Charity Navigator

Charity Navigator is a charity assessment organization that evaluates charitable organizations in the United States, operating as a free 501(c)(3) organization, that accepts no advertising or donations from the organizations it evaluates.[3]

Charity Navigator
Formation2001 (2001)
FounderJohn Patrick Dugan
TypeNonprofit corporation
Legal statusActive
PurposeCharity evaluation
HeadquartersGlen Rock, New Jersey, U.S.
Official language
English
Michael Thatcher[1]
CRTO
Stephen Rockwell[1]
CRO
Kevin Scally[1]
Director of HR and Finance
Nancy Sadek[1]
Matt Giegerich (Chairman),[2] Marie Wieck (Vice Chair)[2]
Main organ
charitynavigator.org
Websitewww.charitynavigator.org

About

Charity Navigator was launched in spring 2001 by John P. (Pat) Dugan,[4] a wealthy pharmaceutical executive and philanthropist.[5] The group's mission was to help "donors make informed giving decisions and enabling well-run charities to demonstrate their commitment to proper stewardship" of donor dollars.[6] Initially, Charity Navigator provided financial ratings for 1,100 charities, and it has data on 8,500 as of mid-2017.[7]

In 2011, Kiplinger's Personal Finance selected Charity Navigator as a Money Management Innovation for "helping millions of people become philanthropists,"[8] and it was on Time magazine's top 50 websites of 2006 list.[9]

However, in a 2014 Chronicle of Philanthropy interview on the nonprofit sector, Nicholas Kristof identified it with a trend he deplored: "There is too much emphasis on inputs and not enough on impact," Kristof said. "This has been worsened by an effort to create more accountability through sites like Charity Navigator. There is so much emphasis now on expense ratios that there is an underinvestment in administration and efficiency."[10]

A 2014 survey of attitudes toward charity evaluation lauded Charity Navigator in six of seven categories.[11]

Evaluation method

Using publicly available tax returns (IRS Form 990) filed with the Internal Revenue Service and information posted by charities on their web sites, the Charity Navigator rating system bases its evaluations in two broad areas—financial health and accountability/transparency.[12]

Limitations of initial methodology

This method was criticized in an article in the Stanford Social Innovation Review for taking into account only a single year's IRS Form 990.[13] This can lead to significant fluctuation in the ranking of a charity from year to year.[13] Also, the focus on the IRS Form 990 has itself been criticized, as the accuracy and reliability of IRS Form 990 data is questionable.[13] Form 990 categorizes a charity's expenditures into three broad categories that are open to accounting manipulation. The nonprofit sector does not have the strict financial regulation and transparency required from public corporations (under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Sarbanes-Oxley Act, among others), creating limitations on how accurately a charity's efficiency can be graded based on a tax return. Particularly relevant to Charity Navigator's methodology is that 59% of the 58,000 charities receiving public donations in 1999 failed to report any fundraising expenditures, illustrating a potential problem with relying on Form 990 figures alone when analyzing an organization.[13]

It only rates the 6% of charity organizations in the United States that have over $1 million in annual revenue (these 6% get 94% of the revenues that come into the nonprofit sector each year)[14]

Revisions

In December 2008, President and CEO Ken Berger[4] announced on his blog that the organization intends to expand its rating system to include measures of the outcomes of the work of charities it evaluates.[15] This was described in further detail in a podcast for The Chronicle of Philanthropy in September 2009. The article explained that plans for a revised rating system will also include measures of accountability (including transparency, governance and management practices) as well as outcomes (the results of the work of the charity).[16]

In July 2010, Charity Navigator announced its first major revamp.[17] This revamping begins what the organization states is the process to move toward CN 3.0, which is a three-dimensional rating system that will include what they consider the critical elements to consider in making a wise charitable investment[18]

  1. financial health (Charity Navigator evaluated this from its inception),
  2. accountability and transparency (begun in July 2010) and
  3. results reporting (slated to begin rating this dimension in July 2012).[19]

After collecting data for more than a year, in September 2011 Charity Navigator launched CN 2.0, which is a two-dimensional rating system that rates a charity's (1) financial health and (2) accountability and transparency.[20]

2013 expansion

In January 2013, Charity Navigator announced another expansion to its rating methodology, "Results Reporting: The Third Dimension of Intelligent Giving." Because mission-related results are the very reason that charities exist, Charity Navigator developed this new rating dimension to specifically examine how well charities report on their results.

