If you want to secure a successful organizational expansion, you need to have a strong growth mindset. Michael Thatcher joins Kendra Prospero to share how this mindset helped them bring their company to the next level. He explains how they made Charity Navigator the nation’s largest and most utilized independent evaluator of charities. Michael discusses how they expanded to 15 states, acquired the nonprofit Impact Matters, and now rating around 200,000 organizations.
Michael Thatcher is the CEO of Charity Navigator, a tool we’ve used at my company to evaluate the various nonprofits that we work with. We’ve used it to understand their financial data, employee information, and how the nonprofit makes an impact. He’s been running the organization now for a couple of years. When he started as the leader, they were 16 people and evaluating about 8,000 charities. Now, they are 34 people and evaluating over 200,000 charities on an annual basis.
The opportunity is endless for them. There are over 10 million charities worldwide that could be incorporated into their tool. There’s so much to do which has an interesting impact on employee engagement. When there’s an endless amount of opportunity, it can be very motivating to some people and can also be challenging for employees. There’s a balance between moving too quickly and keeping communication clear. However, Michael has the perfect background to guide this amazing organization. He was an executive at Microsoft for fifteen years. He has been an oceanographer, composer, and dancer. He knows how to scale and how to do it well.
Michael Thatcher, welcome to the show.
Kendra, thank you. I’m delighted to be here and talk about what we do and how we got there.
It’s amazing because we use your tool. We work with nonprofits so we now can then get up there and look at financial data, salaries, and those various things. It was exciting to see you on the calendar because I don’t usually get to talk to somebody whose tool I’m using.
That’s fun. Needless to say, it’s gratifying to me when people are using what we do. That’s the whole point if you think about it.
We can get lost in the sea a little bit because there are so many tools out there and there are so many offerings. It was neat to see this on my calendar. I’m not sure if you’ve had a chance to listen to any of the other podcasts, but I know you’ve been on others. This is a little bit different. This is all about your employees. As much as I want to talk about Charity Navigator, I also want to draw out your experience and how you’ve grown this organization and some of the challenges that you’ve had. I run a small HR consulting company based out of Colorado, and my experience has been that a lot of founders and CEOs don’t think about their people as much as they need to.
We are our people if you think about it. The output of Charity Navigator is the result of the humans that have done the work. I don’t think I learned this here, but I had to try and put it into practice here. I spent fifteen years at Microsoft, which was a great company to work for, but when they talked about people, at least at the time I was there, we were always bullet six. People are our most important asset, yet we were the sixth bullet in the executive slide presentation. That tells you where you sit in the pecking order of things. If you flip it, it works. It’s scary because a lot of times we get worried about bottom-line quarterly numbers. Are we achieving our mission? You can only do that with your people. I’m a huge advocate for people first.
I totally agree with you. Especially with what we’ve seen with the Great Resignation and the Quiet Quit. I’ve been predicting for over a decade that this was coming because I talk to people every day about how they feel about their jobs. I rarely run into someone who truly loves their job which is terrible because nobody wins and benefits from that. It’s time that we make that change, in my opinion. We’re on the cusp of an employee revolution.
There are some interesting tension points between staying true to your people and mission, and working out that alignment part because sometimes people don’t belong in your organization, and sometimes people do belong in your organization. Figuring that out so that people can come and go as is best for their individual needs is important. I would say Charity Navigator is quite similar to other nonprofits. People are there because of the mission. I would say even before I was at Microsoft because of the mission. They had an amazing mission and that kept me there for fifteen years.
Do you find that sometimes people are more drawn to the mission than they are to the work or the actual job?
Yes. That’s an amazing call out because we’ve fallen in love with the mission, but you’ve got to fall in love with the work too. There’s a great Navy Seals expression, “You learn to love to suck.” In other words, you have to learn to love the hard parts of the job because it all goes together and you can’t always be riding on that high. You got to do your pushups, eat your broccoli, and all of that stuff. There isn’t a free ride.
