Guidestar

Grade Level: 
6, 7, 8, 9, 10, 11, 12
Keywords: 
Guidestar.org
Nonprofit
Nonprofit Organization
GuideStar USA, Inc. is an industry leader in the use of providing high-quality data to help donors make better decisions and improve nonprofit practice.

Authored by Roy Y. Chan

Definition

GuideStar USA, Inc. is a 501(c)(3) nonprofit organization that connects people and organizations with information on the programs and finances of more than 1.8 million IRS-recognized nonprofits. GuideStar helps nonprofit organizations make charitable giving more efficient by providing easily accessible nonprofit information to philanthropic leaders, decision-makers, and educators. GuideStar mission is “to revolutionize philanthropy by providing information that advances transparency, enables users to make better decisions, and encourages charitable giving” (GuideStar, 2016).

Since its founding in 1994, GuideStar operations include data digitization, database management and development, nonprofit services, web site operations and research. GuideStar has a suite of sophisticated products and services that help turn data and information into knowledge and encourage transparency and charitable giving. GuideStar employs approximately 80 full-time staff members who verifies that a recipient organization is established and that donated funds go where the donor intended in the wake of disasters or during the holiday season.

Each year, approximately 10 million unique visitors seek answers from GuideStar’s 1.3 billion pieces of data. GuideStar has over 2.5 million 501(c)(3) nonprofit organizations listed in the GuideStar database, 7.2 million unique users, and 120 data distribution network partners (GuideStar, 2014). GuideStar serves a wide range of audience inside and outside the nonprofit sector, including individual donors, nonprofit leaders, grantmakers, government officials, academic researchers, and the media.

It is important to note that GuideStar is not a charity evaluator or a governmental agency.  GuideStar is a public charity that collects, organizes, and presents the information to nonprofit leaders in an easy-to-understand format while remaining neutral and transparent. Any user can gain access to GuideStar’s database and download Form 990 and Form 990-EZ of any nonprofit organization across the United States at no cost.

 

Historic Roots

GuideStar USA, Inc., formerly known as Philanthropic Research, Inc., was founded by Arthur “Buzz” Schmidt in September 1994 at Williamsburg, Virginia to provide transparent information of nonprofit organizations across the United States. During the first two years of existence, a staff of five were assembled by Schmidt to collect, analyze, and disseminate reports of 35,000 registered 501(c)(3) public charities in the United States for publication in the GuideStar Directory of American Charities CD-ROM. The reports included data on revenue and expenses and a balance sheet provided by the nonprofit organization. That same year, GuideStar launched its official website where nonprofit leaders can update data more frequently and provide more extensive information of their operation and management expense.

In 1998, GuideStar provided digitized Form 990 and Form 990-EZ data on its website “individual public charities page” for more than 200,000 public charities. Beginning in 2000, PDF’s of philanthropic foundations’ Form 990 and Form 990-EZ were available online, followed by an expanded database of more than 850,000 nonprofits through the IRS Business Master File.

In 2002, former Public Broadcasting Service (PBS) CEO Robert G. Ottenhoff was elected as the president of GuideStar after Schmidt retirement. Ottenhoff led the strategic direction and launch of GuideStar’s annual Nonprofit Compensation Report as well as a modified search engine to make it easier for users to find data online. Between 2002 and 2009, Ottenhoff enhanced GuideStar features to include online donation capacities, a CEO Compensation Checkpoint service for analyzing nonprofit CEO compensation, as well as a beta version of the GuideStar Exchange. Ottenhoff also forged new partnerships with several leading nonprofit organizations including Network for Good, Great Nonprofits, and GiveWell. In 2010, Ottenhoff acquired Philanthropedia and Social Actions and developed an innovative way to buy nonprofit data through GuideStar Premium Pay as You Go and Financial SCAN (Situation and Comparable Analysis) of which recognized GuideStar as the nation’s premier nonprofit database.

In 2013, GuideStar selected Jacob Harold to replace Ottenhoff as the next president and CEO. Harold announced several major changes to the GuideStar Exchange through the four levels of membership – bronze, silver, gold, and platinum – to reward nonprofit organizations who are willing share their information and be more transparent about their data via GuideStar. Harold then expanded GuideStar’s service by developing alliances with leading philanthropic organizations including Charity Navigator, BBB Wise Giving Alliance, Grassroots.org, and the Foundation Center. Harold also developed a new information sharing resource tool between funders and grantees through Simplify, a grant application tool for nonprofit organizations to eliminate extraneous steps involved in the application process (GuideStar, 2016).

