Charity Navigator: Giving Your Organization a Facelift

Charity Navigator, an online exempt organization rating website, is used by donors and members of the public as a “go to” location for information about nonprofits. With just a few clicks, users can view an organization’s financial health, accountability and transparency and overall star rating. If you are a nonprofit organization, an individual donor or a business involved with charitable giving, this website may be a valuable resource for you.

Users will receive a snap shot of financial information, as well as how much a nonprofit spends on program, administrative and fundraising expenses each year. Charity Navigator includes information on well-established 501(c)(3)s that have filed a Form 990 for the past seven years and depend on support from individual donors. Evaluations are not performed on private foundations or religious organizations.

Beginning in 2016, Charity Navigator will start evaluating how well charities report their results, not just the results themselves. According to Charity Navigator’s website, the purpose of this new evaluation criteria is to access how a charity comes to “know, use and share their results with stakeholders. In doing so, [Charity Navigator] hopes to shift the paradigm of results reporting from selectively reporting, such as storytelling, that may not be representative of overall performance, to reporting on demonstrably important measures, and showing how the organization learns and improves based on those measures.”

Charity Navigator will use the following five rating elements to examine results reporting:

1. Alignment of mission, solicitations and resources – Charity Navigator will determine if a charity’s fundraising materials are consistent with the program expense breakdown in the most recent Form 990. Charity Navigator has concluded that this new element will be a better fit within the accountability and transparency criteria, becoming part of that evaluation factor sooner than the other four new elements below.
2. Results logic and measures – Charity Navigator will determine whether the results reported appear to be plausible and logical, as well as whether the charity has a plan to collect data based on specific measures. Charities will need to present a clear connection between their planned activities and the likely results and the process they will follow to collect the data to know what results they have actually achieved.
3. Validators – Charity Navigator recognizes that there may be other organizations that evaluate and assess the charities. Many charities belong to national organizations that require them to meet certain standards and evaluate or accredit them against those standards. Charity Navigator will consider the results of evaluations or analyses from such validator organizations should they be made public.
4. Constituent voices – Charity Navigator will examine how well a charity gathers and publishes feedback from their primary constituents.
5. Published evaluation reports – Charity Navigator will assess whether a charity publishes evaluation reports that cover a majority of its programs. They will assess the quality of these reports and how the charity explains that it is changing as a result of such evaluations.

While 2016 may seem like a long way off, it will be here before we know it. In order to prepare for the new Charity Navigator reporting evaluation criteria, nonprofits should take steps now to prepare. Some suggested steps include reviewing strategic activities and creating evaluation tools, developing program performance improvement tracking systems and reviewing fundraising materials.

For more information on Charity Navigator or help with your organization’s “facelift,” please contact me at (805) 963-7811 or LDunne@bpw.com.