Charity Navigator Revamps Ratings System to Evaluate Charities' Actual Results


Charity Navigator, a nonprofit that evaluates American charities for efficiency and responsiveness, has announced a significant change to its ratings system: in addition to evaluating "financial health" and "transparency," the organization will start to assess charities based on their results.


Through a short video and concept note, Charity Navigator President and CEO Ken Berger explained the (seemingly obvious) motivation behind the decision:

Why is it important that Charity Navigator add a review of each charity's Results Reporting to its methodology? Because mission-related results are the very reason that charities exist! 

Criticizing the current state of affairs, the concept note continued:

The current norm of charity reporting, as represented by websites and annual reports, is little more than promotional marketing. It is not possible today to make even preliminary assessments of the effectiveness of the overwhelming majority of America's charities on the basis of what those charities publish about their results.

How will Charity Navigator actually gather and measure results? Berger provided a few illustrations of how the evaluation system might look. For instance, Charity Navigator might distribute questionnaires to charity recipients to try to gauge their satisfaction with the service. It also might collect a charity's self-reported data on how much it has accomplished certain objectives, such as the number of successful surgeries performed on impoverished children. Fundamentally, charities will need to prove that they are meeting certain performance criteria, are demonstrating an understanding of their weaknesses, and have plans in place to improve. 

Some charity leaders have expressed their reservations. Doctors Without Borders Executive Director Sophie Delaunay told NPR she's wary of a system that would grade a nonprofit based on its results, since they could be too difficult to measure. For instance, distributing surveys in a war zone would be "totally unrealistic."

"There is no way we're going to send a questionnaire to our patients, who are displaced and in a dramatic state, about whether they are satisfied with our care," Delaunay said.

In the concept note, Charity Navigator acknowledged that there are inherent challenges to measuring a charity's outcomes. Berger stated that questionnaires are just one example of how they will evaluate results. 

While using outcome-based evaluations may seem like an obvious approach, the practice has only been gaining mainstream popularity over the past decade. Before the mid-2000's, there were virtually no prominent charity watchdog groups devoted to measuring "effective giving." Today, there are many, including Innovations for Poverty Action, Good Intentions Are Not EnoughGiveWell and Giving What We Can.

Charity Navigator's decision to jump on board may have also been influenced by growing criticism that one of its main approaches to measuring effectiveness — calculating how much charities allocate towards administrative costs — may be misguided. The most famous criticisms come from fundraiser Dan Pallotta, who delivered a TED talk and sat down with Reason TV, to discuss how we should not "equate frugality with morality" when evaluating non-profits because large overhead costs are often necessary for high-quality projects. These costs, Pallotta says, can be used to help attract top-notch leaders through competitive salaries, amplify a non-profit's reach through advertising, and attract risk capital through profit. Instead, Pallotta suggests, we should view non-profits more like businesses and judge them on the breadth of their accomplishments. 

The implications of Charity Navigator's decision could be pretty significant. The American non-profit and humanitarian aid sector is becoming increasingly powerful: it has grown by 25% since 2001 and handles over $200 billion in donations every year. Donors want to be sure that that money's going to the right places. Perhaps even more importantly, researchers have used Charity Navigator's data on spending habits to show that private charities are generally much more efficient than government welfare agencies in servicing the poor. With Charity Navigator's new Results Reporting, we may learn that private charities also have greater impacts. 

NEXT: White House Calls for Six-Week Delay in Obamacare Personal Mandate

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  1. Are they going to rate them on what percentage of their “charity” is not actually charity but taxpayer money that they get for being government contractors.

    For example many of the so-called refugee charities in the US seen to get most of the money to support their refugee programs from the government at various levels.

    1. It’s easy to be charitable when it’s other peoples money you are handing out.

      1. Not just handing out, but getting yourself as salary, company car, travel, and other perks.

  2. Notice how people tend to be much more vigilant and suspicious regarding charities they donate to than they are of government programs.

    1. I’ve always said government programs should be subject to cost/benefit analysis. You would of course have social costs and benefits in addition to the financial ones but I’m tired of hearing how I should support some program because it’s intentions are good. How many programs have been going on for decades with no real accountability. You should not be able to continue any program without some method of measuring it’s direct success.

  3. I think this is a great idea, but i will still be looking at administration costs as well.

  4. “Doctors Without Borders Executive Director Sophie Delaunay told NPR she’s wary of a system that would grade a nonprofit based on its results”

    Because, as we all know, it’s not results that matter, only intentions.

