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The team from Charity Navigator, the nation's largest independent charity evaluator and leading donor advocate, shares their thoughts on emerging nonprofit-sector issues and offers tips to better inform your intelligent giving decisions.

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Monday, August 29, 2016

Metric Mondays #2: Independent Board

Previously, we took a closer look at Program Expense Percentage. Today, we’ll dive into one of our most important Accountability & Transparency metrics: Independent Board of Directors.

Board independence is defined by the IRS, and it pertains to whether a member of an organization’s board has a personal financial stake in the organization. For our purposes, we are looking to see that independent board members outnumber non-independent members, so that decisions made by the organization’s board cannot be controlled by members with a financial stake. This ensures that those with a vested personal financial stake in the organization cannot control its board decisions. There are also requirements in the definition of board independence regarding familial relationships with principle officers; this ensures that relatives of individuals with a financial stake in the organization are not responsible for controlling board decisions.

Beyond simply requiring an independent majority, we also look to make sure there are at least five independent board members. Most organizations we rate have far more than this, but we believe that it is critical for an organization’s board to have diversity of thought and the capacity for full deliberation on decisions made, and having at minimum five board members ensures this. An independent board smaller than this will suffer, as it will overly rely on a small number of board members and may not make the best decisions possible for the organization.

Boards of directors with an independent majority and at least five independent members will have both the independence and the diversity of thinking that make for an effective decisionmaking body. Organizations that meet these criteria receive full credit for the metric. We consider this to be one of the most vital measures of an organization’s Accountability & Transparency, and lacking an independent board costs an organization 15 points from its Accountability & Transparency score.

To learn more about our Accountability & Transparency metrics, check out our Accountability & Transparency Methodology.

Tuesday, August 23, 2016

Tuesday's Giving Tip: Look for Charities with Strong Leadership

Good charities usually have formidable leaders, more so even than in the private sector. Look for a charity with a dynamic, proven leader who has been in his job for a while. Organizations with high turnover usually struggle, and the inability to retain quality leadership is often a red flag for instability.

Friday, August 19, 2016

How the First Ever Refugee Olympic Team Has Impacted Us Forever

Heading into the final days of the 2016 Summer Olympic Games in Rio De Janeiro, there have been a number of miscellaneous and diversified storylines centered around everything from athletes and countries to the conditions of the hosting city. Sports ranging from badminton, to handball, cycling, swimming and even equestrian dressing, highlight the thousands of phenomenal and diverse athletes that the globe encompasses. Regardless of what events these athletes pour their blood, sweat, and tears into, they are equally represented by their respective countries, and showcase it with pride when given the opportunity. This opportunity to be on the stage of a lifetime is granted at the hands of whichever country one belongs to, and the medals that hang around their neck glorify their individual achievements in addition to their nation’s pride.

However, before these 2016 games, the word opportunity could have very well been juxtaposed for some when referring to the Olympic Games. For the first time ever, the International Olympic Committee has given those who previously were denied representation the chance to feel like they belong.

The IOC comprised a 10 member team of refugees featuring athletes from the Democratic Republic of Congo, Ethiopia, South Sudan, and Syria. The symbolism behind this unprecedented action has highlighted the IOC’s mission for this decision to “act as a symbol of hope for refugees worldwide and bring global attention to the magnitude of the refugee crisis”.

The 10 person team consists of two Congolese refugee judo athletes, two Syrian swimmers, five South Sudanese runners, and an Ethiopian marathoner. For these athletes, the opportunity to represent themselves at the Rio 2016 Games is quite a distance, literally and figuratively, from the homelands in which they have been separated from.

During the Olympic opening ceremony, the Refugee team strode through the Parade of Nations displaying flags with the Olympic logo on them. The significance of that moment stretches far beyond just a parade, beyond the individual athletes, and beyond a flag, evident by a statement from Yusra Mardini. The Syrian swimmer gave the world a perspective of what this experience truly means to her, by saying “In the water, you forget which country you are from. You are a swimmer.”

As important and heartfelt as the story behind the first ever Refugee Olympic team is, it sheds light on an extremely prevalent issue within our global society today. The facts of the current world refugee crisis are astronomical, currently totaling up to over a world record 65 million people displaced around the world, with an estimated figure of about 20.2 million refugees fleeing wars and persecution, the most since 1992, according to the U.N. High Commissioner for Refugees (UNHCR).

With this world record of human displacement, compassion, empathy, and humanitarian aid is needed more than it ever has been before. Millions of people will live in exile for years to come, and be inaccessible to proper food, nutrition, shelter, health care, and many other life necessities. The highly rated charities listed here provide services for food, clothing, medical assistance, and more. Before you decide to make a donation, make sure that you know exactly what you would like it to accomplish and make sure that the charities in which you consider offer that specific type of aid.
Here are a number of 3 and 4-star charities with causes geared towards assisting the overall well being of those affected by the world refugee crisis:

Tuesday, August 16, 2016

Monday, August 15, 2016

Metric Mondays #1: Program Expense Percentage

Welcome to Metric Mondays! This series of blog posts will take a closer look at the metrics that make up our charity evaluations. The first metric we’ll be discussing is Program Expense Percentage. Let’s get to it!

