Guidestar: Data as a Tool for Nonprofit Transformation

By Laura Arrillaga-Andreessen, Sarah Murray
2016 | Case No. SI130 | Length 17 pgs.

In 1994, Arthur “Buzz” Schmidt, GuideStar’s founder, launched an organization with a staff of five. The organization, then known as Philanthropic Research, was formed with the simple goal of making basic information on nonprofits easily available to donors.  At the time, virtually the only way a donor could gain access to information about a nonprofit was to solicit the organization directly or to hire someone to conduct research, and nonprofits only responded to philanthropists making substantial gifts.  For those wanting to make small donations, this kind of due diligence was impossible.

While Schmidt’s original plan envisaged writing in-depth and qualitative evaluation reports on the 400 biggest U.S. health care nonprofits, it became clear this would require the profiled organizations’ cooperation.  As a result, the team changed its goal and started building a database of the 50,000 largest U.S. nonprofits by income. The idea was to collect as much information as was publicly available on nonprofits, including each Form 990—the annual IRS reporting return that all nonprofits, with the exception of religious institutions, are required to file—but also any other operational information that was available, including details on leadership, management, and grant-making strategies.

Since 1996, GuideStar has grown to serve over 2.7 million users, and continues to provide innovative new resources and services as it executes on its strategic plan aimed at scaling the organization through 2020.

Learning Objective

a. Educate students on how to evaluate the effectiveness of a nonprofit organization b. Showcase best practices in transparency and accountability through the founding story and subsequent growth of GuideStar, a nonprofit data platform.

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