My experience when we’ve done work with nonprofits in the past has been helping draw that out. Not having the mission only be the reason why someone is joining. It is very important. It trumps probably other organizations’ missions in a way. However, they’ve got to have the qualifications to do the job and the passion, as you said, then the ability to deal with the suck. A lot of executive directors that I work with miss that piece. I’ve even experienced that myself in my own business because we’re very mission-driven too, where I’ve hired people that were bought into our mission and not so much the values alignment that we needed. Have you experienced that?
The whole values thing is an interesting area that we could spend time on. For me, values are the essence of the organization and it focuses on the mission and the people. When I look at Charity Navigator, one of the core aspects of who we have become is all about collaboration. That’s collaboration internally, but also collaboration externally with the others in the nonprofit sector.
We’ve gone through some big changes in our new website and unified rating system. It never could have happened without collaboration and engagement across the teams. That’s one of our core values. What it meant, which was interesting, was that you had people in HR finding bugs on the website and filing those as if they were engineers. The engineers would say, “Thanks for the help,” and then fix it so that when we could get it out there. It’s going to be useful for everyone needing it this giving season.
Did you go through an acquisition or are you partnering with a new organization?
It’s both. A few years ago, we acquired a small startup nonprofit called ImpactMatters. We brought in their people, intellectual property, and assets into Charity Navigator. That added to a whole element of our scoring system which provides an impact assessment. That was one of the integration pieces. The other is that we have partnerships with other data collectors or what I would call sense makers or infrastructure players in the sector. That’s more licensing agreements and joint ventures or working on using their data as part of our ratings. That’s another piece of what we’re doing.
How has that been in terms of the employee experience bringing in that other organization?
It was hard. One of the big changes that we’ve been through, at least in the last couple of years while I’ve been here is moving from a place of having to do it all ourselves to sharing and learning how to share and take input from other people as well as ourselves. Also, trusting others to do some of the work for us instead of building everything ourselves. The way it starts to make sense to people is where you go. Charity Navigator, we’re in our 20th year in 2022. It took us eighteen years to get to rate 9,000 organizations. It then took us two years to get to 200,000 organizations.
How did you scale that?
Through collaboration. It’s all about bringing in other people’s data. We now have ratings for about 1,500 nonprofits around Impact specifically. We have the financial information about 200,000. There are other attributes that we’re looking at that we’re getting from Candid, which was a former GuideStar where we’re collecting internal equity and DEI practices. Nonprofits report this information to other organizations. We then consume that information, run algorithms on it, and issue a rating as a result of it. Again, you could go out and collect the data yourself or go where the data already exists and then buy it from the person that’s done that work. That’s how we’re doing it.
That makes a lot of sense. Tell us about your team. What is your team made up of? What are the 34 people that you have?
We’re essentially broken into four key areas. We have the programs team which is the evolution, maintenance, and constant renewal of the ratings. You have data and engineering, which is sense-making of the data science around the ratings, how people are using them, the website, the tools to issue the ratings, the tools to collect the data, and internal processes. You then have marketing, communication, and development that’s under a single person right now. Everything about getting the word out about Charity Navigator to fundraising for Charity Navigator to engagements with media and PR. The last area would be the admin team, which would be finance, HR, and internal operations.
There’s a component of you having developers on the team as well as the program officers which is unusual in a nonprofit organization. Do you find that everyone is collaborating among all of those different groups?
Pretty much and we’ve grown into that. We are still in a fairly rapid growth spurt right now. One of the reasons for it is that Charity Navigator found itself between donors and nonprofits. We went into a period of extreme need in this country between COVID and the racial reckoning that the country has been through. Everyone was looking for, “How do I do something about this? Where can I find information on this that I know nothing about?” None of us were experts on infectious disease prevention up until a couple of years ago. Who are the charities that were helping individuals and people at that time?
