Getting “Candid” About Social Sector Data

This transcript has been generated by an A.I. tool. Please excuse any typos.

00:00 - 00:24

Time, Insights into grants and pledges and other financial information are critical for the social sector. Yet, due to the pandemic and other related issues, what should be a publicly available data is lagging more than ever before. What can we do to counter this crisis? Today, Cathleen Clerkin senior director of research at Candid is going to share some steps to foster transparency and keep everyone better informed.

00:30 - 01:14

Hi everyone. Welcome to Inspired Investing. I'm your host, Clare Golla, head of Foundation and Institutional Advisory at Bernstein. This podcast is where we strive to connect and share insights with listeners like you who are engaged in the nonprofit philanthropy and broader social sector. So here we go today. Information is power, and we live in a world where more and more information and unfortunately, misinformation is at our fingertips every day. 24 seven. Yet, unfortunately, certain data that is absolutely critical for nonprofits and foundations and the professionals who partner with them is increasingly difficult to access. So we're delighted to have with us today Cathleen Clerkin to break it all down as we head into the new year. Welcome, Cathleen.

01:15 - 01:20

My pleasure. So good to be here. Thanks for having me on your show. I'm so excited to have this conversation.

01:21 - 01:39

Awesome. Yeah, me too. I've had lots of people asking me about what is going on. Why is there such a lag in the data these days? So, as you know, I recently read your article. It was on Candid’s site titled The Data Crisis Catch 22: How the Pandemic Created a Social Sector Data Gap. So it really resonated with me.

01:40 - 02:01

But before we dive into that, I'd love to pull back and just provide some context, right? So most of our listeners are aware of Candid and that it was created a few years back. Well, some are aware that it was created a few years back by this merger between GuideStar and Foundation Center, and so maybe we can start there. What was the vision behind combining these two organizations?

02:01 - 02:42

Yeah, sure. For folks who who don't know, Candid is a nonprofit that provides comprehensive data and insights about the social sector. We know that millions of nonprofits spend trillions of dollars around the world, and our goal is to find out where that money goes, where it comes from, and why it matters. And you're absolutely correct. So GuideStar was born in 2019 as a result of the merger between GuideStar and Foundation Center. And the reason behind the merger was that both GuideStar and Foundation Center found really important pieces of the social sector puzzle, so to speak. And they were amazing organizations separately, but so much more impactful together.

02:42 - 03:41

And so on the GuideStar side of things, again, if folks are familiar with that, GuideStar is a nonprofit that started back in the nineties and really focused on data and information about nonprofit. So information about how many nonprofits are working on different issues, where they're located, what populations they serve. And then kind of on the flip side of that, Foundation Center was a nonprofit that really focused on grantmaking. So it had nearly five decades worth of information and data about foundations, grantmaking practices. And in that case, the grantmaking was really kind of the unit of analysis. Again, both organizations were super awesome and they really looked at the sector from kind of a single vantage point. And so when we merged, the goal was really to take a more kind of holistic view of the sector, put those different puzzle pieces together, and kind of foster not only more comprehensive data, but more transparency and resources for the whole sector.

03:41 - 04:12

All right. That makes a ton of sense for so many reasons, but I feel like so many social sector participants still think of one or the other, like, maybe I'm lazy, but I will still type in GuideStar right to go to one or the other. So let's just to be clear, if I'm a midsize foundation and I want to know who else is giving to say, a particular issue area, I could just go straight to Candid to get that information. Is that correct? I don't have to go. We don't have to go to foundation source, which is just like Candid isn't just a parent company or whatever.

04:12 - 04:57

Right. And so right now we kind of have a little bit of everything. So you can definitely just go to Candid dot org and all of our resources are right there. But yes, the idea is that we have tools, resources for everyone in the social sector to kind of no matter where you sit. For example, our GuideStar tool is still available. It's now called Candid’s GuideStar, and that's an excellent resource for for folks who are trying to find more information about nonprofits. So you can go on there and information about 1.8 million of us nonprofits, but you can also go to our Candid Foundation directory if you want to get that kind of tool about looking at the grants that you maybe had found on the Foundation Center in the past.

