2 Information Giants, Foundation Center and GuideStar, to Join Forces

Chronicle illustration by Scott Seymour/iStock

The Foundation Center, which has collected information on philanthropy for more than half a century, today announced that it will join forces with GuideStar, an electronic database of about 2.7 million nonprofits, to form a new nonprofit organization known as Candid.

Their merger brings vast troves of information about foundations and nonprofits under one roof for the first time. It makes possible, at least in theory, not just more data but the kind of analysis and insight into the nonprofit world that neither the Foundation Center nor GuideStar has been able so far to deliver on its own.

Among the efforts it envisions: creating an easy way for nonprofits to apply for money from multiple foundations and to report the results just once and share it with others.

Brad Smith, who is 65 and has been president of the Foundation Center, will be president of Candid. He’ll remain based in New York. Jacob Harold, 41, who has been president of GuideStar, will be executive vice president, based in Washington.

The Foundation Center had revenues of $24.5 million in 2017, according to its most recent IRS tax return. GuideStar had revenues of $12.8 million. Both have been growing, and both get well over half of their income by selling access to their information. The rest comes from foundation grants. The Foundation Center also has a $16 million reserve fund so the new nonprofit will be prepared for unexpected dips in earnings or grants.

Idea Was Hatched in 2012

In a joint interview with the Chronicle, Smith and Harold said they initiated the merger and are joining together from positions of strength, with the expectation that they can grow bigger and stronger together. “It’s very rare that two organizations in the philanthropic sector voluntarily decide to do this,” Smith said.

“Our combined data and networks will allow us to understand the current state of the field in new ways, Harold noted.

In a news release announcing the merger, Candid said it will explore a range of new products and services, including:

• Weaving together databases to enable much more comprehensive search results.
• Driving a common nonprofit profile — and, eventually, a common grant application and framework for nonprofits to report on what they do with grant dollars.
• Providing more skills and training to people working at nonprofits and foundations.
• Creating “give lists” for donors that can be integrated into social media.
• Helping nonprofits improve their fundraising skills.

Foundation Center and GuideStar staff began talking about joining forces in 2012, they said. In the past 18 months, they sought advice from a small consulting firm called the InfoCommerce Group, which recommended the merger. They then turned to a design and branding studio called Open that came up with the new name, Candid.

Why Candid? The organizations say: “We all want to speak honestly about what we do, what works, and what can be improved. Our name tells the world that we put that idea before all others.”

While donors did not initiate the merger, they are welcoming it with enthusiasm and financial support. The Bill & Melinda Gates Foundation, which has been the largest philanthropic supporter of the Foundation Center and GuideStar, has made a four-year, $16 million grant to Candid to cover costs associated with the merger and general operating support.

“This is a big bet to strengthen the ecosystem for foundations and nonprofits,” said Parastou Youssefi, a senior program officer on the Gates Foundation’s philanthropic partnerships team. “The potential to organize the data and draw insights is the real value that this merger will provide.”

Another $11 million or so in funding has come from the Charles Stewart Mott, William and Flora Hewlett and Lodestar foundations, and from the Fidelity Charitable Trustees Initiative, among others.

Candid will be governed by a board composed of all 19 current trustees of the Foundation Center and GuideStar. Co-chairs will be Clotilde Perez-Bode Dedecker, who has chaired the Foundation Center board, and Mari Kuraishi, who has been board chair at GuideStar. Dedecker leads the Community Foundation for Greater Buffalo and Kuraishi is the new president of the Jessie Ball duPont Fund.

Dedecker said proceeding slowly has enabled leaders of the two organizations to come together smoothly: “There wasn’t a precipitating crisis. There wasn’t a defining moment. Combining these two halves of a whole just made sense. This was mission-driven.”

Kuraishi said she has high hopes that the merger will enable the two nonprofits to deliver more valuable information. The Foundation Center and GuideStar “were repositories, and now they need to be analysts and generators of intelligence.”

Candid will have offices in New York, Williamsburg, Va., Washington, D.C., the San Francisco

Bay Area, Atlanta, and Cleveland. It should be able to reduce expenses by sharing real estate and combining such support functions as finance, human resources, and public relations. It expects to invest more in products, services, and technology. One goal is to build a team of data scientists — the Foundation Center has three, GuideStar has none — who can explore ways to standardize data across the nonprofit world and make it more valuable.

Neutral Player or Adviser?

As the dominant provider of information about nonprofits, Candid will have to decide whether it wants to be remain a neutral supplier of data, leaving it up to others to decide how to use it, or whether it will try to satisfy people who want more guidance or insight.

For example, Pamela Norley, president of Fidelity Charitable, which makes GuideStar’s database available to holders of its donor-advised funds, said she can envision individual donors wanting to know more about which causes or nonprofits are favored by experts at staffed foundations.

The Gates Foundation’s philanthropy program, for its part, wants to encourage people to give smarter as well as give more. Youssefi said that Candid has the potential to “see if funds are flowing efficiently to the most effective organizations.” But making such value judgments could leave Candid vulnerable to criticism.

The Foundation Center was established in 1956, after McCarthy era hearings on the role of foundations. Its primary audience is nonprofits seeking grants, and its programs include GlassPockets, a site that examines transparency of grant makers, Issue Lab, a compilation of reports produced by nonprofits and foundations on a range of causes, and GrantCraft, which offers tips, advice, and research to grant makers. Smith’s total compensation was about $660,000 in fiscal 2017.

Founded in 1994, GuideStar mostly serves individual donors. Harold was paid about $268,000, including deferred benefits, in fiscal 2017.