both questions are as legitimate when applied to GuideStar as to the million other nonprofits whose doings it attempts to illuminate.
That GuideStar has a worthy mission is not a difficult case to make. American individuals, estates, foundations and corporations gave an estimated $241 billion to charity in 2003, according to the Giving USA Foundation, a nonprofit that studies these things. But with public trust in the nonprofit sector at something of a low ebb, transparency and accountability are the watchwords of seemingly everyone in this huge field. No wonder: in a recent poll of 1,400 Americans by the Center for Public Service at the Brookings Institution, only 11 percent said charitable organizations do a “very good” job spending money wisely, while just 15 percent had high confidence in charities. The reputation of charities—the ultimate do-good organizations—has been battered by a series of high-profile pay and spending scandals, and also suffered from controversy over the disbursement of relief money after the September 11, 2001 terrorist attacks. Under the circumstances, it’s hard to argue against a transparency-boosting outfit like GuideStar.