Charity Navigator

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The Charity Navigator is an institution that evaluates charitable non-profit organizations based in the United States and awards them donation seals if they meet certain criteria. The charities, some of which also operate internationally, must be tax-exempt and disclose their finances annually to anyone who so wishes. According to Learning to Give, Charity Navigator is the world's largest organization of its kind.

mission

The organization's mission is to "make effective philanthropy easier for all". The donors should know where their money is going and donation should not only be something for the “super rich”, with whom most people associate the word philanthropy.

history

As Pat and Marion Dugan have observed an increasing number of scandals at charities, the couple set up Charity Navigator in 2001 with a starting capital of 1.5 million  US dollars in the legal form of a "private foundation". Pat Dugan had previously donated money himself to Hale House , an organization embroiled in a scandal over mismanagement and child abuse. On April 15, 2002, the website charitynavigator.org went online with reports of 1,100 organizations with financial health information based on Form 990 from the US tax authorities. In 2006 the website was included in a list of the top 50 best websites by Time Magazine .

In 2007, in cooperation with “Network for Good”, the opportunity for direct donations was created via the company's own website. In 2008 Ken Berger replaces the previous CEO Trent Stamp at the helm of Charity Navigator. In April 2008, Charity Navigator evaluated over 5000 institutions. On June 1, 2010, an organization was added to the Donor Advisory List for the first time, warning of organizations against which reservations exist. In September 2011 a new rating system was launched, which was expanded again in January 2013. The new rating system has replaced the rating system that was previously criticized for its excessive weighting of financial aspects, which has previously led many organizations to forego experienced employees and invest less in technology in order to keep their costs down. The newly introduced system weights financial health at 33%, accountability at 17% and the actual work of the organization is rated at 50%.

Also in 2011 the organization was transformed into a public charity according to 501 (c) - whereby the organization does not meet its own criteria for an evaluation by itself until 2019. In January 2014, another watchlist was set up, with which, analogous to the Donor Advisory List, charities are warned in three categories about reservations about these organizations - the separate Donor Advisory List is integrated into this. At the end of 2014, Charity Navigator rated 8,000 organizations. Michael Thatcher took over the position of CEO in August 2015. Thatcher is a former CTO at Microsoft for the public sector and will use his technical knowledge to support the expansion of the rating system. The former CEO, Ken Berger, was to stay with the organization for the time being and wanted to write a book about Charity Navigator. In June 2016, the assessment method for the financial health of the assessed organizations was last adjusted.

organization

In 2015, income was $ 1,762,900, compared to spending of $ 1,912,882. According to the 2016 Annual Report, the organization is financed to 88.6% from donations from third parties and a further 8.2% come from the founders and members of the Board of Trustees. Donations from other non-profit organizations are not accepted for reasons of neutrality. 71% of the money is spent on the main activities of the organization, 17% is used for general and administration and 12% is used for development and fundraising. At the end of June 2016, the organization employed 22 people.

Board of Directors

The organization is led by a 14-member Board of Directors , most of which are made up of personalities from the business world:

  • Matt Giegerich, Chairman of the Board (Ex-Chairmain & CEO of Ogilvy CommonHealth Worldwide )
  • Michael Thatcher, President and CEO
  • Thomas Murray, Vice Chairman (Honorary President of The Hastings Center )
  • Kenneth Rose, Treasurer (Morse, Zelnick, Rose & Lander)
  • Cheryl Black (Managing Director of JP Morgan )
  • Dorothy Crenshaw (Crenshaw Communications)
  • Michael Dix (founder of Intentional Futures)
  • Peter Dugan (Vice President of PDS Preclinical Data Systems)
  • Jeffrey R. Graubard (Managing Director of Gibbs-rbb Strategic Communications)
  • Loretha Jones (Headmaster)
  • Richard Nathan (President of Tailored Technologies)
  • Kern Schireson (Executive Vice President at Viacom Media Networks)
  • Dan Weiss (publisher of Large St. Martin's Press )
  • Marie Wieck (General Manager at IBM Middleware Group)

Evaluation of organizations

In order to be assessed by the Charity Navigator, the charities, some of which also operate internationally, must be tax-exempt according to 501 (c) (3) and disclose their finances annually to anyone who wishes to do so within a document called "Form 990". Under this status, organizations must have been in business for at least seven years and have raised more than $ 1 million in at least the last two years, of which at least $ 500,000 or 40% from public funds.

Not rated:

  • Organizations (eg the "Disabled American Veterans" or the " National Rifle Association ") that are allowed to use a substantial part of their income for state lobbying.
  • Private foundations, as their type of financial disclosure differs from that of public organizations (Form 990-PF), which makes a comparison hardly possible.
  • Organizations (e.g. religious) exempted from issuing the Form 990 document.
  • Schools and universities were also removed from the assessment in the 2016 fiscal year.

The main field of the assessment is the financial soundness of an NPO, so that the potential donors can better assess how much of their donations really flow into the aid projects. In addition, z. B. specify how personal data is handled.

Financial analysis

First, seven individual criteria are examined and evaluated using points (from 0 to 10; 0 = worst result, 10 = best) (see below). As a result, the evaluations for organizational efficiency and organizational capacity (the next higher, more general level) are created by adding up the points of the individual criteria and converting them to stars. Finally, the result is an overall rating of the financial soundness of the organization in the form of stars: 0 stars is the worst result; 4 stars the best.

Organizational efficiency

The organizational efficiency is composed of four individual criteria:

Project costs

Charitable organizations support projects. It is the intention of the donors that as much as possible of their donations flow into these projects. For this purpose, the sum that flows into the projects is compared with the sum that is available to the organization as a whole. If an organization uses less than a third of the total amount for its projects, this is given 0 points by the Charity Navigator.

administrative expenses

On average, the following applies: If more than 60 percent of the total budget is spent on administration, this is 0 points; up to 15 percent equals 10 points. However, the Charity Navigator still differentiates between the type of organization: For example, museums receive full points if they spend 17.5 percent on administration, while hunger aid for full points may only have administrative expenses of up to 3 percent.