    1. This reminds me of the arguments against evaluating teacher performance based on student outcomes.

      At some point you should be able to grade the teachers and get rid of the bad ones who aren’t teaching well, but I agree that there is only so much a teacher can do to help students. Similarly, there should be an evaluation system for charities, but I get the argument that there is only so much a charity can do.

      I give to Plan USA, and they have decent scores from Charity Navigator, but their process is centered around getting the community that is being helped to buy in to the programs, and if the community doesn’t really want to there is only so much the charity can do.

      1. Student inputs are vastly different, and we as a nation are not prepared to look too closely at that.

    2. It doesn’t need to be perfect, Ms. Delaunay, just less imperfect.

      1. When I have any cash left over after the gubmint rapes my paycheck, and throw any charity some of it, I worry how much is eaten up by overhead. Some has to go into further fundraising, unless that is separately funded.

        What sets off alarm bells from me is if my bucks are just being used to fund grant applications to gubmint programs, or, even worse, lobbying to get the feds or states to spend even more tax money.

        What metric will be used to judge effectiveness of such “charities?”

        Kevin R

    3. My non-profit “m?decins sans culottes”, sadly, never got off the ground.

      Perhaps this program will inspire me to make another attempt.

  5. Is there any reason to watch the World Series if you aren’t a fan of either team? Buck and McCarver are awful.

    1. I’m a Sox fan and I’m probably not going to watch the whole thing. I suggest searching FIRE JOE MORGAN with the terms “McCarver” or “Buck” to pass the time instead.

      1. Isn’t McCarver retiring after this season?

        Joe Buck, on the other hand, is lousy at NFL games, too. Although Aikman might be even worse.

        1. Oh, and Fox needs to fire Gus Johnson too.

    2. Then again, I am enjoying watching the Cardinals fail like this.

      1. I am definitely not watching all of this if the Cards can’t even play defense. I was worried about their bullpen, but this is reminding me of 2004 a little bit.

        1. I’m a Dodger fan, so after Kershaw imploded in the middle of the last game I stopped watching and didn’t tune in again until the 7th inning when Vin Scully was back calling the game on the radio.

          1. My Dad was a Dodgers fan. Too bad the team hasn’t existed since the fall of `57.

            Rumor has it their place in the NL was taken by some west coast squad….?

            Kevin R

            1. My dad is a Spankees fan. I’ve been enjoying this century so far.

  6. So it begins: White House to delay individual mandate by as much as 6 weeks

    Amid mounting criticism, the White House said Wednesday that it plans to soften the deadline for when Americans are required to purchase health insurance. The date by when Americans would be penalized for not having signed up for health insurance could be “slid” back by as much as six weeks, administration officials told NBC News.

    But it was not immediately clear Wednesday whether the adjustment to a cornerstone of the Affordable Care Act would need to be approved by Congress or is just change in interpretation of what the March 31 deadline represents.

    As the law stands now, individuals are expected to be insured by March 31 to avoid a financial penalty. But under the prospective change, individuals will only be expected to have started enrollment by that date.

    Meanwhile, Democratic Sen. Joe Manchin of West Virginia was already drafting a bill earlier Wednesday to delay the mandate for a year, his spokesman said. And Sen. Jeanne Shaheen, D-NH, on Wednesday called for an extension of the open enrollment period to allow people more time to purchase coverage; Democratic Sen. Mark Pryor of Arkansas said he supported Shaheen’s “common sense idea” in a statement.

    1. Congratulations, now you’ve caused adverse selection in the pools. Here comes death spiral.

      Oh, haven’t confirmed, but heard that insurance companies have until 10/31 to pull out of the exchanges. Friday news dump might be interesting this week, and next week could be fun, too.

      1. “Congratulations, now you’ve caused adverse selection in the pools” – you have to remember, a lot of leftists seriously do not believe in things like “adverse selection”, “moral hazard”, or even “supply and demand”. They honest-to-dog think these things are just mumbo-jumbo made up by evil right-wing economists to justify oppressing the poor.

    2. Oh, and pretty sure six weeks won’t do shit. Same problems will plague it, and then they’ll open the floodgates to 10 million who lost insurance because of Obamacare.

    3. When a democrat suggests it, it’s common sense. When a republican suggests it, it is extortion and treason. Yay politics!

  7. I give time and money to the Special Olympics. It’s nice to not have to worry about outcomes (other than the participants having a good time).

  8. Can we roll that beautiful bean footage or what?

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