Open for comment: Proposed changes to Candid’s taxonomy
Every year, Candid processes data on nearly two million organizations and more than three million grants. That data makes its way into various products and services to help: nonprofits find funding; researchers, advocates, and journalists derive insights into what is happening in the sector; and all types of funders to make funding decisions. All this work would be significantly more difficult if it weren’t for Candid’s taxonomy, the Philanthropy Classification System (or PCS). A taxonomy is simply a system of classification, or a way of organizing things. We’ve all encountered taxonomies, like the more formal biology classification system we learn in middle school (remember kingdom, phylum, family, genus, species?), or the style, size, color, and other categories we use to find what we’re looking for when online shopping. In Candid’s case, the PCS is one of the key things that makes our data usable. Without it, people would be left to dig through a mountain of data to try to find the information that’s relevant to them.
This year, Candid is updating its taxonomy. Based largely on input we’ve received from individual organizations and partners, we’re proposing 205 changes to the PCS. Before moving forward with these changes, however, we want to give as many people as possible a chance to weigh in on them. Starting today and through August 5, 2023, we are making the proposed changes available for public comment. The PCS is meant to reflect the work of the sector; it’s important to us that the sector has a chance to shape it.
How we got here
The Philanthropy Classification System was developed in 2015 by what was then the Foundation Center (one of Candid’s predecessor organizations), which found that the National Taxonomy of Exempt Entities (NTEE) used by the Internal Revenue Service (IRS) did not adequately capture the work of the sector. The PCS expanded on the NTEE and covers five facets: subjects; populations; support strategies (e.g., program support, general support, advocacy); transaction type (e.g., cash grants, program-related investments); and organization type. Candid codes much of its data according to the PCS, including organizations, grants awarded, funding opportunities, news, and more.
In early 2022, Candid solicited recommendations on how to improve the PCS. This is only the second time Candid has sought to update this taxonomy, and the first time since the PCS’ release that significant external input was solicited. Groups could recommend: adding, combining, or removing terms; moving terms in the hierarchy; or updating term definitions. In all, we received over 600 recommendations from nearly 30 organizations, as well as from Candid staff with extensive knowledge of the taxonomy.
These recommended changes to Candid’s taxonomy then went through multiple rounds of internal review. During this review process, which took longer than expected due to the number and complexity of the recommendations we received, staff considered whether:
- A proposed term was already covered by an existing PCS code (if so, we rejected the proposed change)
- A proposed term could be applied to a sufficient number of grants or organizations (this is to avoid adding terms so narrow that few search results are returned)
- A proposed term would be intuitive to users of Candid’s products, as well as a more general audience
- A proposed term is widely used or aligned with standards set by more recognized organizations, such as the Associated Press (which maintains a stylebook)
- A proposed term was actually in use in our existing data, such as in mission statements or grant descriptions (since the PCS is meant to describe the work of the sector as a whole, our goal here is to avoid terms used by only a few organizations)
- It would be feasible to apply the proposed term or make the proposed change based on the quality of the data available
- There was a compelling rationale for combining or moving terms within the hierarchy, since these types of changes in particular can be disruptive
- The proposed change would negatively affect the overall coherence and balance of the taxonomy
Once we had applied these criteria, we were left with 205 proposed changes, broken down by facet and change type in the chart below.
| Facet | Change definition |
Change term label |
Move term |
Combined terms |
Remove term |
Add term |
Total |
|---|---|---|---|---|---|---|---|
| Subjects | 48 | 21 | 31 | 2 | 3 | 19 | 124 |
| Populations | 24 | 31 | 3 | 0 | 4 | 9 | 71 |
| Support strategies | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| Transaction type | 0 | 0 | 0 | 0 | 0 | 1 | 1 |
| Organization type | 0 | 0 | 0 | 0 | 0 | 7 | 7 |
| Total | 74 | 52 | 34 | 2 | 7 | 36 | 205 |
| % of total | 36% | 25% | 17% | 1% | 3% | 18% | 100% |
The PCS will never be perfect–the sector and society itself change too quickly for that to be possible–but it can always be better. We’re sincerely grateful to the organizations and individuals who have made such thoughtful recommendations to Candid’s taxonomy to date, and we look forward to receiving broader feedback during this public comment period. Candid staff will review these comments in August and September and share the finalized changes with the sector in the fall.
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Kate, Digital Communications Manager, Candid says:
Final changes will be released in the Fall and shared broadly on our channels.
Robert Burnett says:
Now that the comment period is closed for the latest revisions, when is the new revised PCS expected to be officially released?
Jill Fink says:
I'd like to second the comments made by Melissa Lee and Elizabeth Killough. A "non-profits with endowments" category that requires such organizations to list their asset holdings would go a long way toward encouraging organizations to invest their assets (including as loans or equity investments in their grantees) in ways that reflect and advance their mission and values. Requiring this to receive the highest "seal of transparency" could be a 'carrot' to provide organizations to not only make more intentional investments, but at a minimum to truly know what they own.
Thank you for the opportunity to be part of this process.
Melissa Lee says:
It would be extremely beneficial if the Foundation Directory could present information about "Loans" as clearly and accessibly as it does for "Grants." This includes details about the loan providers, the purpose for which the loans are offered, and the application process. Nonprofits and social enterprises are in need of a more transparent pathway to capital. Grantmakers should also be aware that offering loans and equity investments is a viable option. Your inquiry is highly appreciated, and many thanks for raising this important issue!
