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Wednesday, October 14, 2020

ImpactMatters and Charity Navigator have joined forces to rate nonprofit impact

Written by Tamsin Chen, Elijah Goldberg and Masha Winchell — former staff of ImpactMatters and now members of Charity Navigator’s new Impact Unit. The Impact Unit leads the development of the Encompass Rating System’s Impact & Results beacon.

An announcement...We’re excited to share two very big pieces of news today.

ImpactMatters — the organization we started five years ago to help donors find high-impact nonprofits — has been acquired by Charity Navigator. As of today, we are officially part of the Charity Navigator team, tasked with developing the Impact & Results beacon of the new Encompass Rating System.

Today also marks the very first time that Charity Navigator is rating nonprofits on their impact — something it has long hoped to do in service of its mission to “make impactful philanthropy easier for all.” These ratings were originally produced by ImpactMatters and have now been adapted for the Encompass Rating System. We are so proud that our work has catalyzed Charity Navigator’s venture into impact rating.

It truly means a lot to each of us personally that our work has found a home at Charity Navigator. For Elijah, who co-founded ImpactMatters with Dean Karlan in 2015, this has been years of heartfelt hard work in the making. Tamsin, who’s seen the challenge of nonprofit monitoring and evaluation firsthand, is keen to build an impact data ecosystem that works for all. And Masha is excited for our work to reach that many more people under Charity Navigator so that it can have — you guessed it — an even greater impact.

The “holy grail”

Among nonprofit raters like Charity Navigator and ImpactMatters, impact has earned notoriety as the “holy grail” — and for good reason. Impact is foundational to a nonprofit’s existence, and so, many of us agree that it is something we would like to know about a nonprofit. But actually measuring impact is tough — much less doing it for thousands of nonprofits. There is simply no one-size-fits-all solution for measuring the impact of the very many, very varied nonprofits that exist.

Our methodology

To rate impact, we’ve had to embrace the complexity of the nonprofit sector. ImpactMatters (now, the Impact Unit at Charity Navigator) develops methodologies for one type of nonprofit program at a time (e.g., food banks, clean water, college scholarships). For each type of program, we build a mathematical model for estimating impact based on the research literature. And for each nonprofit, we fill the model with data from the nonprofit’s website, annual reports and financial statements. The result is an estimate of the nonprofit’s causal effect on the outcomes of its beneficiaries. We then weigh its impact against its programmatic cost, providing you with a measure of the amount of good achieved by your donation. This is the methodology behind the first 710 Impact & Results scores released today as part of the Encompass Rating System. (Nonprofits currently rated under Charity Navigator’s Star Rating System are unaffected.)

We’ll be the first to admit our methodology’s limitations. For starters, it works well for nonprofits that deliver charitable services directly to beneficiaries. But we’ll need a different methodology for nonprofits whose work may be very impactful but poses significant challenges to measurement, like advocacy, research and alliance-building. In the meantime, our ratings won’t penalize nonprofits for falling outside of our current methodological scope.

What’s next?

Today, we’re taking a moment to celebrate a historic day for our two organizations. Tomorrow, we have a lot of work to do! Growing the quantity and quality of our impact ratings will be challenging, to say the least. Without exaggeration, we cannot do this without your help. Please, send us your ideas for improving our methodology and tell us where we have erred. If you are a nonprofit, share your impact data with us; we are eager to work on a rating together.

Written by Tamsin Chen, Elijah Goldberg and Masha Winchell - the Impact Unit of Charity Navigator.

As a 501(c)(3) organization itself, Charity Navigator depends on public support to help donors make informed choices. Please consider investing in the future of Charity Navigator by making a donation today. Donate now >>

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