Charity Navigator is a major 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.
|Founder||John Patrick Dugan|
|Headquarters||Glen Rock, New Jersey, U.S.|
Director of HR and Finance
|Matt Giegerich (vice-chairperson)|
Charity Navigator was launched in spring 2001 by John P. (Pat) Dugan, a wealthy pharmaceutical executive and philanthropist. 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. Initially, Charity Navigator provided financial ratings for 1,100 charities, and has data on 8,500 as of mid-2017.
In 2011, Kiplinger's Personal Finance selected Charity Navigator as a Money Management Innovation for "helping millions of people become philanthropists," and they on Time magazine's top 50 websites of 2006 list.
However, a 2014 Chronicle of Philanthropy interview on the non-profit sector by Nicholas Kristof identified them 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."
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. Based on how the charity rates in each of the two areas, it is assigned an overall rating, ranging from zero to four stars. To help donors avoid becoming victims of mailing-list appeals, each assessment of a charity's performance is accompanied by a review of its commitment to keeping donors' personal information confidential.
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. This can lead to significant fluctuation in the ranking of a charity from year to year. Also, the focus on the IRS Form 990 has itself been criticized, as the accuracy and reliability of IRS Form 990 data is questionable. 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.
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), and argues these charities have better expertise for reporting to the IRS, are under greater public scrutiny and therefore their reporting tends to be more accurate.
- Able to communicate who they are and what they do
- Defined short-term and long-term goals
- Able to state the progress it has made (or is making) toward its goal
- Programs make sense to the donor
- Programs that the donor feels they can make a long-term commitment to
In December 2008, President and CEO Ken Berger 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. 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).
In July 2010, Charity Navigator announced its first major revamp. 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
- financial health (Charity Navigator evaluated this from its inception),
- accountability and transparency (begun in July 2010) and
- results reporting (slated to begin rating this dimension in July 2012).
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.
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.
In recent years, Charity Navigator has become outspoken against what it calls high CEO compensation. At the same time, they note that nonprofit CEOs should be paid what the market demands. They complete a CEO compensation study each year. In the study, they have consistently argued that a low six-figure salary for a CEO of a mid-to-large sized nonprofit is the norm and should be acceptable to donors. They further argue that these are complex multimillion dollar operations that require a high level of expertise. They are however, outspoken against the phenomenon of million dollar plus compensation, which they do not believe is justified for a tax-exempt public charity.
On its 2014 Form 990, Charity Navigator reported the salary of CEO Ken Berger as $160,644.
Charity Navigator compiles lists of charities that contract fundraising to corporate solicitors who retain more than 50% of the charity's budget. The charities were "ranked by the percentage of their total functional expenses spent on professional fundraising fees." The worst was the Disabled Police and Sheriff's Foundation which only kept 5.8% for its own programs and services. The rest of the donations, which represented 90.5 percent of the total collected went to the for-profit fundraisers. Both The Cancer Survivors' Fund, and The Association for Firefighters & Paramedics saw over 80 percent of donations retained by the corporate fundraisers.
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."
- "Board and Staff". Charity Navigator.
- "Charity Navigator: Ten of The Best Charities Everyone's Heard of". August 1, 2018.
- Stephanie Strom (November 26, 2010). "To Help Donors Choose, Web Site Alters How It Sizes Up Charities". The New York Times.
- Marc Gunther (5 April 2015). "Why Charity Navigator needs an upgrade". Nonprofit Chronicles. Retrieved 6 July 2015.
- 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.
- Ann Carrns. Charity Navigator Tweaks Its Rating System. New York Times. 27 May 2016.
- "20 Financial Innovations You Can't Afford to Ignore". Kiplinger. Retrieved 2012-01-05.
- "50 Coolest Websites for 2006". TIME Magazine. No. August 2006. Time.com.
- "Inspiring People to Make a Difference". The Chronicle of Philanthropy. September 15, 2014.
- Janna Finch (2017-04-25). "Survey: Do Ratings From Watchdog Groups Impact Giving Decisions?". softwareadvice.com.
- Niraj Chokshi (September 27, 2017). "How to Decide Where to Donate Your Money After Disasters". The New York Times.
- Lowell, Trelstad and Meehan (Summer 2005). "The Ratings Game: Evaluating the three groups that rate the charities". Stanford Social Innovation Review.
- "UI Press - Nonprofit Almanac 2008 - Summary". urban.org. Archived from the original on 2012-03-28. Retrieved 2011-09-27.
- "6 Questions To Ask Charities Before Donating". Charity Navigator. Retrieved 2007-12-06.
- "A Measure of Outcome". Kenscommentary.org. December 8, 2008. Archived from the original on 25 July 2011. Retrieved 15 September 2010.
- "Ken's Podcast Interview". September 11, 2009. Archived from the original on 18 July 2010. Retrieved 15 September 2010.
- Ken Berger (July 1, 2010). "Charity Navigator Expands Rating Methodology". Charitiy Navigator. Archived from the original on 19 August 2010. Retrieved 15 September 2010.
- John Hanc (November 6, 2017). "Want to Help? Do Your Research Before You Donate". The New York Times.
.. investments .. balanced portfolio
- "Where We Are Headed (2013 and Beyond)". charitynavigator.org. Archived from the original on 29 June 2015. Retrieved 6 July 2015.
- 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.
- Ann Carrns (December 2, 2015). "Before Giving, Check Out Charities and Their Policies on Privacy". NYTimes.com.
- "2010 CEO Compensation Study". Charity Navigator. August 4, 2010. Retrieved 13 September 2010.
- "2014 Form 990" (PDF). Charity Navigator. November 30, 2014. Retrieved 6 July 2014.
- "10 Charities Overpaying their For-Profit Fundraisers". 2017. Retrieved December 20, 2017.
- William MacAskill. "What Charity Navigator Gets Wrong About Effective Altruism (SSIR)". SSIR.org (Stanford Social Innovation Review).
- Ken Berger; Robert Penna (November 25, 2013). "The Elitist Philanthropy of so-called Effective Altruism". SSIR.org.