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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, February 22, 2021

Donor Perspective: Leveraging Charity Navigator to Benchmark deserving nonprofits

This is a follow up to the blog posted on December 8, 2020: "Donor Perspective: Leveraging Charity Navigator to find and support deserving nonprofits.”  

Charity Navigator has played an important role in my philanthropic planning -- my wife and I use their ratings to surface fiscally responsible and effective charities for consideration. With so many different organizations to consider supporting, we’ve found benchmarking an important step in selecting the right charity to make an investment in.

Donors can use benchmarking to see which charities are the best fit with their passions, have more impact, or are superior performers. If around 85% of nonprofits rated through the Star Rating System have 3 or more stars, why settle for less? In fact, 40% of the Star-rated nonprofits have 4 stars, so there are plenty of high-performing organizations to consider.

Charities' websites usually have more detailed information on their organization, mission, and financials. They also increasingly give details on their impact. There are several tools on Charity Navigator that can help -- I’ve outlined four of them we use to help with benchmarking below. 

  • Rating Profile: A profile comes up when you click on the name of a nonprofit. There is a section at the bottom of the profile of "Charities Performing Similar Types of Work." This gives you the nonprofit’s overall score compared to four similar nonprofits. You can then click on "Compare These Charities" to see a rack-up of all of the financial metrics and accountability/transparency criteria tracked by Charity Navigator for each of the five organizations.

  • Location: Charity Navigator's Advanced Search capability enables searching based on a state, city, or specific zip code. We have a friend who is retired and recently moved to Louisville, KY.  He asked for help finding and evaluating charities near his new home. Louisville has 44 Star-rated charities. 17 of them have 4 stars, spanning human services, arts, community development, and education. The friend selected several nonprofits to volunteer with and donate to, and he has hit the ground running in Louisville!
  • Top 10 Lists: These are a handy way to quickly look at highly related charities. Lists focus on things such as perfect impact scores and charities growing rapidly. You can then go to the rating profile and review more information on the nonprofit’s website.

  • Hot Topics: These highlight 3- and 4-star rated nonprofits focused on making an impact for specific causes. The causes are updated regularly. February's Topics include nonprofits focused on Black and African-American and Indigenous People as well as support for veterans and military service members. You can go directly to the rating profile on Charity Navigator and then visit the nonprofit’s website.

My wife and I take our giving seriously -- we want to make sure that our contributions are investments in the causes we care about most. By taking the time to benchmark organizations we’re considering, we feel more confident in the choices we’re making.

We’re excited by Charity Navigator’s plans to continue to enhance the capabilities within the Finance & Accountability beacon as well as expand the other beacons (Impact & Results; Leadership & Adaptability; and Culture & Community). With additional points of data that provide a more holistic view of what makes up a good, effective nonprofit, we’ll gain even further insight for making more informed decisions.

About the author:
The author, who wishes to remain anonymous, is a long-time supporter of Charity Navigator at a leadership level. He and his wife do more than donate to the causes they care about--they invest in their future. They dedicate their free time to closely working with the organizations they support to foster growth and innovation.


Unknown said...

Very helpful insights and makes sense. This is how I chose the charities we give to. Made some decision to start/stop giving to certain organizations as such.

kevinwparker said...

Thanks for the write-up. My position is that I'll give to a four-star charity without hesitation.

Three-star charities I look at more closely and will be chary of ones that fall short either on Accountability & Transparency or the Program Expenses - Fundraising Efficiency subset of the Financial dimension. The other aspects of the Financial score I am willing to forgive since the charity doesn't always have full control of those.

If I give to a two-star charity, there has to be a really good reason.

Oskar said...

I use a spreadsheet with a list of potential candidates. Starting from the CN Star rating, I subtract a number which represents a penalty due to high compensation, as follows: 0.1*(%of expenses). So if the high compensation for example is 10%, then I deduct 1 point. Then I sort the adjusted rating column in descending order and get my preferred charities at the top of the list. This just reflects my bias against high compensation, maybe it's sometimes justified; CN investigated this issue a few years back.