The new rankings now include "various criteria, including ... privacy policies"[21]

Improvements in response

Some charities, in response, began to supply more information. The New York Times reported in 2010 that one non-profit began "reporting on its finances using the same format as the 10-K."[4]

Criticism

In response to an op-ed authored by Charity Navigator's CEO entitled "The Elitist Philanthropy of so-called Effective Altruism,"[22] the cofounder of the Centre for Effective Altruism wrote "What Charity Navigator Gets Wrong About Effective Altruism."[23]

gollark: Technically not all of the orbital lasers may have *originally* been mine, but they run osmarks.tk firmware now and it's not like someone can go up there and reflash them.
gollark: Well, have osmarks.tk orbital laser network, will orbitally lase.
gollark: Idea: switch the incentives to make politicians build more environmentally-friendly power plants by orbital-lasing all heavily polluting power plants!
gollark: Other people who might be on Mars will only be allowed to use this by posting comments and getting replies back from Earth.
gollark: Don't worry though, osmarks.tk will still function even with me on Mars, using our (not)patented™ wormhole projection technology to maintain low-latency network links.

See also

References
  1. "Board and Staff". Charity Navigator.
  2. "Board of Directors : Charity Navigator". Retrieved 2019-12-29.
  3. "Charity Navigator: Ten of The Best Charities Everyone's Heard of". August 1, 2018.
  4. Stephanie Strom (November 26, 2010). "To Help Donors Choose, Web Site Alters How It Sizes Up Charities". The New York Times.
  5. Marc Gunther (5 April 2015). "Why Charity Navigator needs an upgrade". Nonprofit Chronicles. Retrieved 6 July 2015.
  6. Overholt, Alison. Charitable Deductions: Charity Navigator dares to hold the nation's nonprofits accountable for their fund-raising Archived 2006-03-25 at the Wayback Machine, August 2003.
  7. Ann Carrns. Charity Navigator Tweaks Its Rating System. New York Times. 27 May 2016.
  8. "20 Financial Innovations You Can't Afford to Ignore". Kiplinger. Retrieved 2012-01-05.
  9. "50 Coolest Websites for 2006". TIME Magazine. No. August 2006. Time.com.
  10. "Inspiring People to Make a Difference". The Chronicle of Philanthropy. September 15, 2014.
  11. Janna Finch (2017-04-25). "Survey: Do Ratings From Watchdog Groups Impact Giving Decisions?". softwareadvice.com.
  12. Niraj Chokshi (September 27, 2017). "How to Decide Where to Donate Your Money After Disasters". The New York Times.
  13. Lowell, Trelstad and Meehan (Summer 2005). "The Ratings Game: Evaluating the three groups that rate the charities". Stanford Social Innovation Review.
  14. "UI Press - Nonprofit Almanac 2008 - Summary". urban.org. Archived from the original on 2012-03-28. Retrieved 2011-09-27.
  15. "A Measure of Outcome". Kenscommentary.org. December 8, 2008. Archived from the original on 25 July 2011. Retrieved 15 September 2010.
  16. "Ken's Podcast Interview". September 11, 2009. Archived from the original on 18 July 2010. Retrieved 15 September 2010.
  17. Ken Berger (July 1, 2010). "Charity Navigator Expands Rating Methodology". Charitiy Navigator. Archived from the original on 19 August 2010. Retrieved 15 September 2010.
  18. John Hanc (November 6, 2017). "Want to Help? Do Your Research Before You Donate". The New York Times. .. investments .. balanced portfolio
  19. "Where We Are Headed (2013 and Beyond)". charitynavigator.org. Archived from the original on 29 June 2015. Retrieved 6 July 2015.
  20. Berger, Ken (2011-09-20). "Ken's Commentary: CN 2.0: More Knowledge, More Good". Kenscommentary.org. Archived from the original on 2012-01-12. Retrieved 2012-01-05.
  21. Ann Carrns (December 2, 2015). "Before Giving, Check Out Charities and Their Policies on Privacy". NYTimes.com.
  22. Ken Berger; Robert Penna (November 25, 2013). "The Elitist Philanthropy of so-called Effective Altruism". SSIR.org.
  23. William MacAskill (December 3, 2013). "What Charity Navigator Gets Wrong About Effective Altruism (SSIR)". SSIR.org (Stanford Social Innovation Review).
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