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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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Wednesday, November 30, 2011

Importance of Various Issues When Selecting a Charity

We asked donors and the charities to tell us how important various issues are when a donor is considering which charity to support. We wanted to see if there were in any gaps between what donors said was important and what charities believed their donors find to be important.
  • How Important is Accountability and Transparency (this includes ethics, good governance, disclosure practices)? The majority of donors (87%) indicated that this is a very important issue (rating it an 8, 9 or 10 on the scale of importance. In contrast, fewer of the charities (73%) believed their donors were especially interested in their Accountability and Transparency when considering whether or not to make a donation.  This mirrors what we’ve seen during the implementation of CN 2.0 (our expanded methodology that rates both Financial Health and Accountability & Transparency)  --- donors are very interested in these issues, yet many charities have failed to realize that until their donors question their Accountability & Transparency performance.
  • Not surprisingly, donors are very concerned about the CEO’s compensation (56% rating this issue 8, 9 or 10 on the scale of importance) when selecting a charity to support. But the charities’ didn’t recognize this as such an important issue for their donors (12%). There’s room for improvement here on both sides of the coin. Charities could do a better job explaining why their CEO’s pay is reasonable (and doing their benchmarking studies to ensure that it is appropriate). And donors need to understand that charities of a certain size must pay a decent salary to attract and retain competent leadership. Our CEO Compensation Study is a helpful tool for both donors and charities to better understand this issue.
  • Charities and donors see eye to eye on the importance of a charity’s Financial Health. 91% of donors and 81% of charities rated this issue an 8, 9 or 10 on the scale of importance.
  • Both charities and donors highly value a nonprofit’s results reporting (evidence of a charity’s effectiveness). On this issue, 89% of donors and 87% of charities rate it an 8, 9 or 10 on the scale of importance.
  • We also asked charities and donors to rate how important it is for donors to be familiar with the charity. Charities were more likely to see this as an important factor for their donors (81% rating it an 8, 9 or 10 on the scale of importance) than donors (65%). The charities comments, such as “a donor’s personal relationship with the solicitor is important” and the “donor’s personal connection to someone helped by the charity,” highlight their belief that a giver’s familiarity with the charity is of utmost importance. Although several studies support the charity's belief on this issue, our survey indicates that donors may be open to new charities. This demonstrates that there is an opportunity for charities with reasonable CEO pay, strong Financial Health, a commitment to Accountability & Transparency and evidence of results, to attract new supporters.
Visit our site for results of our Year-End Giving survey.

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