What ended up happening was Charity Navigator became an incredibly motivating job because we had so much demand for what we were doing, which meant we grew. We went from 18 people at the end of 2019 to now we’re over 35 at this point. It’s validating when you know that the work you’re doing is bringing benefit to the world. Everyone on the staff sees the difference. You see the giving traffic and how much money is going to the organization that’s helping people get food in areas where they don’t have it, and that makes a difference.
Where is everybody located? I noticed you were in New Jersey, is that the case?
Again, that’s another anomaly with Charity Navigator. In 2019, we were in three states, New York, New Jersey, and Pennsylvania. We’re now in fifteen states. This was something that was a testament again to the people. We’d sent everybody home as soon as we could, in our case was March 13th 2019. It was Friday afternoon. We had already tested systems that allowed people to work from home.
Ironically, there was a snowstorm in December of 2019 that one of our Mondays are our busy days. At Charity Navigator, we had all the in-person meetings and everything going on, and everything was shut down. We said, “Everybody’s got their systems at home. Let’s test our equipment and see if we can run all our meetings,” and we did. All of a sudden, we’re in the pandemic.
It’s hard to think back to those first days, but we were all scared. You had to address that fear. In other words, you had to allow people to do what they needed to do to feel safe and find safety in their own environments, and then give them what they needed when you can do that. We were fortunate and we were able to do that.Address the fear your team is facing. Allow them to do what they need to feel safe, and give them what they need to achieve that. Click To Tweet
After things started opening up again, we also opened the office very quickly. We opened in August 2020, but nobody showed up. It was all voluntary. There are 1 or 2 people that were going in and checking the mail. We realized at that point that we were also looking at our productivity numbers. We were beating all of our numbers. Everything was going well. We were innovating and acquiring ImpactMatters at that time. We launched a whole new element of the rating system.
Our program delivery and mission delivery were out of the park. Revenue was following. A challenge was there are elements of the organization in the leadership and the board was saying, “We need to get people back in the office.” I started to say, “Let’s question that belief. Do we need to get them back in the office? Let’s see how the culture and productivity are.” We were doing all right. I don’t remember when we made the official decision, but in early 2021, we’re going to stay remote and start to remote hires. All of a sudden, the candidate pool opened up to the entire nation.
Your ability to have a more diverse team opens up. Many things happen when you do that.
One of the things that get hard is we’ve got a lot of staff that we’ve never met in person. What we’re doing now is we’re doing at least one annual event where we bring the whole organization together and then we’re doing team meetings so the sub-teams will gather. We still have the office space. We signed a six-year lease in January 2020. We cannot complain about hardship and get out of that lease. We have a big beautiful space and we use it in a very thoughtful way.
We had the same situation. We moved on February 29th, 2020 into a new space. We were there for one team meeting before everything shut down. Luckily, the people that owned our building ended up selling it, so we were able to get out of our lease at least sooner than we expected, but not soon enough.
I’ve always run a very hybrid organization. For many years we had what we call core hours and flexible hours. Our core hours were like Thursday morning. That was the only time I wanted everyone in the office for that team meeting we had. When COVID hit, we were completely ready for the remote situation. How I look at it is I’m not paying for office space so I can reallocate that budget to travel and bring people together, but I still find that many leaders are against this idea and struggling with the lack of in-person. In your experience, your productivity has gone up. Has it stayed up?
Yes. Part of the leadership journey is also maintaining a sense of urgency in what we’re doing. With COVID and the other issues that we’ve been facing as a country, the urgency was external and it came in loud and clear. We then were fortunate to receive some funding that allowed us to aggressively take on efforts in our strategic plan like taking on work that everybody’s been wanting to do.
As a case in point, when I joined Charity Navigator in 2015, we were approving our annual budget and it had a CRM system on the annual budget. Seven years later, we finally implemented a CRM. We have a nice salesforce CRM that’s running and it went live in early November 2022. It took us seven years because it was nice to have. It wasn’t essential and program-specific.