 When comparing nonprofits, it is important to avoid the trap of only looking at an organization’s overhead. The “starvation cycle”, in which organizations spend as little as possible on overhead, can damage the stability and growth of a nonprofit. On the other hand, charities that do not spend a majority of their expenses on program are less effective at fulfilling their missions. We believe that program expense percentage is a vital indicator of financial health for a charity, as it shows that an organization is spending donor dollars on its mission. We use it as one of our seven metrics for evaluating Financial Health.

So what is program expense percentage? It is simply the ratio of money spent by a charity on mission-related programs and services compared to the amount of money the charity spent overall in a fiscal year. In our scoring system, a charity does not need to spend 100% on programs to get a perfect score on this metric; generally, if a charity spends 85% or more on program, it receives full credit for the metric. If a charity spends less than 50% on programs, it receives a score of 0 for the metric. Anything in between is prorated to a score between 0 and 10.

We currently only rate larger, established organizations, so our scoring ratios don’t necessarily translate to unrated organizations. For example, organizations just starting out tend to have lower program expense percentages as they make investments into their future infrastructure, and this is not a bad thing. If you are concerned about an organization having a lower program expense percentage in any one year, the simplest solution is to reach out and ask about it!

For more information about Program Expense Percentage, see our Financial Health Methodology. For more on scoring this metric, check out our Ratings Tables.

Tuesday, August 9, 2016

Youth Contributions Making More of a Difference Than Ever

Our daily endeavors often require us to cross the path of hundreds, maybe even thousands of people. Whether these encounters come by way of occupation, transportation, or leisure, we have naturally become conditioned to the fact that we share this world with roughly, 7,300,000,000 billion other human beings. Of this world population, about 18% are classified as “youth”, which totals up to about 1.1 billion people between the ages of 15 and 24. This age range consists of various and diverse groups of people, from teenagers acclimating themselves with high school, to bright eyed college students, the new generation of employees, and often times, our most creative thinkers.

Every year on August 12th, the United Nations (UN) honors and celebrates the achievements and endless youth contributions put forth towards improving global society. International Youth Day, as it is called, features various activities that encourage the youth’s progressive participation in developing human sustainability and engagement, culminated by the phrase “Youth Civic Engagement”. These activities include: conferences on a wide range of topics, from education and poverty, to overall health and environment, in addition to concerts promoting youth entertainment, various sporting events, and mobile exhibitions showcasing the accomplishments of young people.

One of the best investments anyone can make, is in the future of our society. Now the means of that investment may vary in its application, but the efforts of anyone looking to sustain human development from its root, starts with the upcoming generation. Whether it be through lending a helping hand via volunteering, spending more time nourishing your local youth’s talents in creative ways, or simply donating a few dollars to charities geared towards youth development , there are numerous efforts that can lead to your being a supporter of the up and comers of the world.

For your convenience, we have put together a list of 3 and 4 star charities that take on the mission of benefiting global youth. They do so in hopes that initiatives such as “International Youth Day” can continue to be prominent and reflective of the amazing contributions that our young people have made and will continue to make moving forward. If you would like to donate to any one of the listed charities, it is as simple as clicking their page link and donating through our Giving Basket.

If you want to support the empowerment and ascension of our youth, then you might want to consider supporting one of these 3 or 4 star charities: K.I.D.S./Fashion Delivers, ISEF Foundation, Kids Alive International, buildON, or American Friends of Migdal Ohr.

Friday, August 5, 2016

Support Team USA's Current and Future Athletes

More than 550 athletes from Team USA will be competing in the 2016 Summer Olympics which starts today in Rio. The exceptional athletes who’ve earned a spot on this year’s Olympic team wouldn’t be there without considerable emotional and financial support.  Since Team USA’s athletes do not receive support from the government, they rely on commercial sponsors and plenty of donations.  If you want to help give Team USA's athletes everything they need to make our country proud, then consider supporting one of the official Olympic charities.

Tuesday, August 2, 2016

Questions To Ask Charities Before Donating

When investigating a charity’s performance to determine if it is worthy of your support, Charity Navigator’s ratings are your best place to start. We believe there are two things every donor should do before donating. First, check Charity Navigator’s evaluation of the charity’s financial health and accountability and transparency practices. Then, reach out to the charity! Speaking to a charity directly can provide you with greater understanding about its programs, mission, and goals. We’ve developed these questions to help guide your conversation with the charity you’re thinking of supporting.
  1. What is your organization’s mission?
    If a charity struggles in explaining its mission and its programs, it will probably struggle in delivering those programs.  Healthy organizations know exactly who they are, what they do, and why they are needed.
  1. What are your organization’s goals?
    Goals are a necessary tool to measure success. Without establishing clear goals, it’s challenging to measure success. If a charity can not communicate its goals, both short and long term, it is difficult for a donor to know what the charity is working towards.  
  1. What progress is your organization making towards its goals?
    Ask your organization what it has done to make the issue it confronts better.  Can the organization demonstrate how their actions have impacted their progress?
  1. What sources are available to increase my confidence in your work?
    Our research has shown that majority of charities are responsible, honest, and well-managed. Healthy charities demonstrate transparency. Documents such as the organization’s form 990 and audited financials statement should be readily available for donors to review.
Before making a final giving decision, and based on the answers you receive ask yourself if this is an organization whose mission you stand behind,and if you are willing to make a long-term commitment to it. We like to think of intelligent giving more akin to marriage than dating. So we recommend that donors take the time, upfront, to find organizations they can support for many years to come. And when they find that charity, they should feel confident in giving it their financial support and telling it that they’ll be there through thick and thin. We believe that only then will long-term, sustainable change take place.

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