More recently, GuideStar published a new strategic plan, GuideStar 2020, funded by the Bill and Melinda Gates Foundation to enhance its three core functions at the organization: data innovation, collection, and distribution. The funding is expected to provide general operation support that aligns their work with the strategic plan.

 

Importance

GuideStar has made a significant contribution to the accountability and transparency of nonprofit organizations across the United States. GuideStar has built the world’s largest information infrastructure of information on the nonprofit sector in the United States. By expanding the source of information presented by nonprofit organizations, GuideStar has helped a number of nonprofits and funders to best identify trends, gaps, and opportunities on their impact and interactions with their beneficiaries.

One of the most important contributions GuideStar has provided to the nonprofit sector is its annual Nonprofit Compensation Report. Since 2001, GuideStar has published the only Nonprofit Compensation Report based entirely on Form 990 and Form 990-EZ data reported to the IRS with more than 135,512 observations from 96,242 FY2014 Forms 990. In addition, GuideStar has published annual reports on GuideStar Directory of Nonprofit Contractors of which is the only report that lists 13,000 businesses that provided services to 14,000-plus nonprofits (GuideStar, 2016).

Aside from its research publications, GuideStar provides verification status of nonprofit leaders and donors seeking to check the legitimacy of a nonprofit organization. GuideStar utilizes the “GuideStar Charity Check” which links its search engine to its IRS publication. Moreover, GuideStar collaborates with several nonprofit entities to strengthen accountability and transparency within the sector, including Network for Good, GreatNonprofits, Foundation Center, BoardSource, D5, BBB Wise Giving Alliance, and Charity Navigator.

 

Ties to the Philanthropic Sector

One of the most important ties GuideStar has to the philanthropic sector are their four participation levels of membership. Specifically, through the GuideStar Exchange Program, nonprofit organizations can acquire a certain participation level at no cost that supplements the public information which is available from the IRS to the GuideStar Exchange Program. The four participation levels are broken up into four categories: 1) platinum, 2) gold, 3) silver, and 4) bronze. In order for a nonprofit organization to achieve a certain membership level, the CEO/director of the nonprofit organization must complete a series of questions on GuideStar through the information used on their IRS Form 990 or Form 990-EZ. The purpose of GuideStar Exchange Program is for nonprofit leaders to demonstrate their accountability and transparency as a 501(c)(3) nonprofit organization. Nonprofit organizations who reach platinum level status are considered the most trusted nonprofit organization in the United States.

For a nonprofit organization to achieve the highest participation level on GuideStar, the CEO/director must complete a series of questions that may take several months to complete. A few questions/topics that are asked on the GuideStar application are: contact information, organization leaders/co-leaders, statement from organization leaders, list of staff members, list of board members and chair, mission statements, areas served, programs, categorization, website, revenue, expenses, assets and liabilities, funding source, funding needs, fiscal year, proof of financial documents, organization goals, organization strategies for achieving impact, organization’s capabilities for achieving this impact, organization’s progress to achieve impact, and a summary of how the nonprofit organization measures progress and results through assessments. While completing the online application requires an intensive amount of time and resource, the advantage of reaching platinum level participation status on GuideStar will help large-scale philanthropic foundations and mega-donors make private gifts to that organization. In other words, the higher participation level status a nonprofit acquires on GuideStar, the more trustworthy the organization is to accept transformative gifts or mega-size gifts. That is, all nonprofit organization should consider reaching the platinum level status regardless of their background, geographical location, and/or resource.

 

Key Related Ideas

Charitable Trust Number (CT Number) - A Charitable Trust Number is assigned to each nonprofit organization that registers with the Attorney General's Registry of Charitable Trusts.

Donor-Advised Fund - A donor-advised fund is a charitable giving vehicle administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, family, or individual. It offers the opportunity to create an easy-to-establish, low cost, flexible vehicle for charitable giving as an alternative to direct giving or creating a private foundation.

Employer Identification Number (EIN) - A nine-digit number assigned by the Internal Revenue Service. Every IRS-designated tax-exempt nonprofit organization has its own EIN.

Form 990 - Form 990 is an annual document required of approximately one-third of all public charities to report information about their finances and operations to the federal government. GuideStar uses data from IRS Form 990 to populate its database with financial information about nonprofit organizations. Posting Form 990 images on the GuideStar Web site is an ongoing process.

IRS Publication 78 - Also known as the Cumulative List of Organizations, IRS Publication 78 lists all organizations to which charitable contributions are tax deductible. The Publication 78 record for each organization includes the organization's name, its city, and its current tax-exempt status, including what percentage of contributions to it are tax deductible

Letter of Determination - A letter from the IRS to a nonprofit organization stating that the organization has successfully applied for tax-exempt status. In this document the IRS indicates under which section of the Internal Revenue Code an organization is qualified.