04:57 - 05:28

Okay, Got it. So while some people are a little slow like me, you really can go to the same place for all of these things. I love this because you're breaking down some of these traditional silos that have so, so long, you know, been characterizing social sector organizations, right, as either funders or grantees. Right. Like there's this wall between them. And so we've also been seeing this at Bernstein, right, where the lines are blurring. There are more creative partnerships forming across different types of entities to really make up the social sector. Can you talk a little bit more about that with us?

05:29 - 05:59

Yeah, absolutely. As I was kind of saying, that that was really one of the catalysts for the merger of breaking down some of these silos that are sometimes limiting and sometimes a little fuzzy. Right. And I think increasingly so. So rather than seeing people as funders or as foundations or nonprofits, we're really looking at the whole sector as a group of entities, whether they're nonprofit or individuals who are kind of working together for private action for public good.

05:59 - 06:32

Got it. You have this schematic, this a nobody can see this right now. Obviously, we're just on audio, not video, but this schematic on the Candid website is so awesome that listeners, you don't need to go anywhere else to figure out who all the players are across the social sector. We're including a link to the schematic in this episode description because I just thought it was such a great resource. We get so many questions from clients about what is this kind of organization about? Again, what is it B Corp? What is a public operating versus not operating foundation? It's got it all.

06:32 - 07:00

All right. So it's awesome. And I think it's you know, it's especially important because when we think about these massive issues that are facing us right now, I mean, we're thinking about like climate change and genocide and global pandemics. Right. They're not going to be solved just by traditional foundation funders or just by nonprofit organizations. Right. They're going to be all sorts of players and resources necessary to pitch in. So I really, I thank Candid for that. So it's great, great stuff.

07:00 - 07:55

So just to share a little bit about that, it's a resource that my team worked on fairly recently. We call it Candid for US Social sector Dashboard and it is it is available online and it is an example of how we've tried to really explicitly break down those those artificial barriers. The way that the resources organize is that it's organized and kind of tab form. And so you think like you would look at the different tabs and we on purpose organize the tabs around people, money and organizations in the sector, but did not divide it up, right. Of like nonprofits and foundations. And then there's that big visual that you were talking about on the about page that shows how we're seeing the social sector, how we're seeing some of those lines blur, how we're seeing things like people groups and unincorporated community foundations and even individuals kind of stepping in and playing a role in the social sector.

07:56 - 07:58

Yeah, thank you. It's really a great a great resource.

07:58 - 08:11

So I want to step back to the data collection piece. So Candid data includes foundations of all sizes. Correct. And I think you've talked about this as a bit of sort of a virtuous cycle. Can you share a little bit about that with us?

08:11 - 09:02

Yes. So we have organizations of all sizes. We you know, if you're a very small foundation, if you're a one person full foundation, we have data and information. We want your data and information. Same thing for the nonprofits. No nonprofit is too small. We have data about nonprofits who file the 1990 NS or the Postcard 990. So the very small organizations. And it is one of those things where everybody's data is important. And what we really try to do at Candid is be comprehensive about the sector, be as expansive as possible. And so every you know, back to that analogy of pieces of the puzzle, every piece of the puzzle is important if we want to see the big picture. And so I would definitely encourage, no matter how big or small your organization is, to check out Candid’s resources and to also share data.

09:02 - 09:17

I think you've also referenced it as like you've used a voting analogy, right? Like if you think, Oh, I'm just a small organization, my you know, my data won't count or whatever, right? That would be a not so virtuous cycle. So, so get out there and vote everyone.

09:18 - 09:43

Absolutely. Vote with your data. And I do think it's one of those things where, like voting, it feels like such a small action, like, does my action really matter? Does uploading my 990 or updating my Candid profile I'm doing, you know, sharing my grantmaking practices? How can that possibly make a difference? But just like voting, right, everybody has to do it and then it makes a huge difference. This is how we shape the sector.

09:43 - 10:06

And I love that we can weave sort of public service announcement into this podcast in the middle. It's great. So along those lines to a lot of folks, go to Candid just to pull up the 990 or the 994 just to look at those financial records. But there are a lot of other things that an organization can do, right, to own their own narrative also, which I think is really important. Do you want to share something about that?

10:07 - 10:44

Yes, of course nine nineties are important, but nine nineties, these can't tell the whole story of an organization and it certainly can't tell the whole story of of the sector. And so we do so much more than just collect and disseminate nine nineties means we have so many resources. Like I said on our website, we have a whole Candid learning on our website where. And go and learn about everything from how to start a nonprofit to how to improve their fundraising strategy. So I really suggest checking that out. And then, like you said, that there's a lot of opportunities for nonprofits to tell their story and own their story.

