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Monday, March 1, 2021

Inside the Encompass Ratings System Culture & Community Beacon Launch

Written by Stephen Rockwell, Chief Ratings Technology Officer, and Ofira Bondorowsky,
Director of Ratings & Nonprofit Engagement, at Charity Navigator. Stephen leads
the team of charity analysts, program specialists, and development engineers
that launched the new Encompass rating methodology and criteria. Ofira facilitated
the development of Constituent Feedback measures with our partners as part of her
responsibilities to lead Charity Navigator’s engagement with nonprofit organizations.

Charity Navigator’s Encompass Rating System evolution marks another significant milestone with our Beta V3 release today. We launched Encompass last July with the intention of rapidly iterating our ratings by both adding new domains of evaluation and improving on existing domains.  Beta V3 does both:

  • Culture & Community Beacon - This beacon represents the third out of four beacons that comprise Encompass. The initial evaluative domain gives credit to nonprofit organizations that indicate that they engage in Constituent Feedback practices, that they listen to the people whom they serve. Over time we intend to include a number of other domains within the beacon including: assessment of an organization's people operations/HR, Diversity, Equity, and Inclusion (DEI) measures, connectedness and engagement with the constituents and communities served, and reputation.

  • Finance & Accountability Beacon - The next iteration of this beacon includes more relaxed financial metrics giving partial credit to nonprofits that come close to the threshold measure and four additional Accountability & Transparency measures that nonprofits provide on the IRS form 990.

In Charity Navigator’s twenty year existence, our Star Rating System saw three new releases.  We’ve seen the same amount of evolution in Encompass in less than a year. Encompass is giving us the space to do deep exploration of new domains that complete the picture of nonprofit impact and effectiveness. We do so in collaboration and consultation with nonprofit leaders, experts and donors who all contribute to our understanding of what matters for those that make a difference through their work and their gifts.  

With rapid iteration cycles, it is important for donors and nonprofits to know what to expect from us as Encompass evolves. There are two important developments to note:

  • 3 Releases Annually - We anticipate that Encompass will continue to evolve with 3 releases every year - spring, summer, and fall, avoiding any ratings changes during the year-end giving season. In addition to the ratings evolution, each new release provides nonprofits the opportunity to improve their practices and scores in a more timely manner.

  • Nonprofit portal - To that end, Charity Navigator will launch a portal for nonprofits later this spring. The portal will provide the opportunity for organizations to learn more about their rating, submit data to us to improve their rating, and get assistance on how to improve their practices.

Let’s now get under the hood to understand how and why Charity Navigator is evaluating  constituent feedback practices.

First Version of Culture & Community Beacon - Why Constituent Feedback?

Constituent Feedback is a practice whereby a nonprofit collects feedback from its beneficiaries and then utilizes what it learns in its decision-making process. Much in the same way customer satisfaction ratings and surveys are often used by retailers to improve their products and services, an increasing network of nonprofit experts are finding through their research and practice that organizations that collect feedback from their beneficiaries and utilize what they learn in their decision-making process may be more effective in pursuit of their stated mission and goals. 

Our partners at Feedback Labs have documented several studies suggesting that beyond achieving organizational goals, nonprofits that are attentive and responsive to concerns raised by beneficiaries establish stronger relationships with the people they serve, promote greater equity and empower constituents in ways that can help to ensure better long-term outcomes. Beyond the potential impact on the organization's direct beneficiaries, high quality feedback practices may also hold the key to establishing an organizational culture of diversity, equity, and inclusion, which may contribute to the wellbeing of staff, as well as the community served by the nonprofit. 

We designed the Culture & Community beacon to encourage donors to consider important metrics and practices, like constituent feedback, that extend beyond conventional financial assessments. It’s an iterative and lengthy process, but we hope you stay tuned as we continue to build a robust Encompass Rating System that will make impactful philanthropy easier for all.

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