Private Foundation - A private foundation is a legal entity set up by an individual, a family or a group of individuals, for a purpose such as philanthropy. Unlike a charitable foundation, a private foundation does not solicit funds from the public.

Public Charity - A public charity normally receives a substantial part of its income, directly or indirectly, from the general public or from the government. The public support must be fairly broad, not limited to a few individuals or families.

501(c)(3) Designation - To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. Organizations described in section 501(c)(3) are commonly referred to as charitable organizations.

 

Important People Related to the Topic

Arthur “Buzz” Schmidt – Arthur “Buzz” Schmidt was the founder and president of GuideStar USA, Inc. between September 1994 and February 2002. During his time as the founding president, Schmidt led the direction and strategy to post information on all 501(c)(3) nonprofit organization listed on IRS, including IRS Forms 990 and 990-EZ. Presently, Schmidt is the chairman and director of the F.B. Heron Foundation, board member of the Permanent Fund for Vermont’s Children and the Vermont Council on Rural Development, and director of Retreat Farm, Ltd., a nonprofit that is conserving an historic institutional farm in Vermont and repurposing it to support sustainable lands-based enterprise. Schmidt was named U.S. Nonprofit Executive of the Year by The Nonprofit Times in 1999; one of six visionary leaders in philanthropy by Time in 2001; and one of the 25 individuals who most shaped the nonprofit sector over the past 25 years by The Nonprofit Times in 2012. Schmidt holds an MBA and M.A. degree from Stanford University and a B.A. degree from Princeton University.  

Robert G. Ottenhoff – Robert G. Ottenhoff was president of GuideStar USA, Inc. between February 2002 and October 2012. While at GuideStar, Ottenhoff developed a sustainable business model which supports free and fee-based services to more than 10 million users. He also led efforts to build partnerships with more than 150 leading U.S. and community foundations, and oversaw the development of GuideStar into a nationally respected, comprehensive source of reports and services on more than 1.5 million nonprofits.  Presently, Ottenhoff is president and CEO of the Center for Disaster Philanthropy (CDP), and serves on the board of Inspirit Foundation (formerly Vision TV); Link TV; and Write on Sports. He previously served on the board of the Grameen Foundation, USAAAFRC Trust for Philanthropy and the e-Philanthropy Foundation. Ottenhoff holds a bachelor’s degree from Calvin College and a master’s degree in planning from Rutgers University. 

Jacob Harold – Jacob Harold is currently the president and CEO of GuideStar USA, Inc. since 2012. Harold came to GuideStar from the Hewlett Foundation, where he led grant making 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. Harold was named to the 2014, 2015, and 2016 Nonprofit Times (NPT) Power and Influence Top 50 lists, and currently serves as a term member for the Council on Foreign Relations. He 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 Graduate School of Business with a certificate in public management.

 

Related Websites

BBB Wise Giving Alliance, at http://www.give.org, helps donors make informed giving decisions and promotes high standards of conduct among organizations that solicit contributions from the public.

BoardSource, at https://boardsource.org/, is a national organization working to strengthen nonprofit board leadership. BoardSource engage with and support a community of more than 115,000 individuals committed to creating positive change in their communities through effective board service.

Charity Navigator, at https://www.charitynavigator.org/, aims to advance a more efficient and responsive philanthropic marketplace, in which givers and the charities they support work in tandem to overcome our nation’s and the world’s most persistent challenges.

D5, at http://www.d5coalition.org, is a five-year coalition to advance philanthropy’s diversity, equity, and inclusion. D5 believes that it is imperative for philanthropy to become more diverse, inclusive, and equitable for three main reasons: 1) advance the common good, 2) increase effectiveness, and 3) enhance impact.

Foundation Center, at https://candid.org/, is the leading source of information about philanthropy worldwide. Through data, analysis, and training, it connects people who want to change the world to the resources they need to succeed.

GreatNonprofits, at https://greatnonprofits.org/, is the leading platform for community-sources stories about nonprofits.

Network for Good, at https://www.networkforgood.com/, is a nonprofit donor-advised fund that uses the Internet and mobile technology to securely and efficiently distribute thousands of donations from donors to their favorite charities each year

 

Bibliography

This paper was developed by students taking a Philanthropic Studies course taught at the Lilly Family School of Philanthropy at Indiana University in 2017. It is offered by Learning To Give and the Center on Philanthropy at Indiana University.