10:44 - 11:18

So if you go to Candid nonprofit profiles on GuideStar, organizations have an opportunity to claim their profile, to update their information, and to share all kinds of information. We have some really helpful forms and guidance around how to do that, how folks can share a deeper story about their mission, about their staff, about the communities that they serve, about their goals and their impact. And we've also heard from some of our nonprofits that we work with, that this can actually be a really helpful starting place for future conversations with funders, because a lot of the same information that funders will ask you for down the road.

11:18 - 11:25

Yeah, no, I can't agree more. It's a really it is a great starting place. You're starting to build that message out. That's a good way to think about it.

11:25 - 11:50

All right. So we've talked a little bit about the data, that it's important how it's being used. Now, let's turn to this really frustrating issue of this lag effect that's going on. So tell us a little bit more about, you know, how this lag has been exacerbated by the pandemic. Is it supply chain issues like I can't order toilet paper for my house, you know what I mean? And I can't get data on my nonprofits. Help me understand this.

11:50 - 12:34

Yeah. So, I mean, honestly, a little bit. It's a little bit of the same toilet paper challenge. So, you know, it's back up. There's always been a lag. And I think that that's kind of important as a starting point. There's always been a lag when it comes to nine ninety data just because of the tax process, right? Like at the end of 2022, we will start thinking about filing our taxes. We won't file that until mid 2023, and that data might not be available for a little while longer. And so there's always been kind of when it comes to tax information, at least a year, sometimes two years as far as a lot. So we're pretty used to that in the sector. But recently, what we've been seeing is the lag is closer to three years. So it's almost double.

12:35 - 12:36

It's really frustrating.

12:38 - 13:13

It is frustrating. I think it's especially frustrating where we've really seen this lag start with the pandemic. And so as far as the data trends that we're seeing, it's starting with 2019 tax data, which is the data that was filed in 2020. And so that is where we're seeing it. So it's very clearly aligning with the pandemic. And so, I mean, I think we'll can't say for sure 100%, of course. And the fact is it's very clearly tied to the pandemic. And I think it's particularly frustrating because everybody wants to know what happened in 2020.

13:13 - 14:02

Right. Like the grant makers step up? Were policies changed? Did enough money go out? Those are questions we get every day. And it's so hard to answer those questions when there's a data lag happening at the same time, which is why in the blog I talk about it being kind of a catch 22 because like on the one hand, data feels really important and recent data feels really important because of the pandemic, but then also because of the pandemic, we don't have as much recent information. And as far as what why it's happening, the best we can tell is it's kind of like a combination of things. You know, we know a lot of foundations and nonprofits asked for extensions for their tax filings because everybody is swamped and there's a lot of fatigue and burnout happening. And so we've actually heard that over 700,000 organizations asked for extensions.

14:02 - 14:03

Wow.

14:03 - 14:17

So that alone is going to, you know, push the timeline out of it. And then we've also heard that there's some challenges at the IRS right now just with bandwidth and a lot of process changes. And so it really is kind of created a perfect storm.

14:17 - 14:45

You know, I wonder, too, I mean, obviously our core business is investment management. And so I wonder I bet there is a small piece of it that has to do with how organizations are investing also. So if they're investing in certain types of assets that frankly have less transparency in terms of reporting, I'm thinking about different types of alternative assets that oftentimes will require, you know, an extension which someday, someday when we have more data, we'll be able to figure this out. So.

14:46 - 14:49

So how are you guys addressing this issue? How is Candid addressing this issue?

14:49 - 15:38

We are very busy working on this issue, as you might imagine. So we have a bunch of different initiatives that we've been working on for a few years to kind of try to fill in these gaps and also to kind of offer folks the scaffolding. Right. Like until 100% of the data comes in. Here are the early training that we do now from these different initiatives that we've been working on. And so one thing we've been working on is what we've been calling our real time data initiative. And so that's kind of a way that we've been trying to reach out and gather data. So rather than waiting for the IRS or waiting for folks to share with us, we've been using data science to go through press releases and news announcements under what's. You try to see what information is out there. So rather than waiting for folks to come to us, we've been proactively trying to gather information and integrate them into our system.