We did things like that. We built the CRM and rebuilt our website which was running on twenty-year-old technology. Everybody wanted this. We did something we needed to do but we also wanted to do it. It was combining the urgency and then we had the resources. We’d been given a large grant that was enabling us to build our infrastructure out, and everybody jumped on it. It was an interesting mix of real mission need and then also desire that this is the thing I’ve always wanted to fix because we’re fixers. In our organization, we build stuff, tell stories, and evaluate. When you have broken tools, it gets at you after a while.
Your plans are to probably stay remote with people from fifteen different states. It’d be impossible to bring everybody together in an office environment.
The tension is like, “I found this great candidate, but they’re not in the United States. Is it okay to hire them?” I was like, “Hold on.”
I have a road warrior on my team that I don’t even know where she is now.
If you stay in the US, it’s a lot simpler.
You scaled from 8,000 charities to over 200,000 charities in a very short period of time. The opportunity is endless for you. There are 10 million charities worldwide that you could be evaluating and pulling onto your tool. What are your plans? Are you going to continue to scale at this pace?
It depends. Part of it is rating 200,000 organizations with a team of 35 that requires a significant amount of automation. It also requires a significant amount of what I would call digital data that’s meaningful. The beauty of the world that we’re living in from that perspective is that everyone’s digital footprint is growing. It’s easier to do sense-making of the digital data now.
The beauty of the world today is that everyone's digital footprint is growing. Click To Tweet
That has the potential of allowing us to grow quite rapidly and to continue improving. We want to do that. We have what we’re calling a four-beacon system with ratings. We’re looking at financial health, internal practices, engagement with community or culture and community, leadership and adaptability, and then impact and results. There’s an uneven distribution right now between how many charities we have that have each of the four areas evaluated. Filling that in is probably the major effort over the next couple of years.
The US tax form made that part easy, and the fact that it’s a public document, but that’s not the case in other countries. That’s what would make the internationalization element much harder, but not impossible. I joined Charity Navigator when I was not living in this country and was thinking about international work and wanting the take it overseas. Maybe someday, but right now we have quite a bit to do in the United States.
How does that impact your employees when you know you’ve got such an enormous amount of opportunity? Do they feel overwhelmed? Are they enticed by that? How do you lead through that?
There are a couple of things. One is there can be paralysis that comes from too much. It’s like, “I don’t know what to do. I’m not changing anything.” There’s this fear of getting it wrong. How we got to the 200,000 was I tried for five years to modify the existing rating system. Most of the challenge was tension and internal resistance to that then there was this realization, “We won’t change the current system. Let’s build a new system in parallel.”
We built that new system in parallel and launched it in this four-beacon approach that I mentioned. In a two-year cycle, we got it from nothing to 200,000 charities with all these different elements to it. It was by not changing too much. It’s getting the staff to say, “This was our core asset. Let’s build a new one.” It create excitement around the new because it had no legacy structures that you had to manage and make sense of. It could allow you to do the right thing and then iterate quickly.
This is stealing from software development. It’s working in an agile mindset, which is to put it out there, get feedback on it, fix it, change it, remove it, redo it, and get it back out there again. What we’re trying to do with the ratings right now is move in that faster mindset, which allows people to make mistakes, correct their mistakes, and also not get too wrapped up in the mistakes. It’s about constantly getting better. It’s not about getting it right and waiting ten years to get it right, and then finally putting it out there when it’s too late. It’s about constant improvement. You don’t scare people that way.
It’s almost like you’re an agile leader as well. You’re not fixed in this mindset that it has to go this one way. You’re iterating as a leader through this process as well.
That’s probably one of the most important things and also one of the hardest things. I did learn this at Microsoft, which is this learning how to forget that you can learn something new. It’s letting go of your past beliefs. When you suddenly try something, you know this is the right way, you do it, and it doesn’t work. You then have to be smart enough to get out of your own way and say, “That didn’t work. I need to relearn this and observe.”