Kate, Digital Communications Manager, Candid says:
Thanks for all the questions! Laia Griñó, the author of the blog, shared these answers:
Is there a schedule to review and solicit comments on the PCS looking ahead? We do not have a set schedule, but generally speaking our intent is to update the PCS about every 3 years.
What prompted Candid to open up for recommendations in 2022? We want organizations in the sector to feel that the PCS accurately reflects their work and the way they speak about their work. Because of this, and because we recognize that we aren't subject matter experts in all areas, we wanted to give the sector an opportunity to weigh in on the evolution of Candid's taxonomy.
Are there any other taxonomies for tax-exempt entities? There are several, but the NTEE - or the National Taxonomy of Exempt Entities - is probably the best known: https://nccs.urban.org/project/national-taxonomy-exempt-entities-ntee-codes
Jason Ray says:
Thank you for posting this for comment! I'm surprised to see some of these terms just now appearing in the PCS.
Is there a schedule to review and solicit comments on the PCS looking ahead? What prompted Candid to open up for recommendations in 2022?
Are there any other taxonomies for tax-exempt entities?
Ian Charles Henderson says:
My only comment/concern (and I know I am late to make one) is that this valuable definition/classification remains free! My heart skipped a beat today when the url I've committed to memory didn't turn it up. That was foundationcenter.org/taxonomy. Unless my memory fails me. I have bookmarked the new page but it rattled me enough to say, please keep it free! I really depend on it. Thank you!
Gratefully,
Ian Henderson
Grants + Development Coordinator
(Formerly Community Television of Knoxville)
800 S. Gay St. Suite P-336
Knoxville, TN 37929
Kate, Digital Communications Manager, Candid says:
Thanks for sharing your feedback! We'd love for you to share it for consideration via the survey: https://candid.surveymonkey.com/r/HXLZ3YB
Elizabeth Killough says:
Laia, please consider adding an “organization type” called “endowment holders.” Over one trillion dollars sit in foundation endowments and perhaps that much in other nonprofit endowments. These funds are probably working against the holders’ missions. But then again, we don’t know, since these holdings are not revealed and no one is rating them. Please require all endowment holders to list their full endowments on their tax returns before granting your highest “Seal of Transparency”-- we need full transparency to know who is using their assets responsibly and in line with their missions.
Further, in 4 of the 5 Candid facets, the Code is applied to three categories: grantmaker profiles, recipient profiles, and grant details. It would be great if you added “loan/equity profiles” to inspire/teach/remind endowment holders that they may, can, and should use their endowments to offer capital to nonprofits and for-profits that fulfill their missions.
It would also be wonderful if the Foundation Directory had “Loans/Equity” listed everywhere that “Grants” is listed along with “How-to-Apply.” (PRIs are in the directory though they are a bit hard to uncover.)
Thanks for asking!
Steven Lawrence says:
The shift in population terms from "People of ____ descent" to "_____ people" raises an interesting question in terms of coding. Historically, these population codes have been applied primary to domestic U.S. grants. However, given this change, will for example all grants to recipients in South America be coded for "South American people," since South American people will conceivably be the beneficiaries? Similarly, will all grants to Europe specific to that region be coded for "White/Caucasian/European people"? And how would this coding account for the fact that many, many European people are not white. Also, I was surprised to see the term "Caucasian" still being used. Isn't "white" the preferred term at this point?
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Kathleen Meyer says:
I am not certain how to give feedback on terms. I find a lack of specificity for autism funding, especially adults with autism and their needs for support in employment and living opportunities. There are also very few terms for addressing the aging population and the need to invent new ways of living engaged healthy lives.
Tara Williams says:
Hi Laia,
A few suggestions/thoughts:
Population - Age - add "infants"
Ethnic and Racial Groups
- eliminate "racial" just use "Ethnic Groups"
- eliminate the word "people" from all of these entries
-Indigenous - American Indian - people of Mexico, Central and South America may need their own category from north americans - there are separate categories for much smaller geographic areas and ethnic groups- but if not, perhaps using term "Native American" would be preferred by the them as "indian" has had a negative connotation in many of these areas. - see what the Smithsonian has to say, "https://americanindian.si.edu/nk360/informational/impact-words-tips"
Multiracial people - change to "multi-ethnic" - Let's eliminate the word race completely.
Religious Groups
- eliminate the words "people" and "groups" in all the sub categories
Thanks for opening up for public feedback.
Tara
Sanna Roling says:
Everything looks good. It does appear that you may have omitted/diminished the opportunities for recreation/education/sport programming to be readily identified.
Mariam Youssef says:
Good evening
Useful lnformattion thanks alot for your help
Lubinga David says:
Very good ideas
Susan Andrews says:
I would like for Candid to consider badges of transparency for qualified foreign nonprofits. Right now, only U.S. organizations qualify. If an organization has adequate verification from their home country, why not include them?
My organization is included in GuideStar India because we show transparency and authenticity. Why not include such organizations in Candid's registry/
Jane Way says:
This is a thoughtful explanation.
It might be helpful to have some specific examples of the proposed changes. My concern is for the smaller entities who report to Candid and what these changes will mean for them. Hopefully they won't be lost in the shuffle, I am sure others would appreciate it if you shared perhaps 5 of the 205 proposed changes.
Thank you,