Earnings calls are making a foray into the nonprofit sector. But the focus is not just on cash flow, financial projections and the bottom line. It’s also about impact.
GuideStar, a nonprofit that publishes the financial reports of nearly 2 million nonprofits, recently had its first ever “Impact Call” in an effort to be more transparent — and perhaps do a bit of marketing — about its operations to its own network of donors, users and supporters.
More than 400 people logged on to the call to hear GuideStar’s 2013 financial results, goals and impact on the nonprofit sector. Part of that impact included a 7 percent increase in the number of charity tax documents that it made available, an 11 percent increase in the number of consultative calls to nonprofits and a 26 percent increase in the number of nonprofits that created donor-friendly profile sites using GuideStar software.
The call also highlighted increases in its Web site visits and social media followers.
Prior to the calls, the organization would provide a financial report to its board and post it online annually. But in an era when donors are demanding more knowledge about charities, GuideStar figured it should make its own information more available.
“We don’t want to be hypocrites,” said Jacob Harold, GuideStar’s president and chief executive. “If we’re going to ask people to share information in systematic ways, we want to make sure we’re living up to that. We want to be walking the walk.”
Nonprofit performance calls are just another signal that the nonprofit sector is continuing to embrace private sector practices after the recession forced nonprofits to be more efficient and accountable for how money is spent. A nonprofit version of an earnings call is just one way groups are adjusting.
“The field is definitely moving in the direction of collecting more data but we tend to shy away from publicizing and presenting it in a public format,” said Rebecca Thomas, vice president of the Nonprofit Finance Fund, which provides consulting services and loans to nonprofits. “It’s important to be clear about the linkages between strategic goals, financial results and social outcomes and have the confidence to talk about them.”
GuideStar is not the first nonprofit to hold a such a call. Root Capital, a Cambridge nonprofit that issues loans to businesses in rural Africa, started quarterly performance calls three years ago. One Acre Fund in Kenya, which also provides financing to farmers in Africa, holds analyst calls twice each year.
It turns out there may be a healthy payoff.
Root Capital said that the calls have educated its donor base, attracted investors and even generated resources from investors who are more aware of the group’s challenges.
“In some places you only go to your donor when the grant is up,” said Liam Brody, senior vice president at Root Capital. “But our donors understand where we are, what we’re struggling with and what we’re trying to improve ... and want to be part of the solution.”
Last year, when Latin American crops were affected by coffee leaf rust disease, Root Capital’s April fourth quarter call projected losses of 70 percent of coffee production, which would significantly reduce the group’s lending — a number that looked like they were sitting on investor money. But the Skoll Foundation, an organization that invests in social causes, was on the call and heard the challenge. It decided to provide seed funding to Root Capital for an initiative to help farmers plant disease-resistant coffee.
Officials at One Acre Fund said the group also receives strategic advice during its calls.
GuideStar is encouraging other nonprofits to hold similar transparency events.
“We want to rally the sector to be systematic about sharing their results and plans with their stakeholders,” Harold said. He added that an organization such as a small soup kitchen might find it more effective to host in-person meetings.
GuideStar’s next call is scheduled in May.