We talked about data-driven decision-making which means looking at the data and listening to it. That can oftentimes defeat my own belief systems which can be troubling. That takes time when suddenly the data tells me I’m wrong and everything I’ve believed in for the last couple of years was wrong. It hurts. The ego takes a hit. The other thing is this one is tricky, but it’s so important. You got to get your ego out of the way.
I find that people make those decisions with hiring as well. You hear like, “Trust your gut.” Listen to that gut, but you need data too. After you have all the data and your gut is wrong, you got to evaluate, “Is this a mindset, belief system, or a bias you may have? The data tends to be more accurate than your gut. Not always, but a lot of the times.
The magic is getting the best out of both. The data can also lead you down a false path if it’s the wrong data or collected in the wrong way. In other words, it’s manipulated data or the data has biases in it. As an evaluator, we are constantly trying to remove our own biases because it’s not about us. It’s about what we care about. Again, that means being invisible on some levels, but then saying, “You tell me what you care about and then I’m going to help you find a good charity.” You don’t want me telling you what I care about. That’s not why you came to Charity Navigator, and that’s hard. Needless to say, we all care about a lot of things.
It’s true. We all have biases. You can’t go into any relationship or setting without having a bias. I always say to myself, “There’s that bias I have. First thought, not last thought.” I didn’t mention this to you, but I came from IBM. I was a software developer for IBM so we both have that big corporate background. I have found that my corporate background has been so helpful for me as a small business owner. I was very well-trained and had great mentors. A lot of founders and CEOs who don’t have that background, don’t have that experience. I feel come into leading with very few tools in their toolbox. What are some of the things that you’re grateful you had from Microsoft that you brought into your leadership here?
One was about process and, this all sounds silly, but scorecarding. It’s coming up with a simple way of knowing I’m making a difference, and then tracking that and building a culture of data-driven accountability really helps. I mentioned this before, it’s this idea of learning and letting go. Letting go of something that doesn’t work and then try something new until I find something that does work.
The other is this culture of getting everybody aligned around the mission and then doing what’s needed to get the work done. Microsoft’s mission at the time I was there was to enable people and businesses around the world to realize their full potential which to me was like, “I can do anything with that.” That’s the key. I felt like I was doing anything with that at Microsoft.
Microsoft worked for me for ten years because the first five years, I worked for Microsoft, and then it flipped in the spirit of entrepreneurship if you think about it. I still interview everyone that is a potential hire. I want to know who’s coming into the organization. One of the questions I like to ask people that we hire at Charity Navigator is, “What are you going to do with Charity Navigator?” In other words, what are your goals and how are you going to use us to achieve your end? Going back to what we’re saying about people don’t necessarily love their jobs. You will love your job if you’re doing what you came to do in the world through your job. That’s where mission alignment and also loving the work go together.
That’s a great way to end this. I appreciate you, Michael. Thank you so much for joining me.
Kendra, I love talking about the people at Charity Navigator and the work that we do, so thank you.
About Michael Thatcher
Michael leads Charity Navigator in its efforts to make impactful philanthropy easier for all by increasing the breadth and depth of evaluation methodologies to facilitate ratings coverage of substantially larger numbers of charities, and expand how the information engages new and existing audiences.
Prior to joining Charity Navigator, Michael spent more than fifteen years with Microsoft, the last ten of which, as their Public Sector Chief Technology Officer responsible for technology policy initiatives and engagements with government and academic leaders in Asia, the Middle East, and Africa.
Michael’s eclectic background includes years at sea conducting oceanographic research with Woods Hole Oceanographic Institution, composing music and dancing internationally as the co-founder and co-director of Dance Music Light. He has held various board positions within the nonprofit and tech sectors, holds several patents in enterprise systems management, and has a degree in Music from Columbia University in New York.
His guiding mantra: Follow your heart – Use your head – Make a difference