Fundraising costs

Organizations that collect donations spend money to get money. For 10 points, less than 10 percent should be used; if campaigns are run on radio and television, 15 percent is allowed for the full number of points. With more than 25% (or 35%) there are 0 points.

Fundraising efficiency

Efficient organizations spend less money getting more. Charity Navigator measures this by the cost of getting $ 1. Average to $ 0.10 = 10 points; over 1 dollar = 0 points. Here, too, a distinction is made between the type of organization and the advertising material used. If a charity goes into debt, its valuation goes down too. The average of several years is calculated and related to the project costs, i. H. the relative share of annual losses is calculated and deducted from the project costs. Then the project costs are assessed.

Organizational capacity

The growth of a charitable organization is included. Growth here means two aspects: increasing donations and expanding projects. These two aspects form two of the three individual criteria for organizational capacity. The growth rate is calculated using the following formula: [(Yn / Y0) (1 / n)] - 1; n = time interval of the period under consideration, Y0 = first year of the period under consideration, Yn = first year of the period under consideration. The result is a percentage; over 6.3 = 10 points, under 3.7 = 0 points when increasing donations; when expanding projects: 10% = 10 points, 0% = 0 points. The third criterion is the creation of reserves. It evaluates how long an organization can maintain its programs if all revenues are lost. The points here again depend on the type of organization. On average, one year is enough for 10 points.

criticism

As early as June 2013, Dan Pallotta criticized the "overhead myth" of the excessive administrative costs of the large charity watchdog organizations at TED . As a result, Charity Navigator as well as GuideStar and the Better Business Bureau Wise Giving Alliance admitted in an open letter that the "overhead ratio" alone is a poor benchmark for evaluating non-profit organizations and encouraging donors to also consider other factors such as transparency To consider leadership and the work of the organization. A year later, the New York Times columnist Nicholas Kristof expressed the same criticism to The Chronicle of Philanthropy magazine .

In 2015 this criticism of the overhead ratio was reiterated by the “California Association of Nonprofits” in an open letter specifically to Charity Navigator. For this purpose, the organization used an analogy in the letter of a company that saves too much on administrative costs and would soon have to deal with problems such as a leaky roof or power outages. Such a company would also pay too little for adequate insurance and the training of employees would probably be neglected. The “California Association of Nonprofits” demanded that CharityNavigator should also evaluate volunteering. Charity Navigator representatives replied that they would like to rate this, but that volunteer hours are not included in the relevant tax forms. It was also criticized that Charity Navigator rated all overhead costs equally, so that fundraising and campaigns with an educational character were rated equally.

The Kiplinger's Personal Finance has recorded in the years 2006, 2007, 2008, 2011 and 2016 in its annual leaderboard Charity Navigator.

Web links

Individual evidence

  1. ↑ a b c d Jonathan Goodman: Charity Navigator. Learning to Give, December 1, 2009, accessed August 27, 2017 .
  2. ^ Mission, Vision, and Goals. Charity Navigator, accessed on August 27, 2017 .
  3. ↑ Josh Getlin: NY Charity Scandal Leads to indictments. In: Los Angeles Times . February 6, 2002, accessed August 27, 2017 .
  4. ^ Maryanne Murray Buechner: 50 Best Websites 2006. In: Time Magazine. Time.com , July 19, 2006, accessed August 27, 2017 .
  5. ↑ a b Mark Hryvna: New CEO at Charity Navigator. In: The Non Profit Times. August 5, 2015, accessed on August 27, 2017 .
  6. ↑ Sean Stannard-Stockton: The Worst (and Best) Way to Pick a Charity. In: Tactical Philanthropy. December 1, 2009, accessed August 27, 2017 .
  7. ^ A b Gary M. Stern: Charity Navigator: Identifying the Best Charities for Donations. Information Today, Inc., March 1, 2011, accessed August 27, 2017 .
  8. ↑ How Do We Decide To Post A CN Advisory? Charity Navigator, accessed on August 27, 2017 .
  9. ^ History. Charity Navigator, accessed on August 27, 2017 .
  10. ↑ Form 990 - Fiscal Year 2015. (PDF; 411 KB) Charity Navigator, accessed on August 27, 2017 (English).
  11. ↑ a b Annual Report 2016. (PDF; 4.56 MB) Charity Navigator, accessed on August 27, 2017 (English).
  12. ^ Board of Directors. Charity Navigator, accessed on August 27, 2017 .
  13. ↑ What Criteria Must A Charity Meet To Be Rated? Charity Navigator, accessed on August 27, 2017 .
  14. ^ Suzanne Perry: Correcting the overhead myth: How Dan Pallotta's TED Talk has begun to change the conversation. In: TED (conference) . March 13, 2014, accessed August 27, 2017 .
  15. ^ Caroline Bermudez: New Book Tells How to Inspire People to Make a Difference. In: The Chronicle of Philanthropy . September 15, 2014, accessed August 27, 2017 .
  16. ↑ Suzanne Perry: Calif. Nonprofit Association Urges Charity Navigator to Make 2 Big Changes. In: The Chronicle of Philanthropy . April 17, 2015, accessed on August 27, 2017 .
  17. ↑ Endorsements. Charity Navigator, accessed on August 27, 2017 .
  18. ^ Lisa Gerstner: The Best Personal Finance Websites, Apps and Software of 2016. In: Kiplinger's Personal Finance . December 2016, accessed on August 27, 2017 .