15:38 - 16:00

And so that's one thing we've been doing that's been really helpful when it comes to things like pandemic giving COVID 19, getting the crisis happening around racial equity, that the word brain. We've been scouring the Internet basically to try to see what the early signals are about getting these done, the press releases along those lines.

16:00 - 16:18

Okay. And so are you able to just capture, for instance, if an organization or a foundation fills out their 990, but it hasn't been processed yet, it's sitting in the IRS office or whatever. Can you accept that on some sort of like tentative basis?

16:18 - 17:06

Absolutely. And we love it when people give us that data. So we have around 800 funders who share their grantmaking with us directly. And this is, again, like one of those places where a little effort goes a long way when everybody's doing it. We have funders who share information with us annually. We have funders who share information with us quarterly. We have a whole a whole way. You can kind of be a data sharing partner and you can share your grantmaking before you ever file with the IRS so you don't have to wait. And then on the nonprofit side as well, if you're a nonprofit and you know, you've you've gotten your your 990 in order, but you're not it hasn't gone through the IRS process. You don't have to wait. You can send that to us as well.

17:07 - 17:15

All right. This is good. So these are action steps. And actually, as you know, I always want us to have some action steps for, you know, concrete things for our listeners to take away.

17:16 - 17:29

So what are and you could use this is the first one if you want, but what are three key takeaways you'd like for our listeners? So private foundations, public charities, others across the social sector. What would you like folks to consider?

17:29 - 17:48

Yes, absolutely. So I will say, you know, for funders, just like I was just saying, of becoming a data sharing partner, it makes such a big difference. I would really recommend, if you're a funder to join our data sharing community and shared timely data about your grantmaking so that we can let everybody know all the great work that you're.

17:48 - 18:04

Doing right in all foundations. Right? So I'm a family foundation and we have, you know, $10 Million. Fine. Great. Yeah. Send it in. Okay, perfect. Just that's a lot of our clients out there, right? So I wanted to make sure that that we're clarifying that.

18:04 - 18:30

What else to speak to? Right. The different kinds of audience. I would say if you're a nonprofit claiming your your kind of nonprofit profile invites are like we're talking about. A lot of nonprofits don't realize it, but if you filed with the IRS, you do exist on our website. You're there, but it's just very minimal information, right? Tell your story, play in your profile, add information, know, help folks understand the good work that you're doing as well.

18:30 - 18:52

I think that's a great piece of information, too. And you can get a seal of transparency. So as I'm glancing at stuff, I will look for that seal. I think those kinds of things are important and people do read that information. So thank you for for sharing that. So okay, so we've got become a data sharing partner for the foundations claiming your profile for the nonprofits. Final bit of advice.

18:52 - 19:44

You know, I would say anybody working in the social sector should be aware that there is kind of this almost data crisis going on along with the larger crisis. And so I think, you know, maybe reflecting on what that means for where you sit, I know that a lot of nonprofits are feeling overburdened with all of the things that they have to fill out for grant making. So if you're a grant maker, what can you do to ease that burden? If you're a researcher, what can we do to ease the burden of, you know, trying to be more surveys obviously come to us for data and we'll share that and then also sharing what information you have, because we're all trying to work together on putting together the pieces of the puzzle. So if we all hold on to our own pieces, we'll end up duplicating all of this effort as we all try to gather more puzzle pieces. And so that's again, really what we try to do is get all of this puzzle pieces together so we don't have to duplicate upwards.

19:44 - 19:55

Put the puzzle together together. Excellent. I love it. So, Cathleen, thank you so much for joining us. It's really been a pleasure chatting with you.

19:55 - 19:58

Thank you so much for having me. But there's been so much fun.

19:59 - 20:03

That is all we have time for, unfortunately. Thank you all for listening.

20:04 - 20:31

If you'd like to learn more on Bernstein's foundation and institutional advisory services, please see the link to our blogs in this episode's description. And if you enjoyed this episode and you haven't subscribe to our podcast yet, please go to Spotify, Apple Podcasts, wherever you listen to podcasts to subscribe and rate us. Also, please email us with your thoughts, questions and feedback to insights at Bernstein dot com and be sure to find us. On Twitter at Bernstein p w app.