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Monday, July 25, 2022

Unifying the Star and Encompass Rating Systems: What Nonprofits Need to Know




On May 24, we announced our plan to release a single unified rating system in October 2022. This unification will bring together our legacy Charity Navigator 2.1 (Star) system with our Encompass Rating System, rating more than 200,000 nonprofits. This is the culmination of a two-year journey of research, consulting, experimenting, and iterating different approaches and lenses to rate nonprofits more thoroughly and accurately. We are proud that Encompass, the system that will power evaluations moving forward, is the most comprehensive and flexible rating framework available, providing objective metrics on nonprofit health and performance so that donors can find and give to the most impactful nonprofits.

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Here’s what you need to know if you are a rated nonprofit: 

  • Once the unification takes place, all charities, regardless of size or prior rating system, will receive a 0-4 Star Rating based on performance. Our twenty years of experience rating charities have revealed that our 0-4 ratings are intuitive and easily understood by the average
    Illustrated image of figure holding a sign with four stars
    donor and a familiar part of the Charity Navigator brand. This single rendering will enable users to easily compare charities based on the same criteria to feel confident in their giving choices.

  • The four-beacon Encompass Rating System will power all ratings moving forward. The four beacons are Impact & Results, Finance & Accountability, Leadership & Adaptability, and Culture & Community. It is worth noting that as we transition to a more comprehensive evaluation, it will take time for all nonprofits to receive a score for each beacon. Almost all rated organizations have the foundational Finance & Accountability beacon, which contains the financial health and governance metrics users have grown familiar with and trust. Currently, earning additional beacons is not mandatory. In the case of the Impact & Results beacon, not every organization is eligible at this time. No matter the number of beacons your organization has, it will still receive a 0-4 star overall rating, indicating that a nonprofit organization is trustworthy. However, earning additional beacons beyond Finance & Accountability can bolster your nonprofit’s overall rating in the unified system and increase visibility on our platform as donors are looking for this information.
     
  • In the short run, for the 9,000 organizations rated through Charity Navigator 2.1 (Star), current scores will become the Finance & Accountability score within the four-beacon Encompass Rating System. In early 2023, we will update the Finance & Accountability beacon to reflect our updated thinking on best practices and harmonize it with the methodology for other
    Star Rating Finance score rendering to Finance & Accountability rendering within the Encompass Rating
    rated organizations. This methodology will be published well in advance of the release so that organizations can review and make adjustments as needed.

  • Earn more beacons to give donors a full view of your organization's performance. In most cases, earning beacons improves a nonprofit's overall rating. Log in to the Nonprofit Portal to see what beacons your organization can earn.
    Four areas of organizational effectiveness within the Encompass Rating System
     
  • More refinement of our Rating system is coming in 2023. We will continue to review evidence and research about what drives nonprofit performance, add domains and metrics, and expand Impact & Results beacon eligibility to provide donors with the most trusted and comprehensive rating system available. We hope our work with the unified Encompass Rating System elevates high-performing and trustworthy nonprofits so they are discovered and financially supported by donors who are prepared to provide them with the resources they need to make a difference. 

Our mission is to make impactful giving easier for all by giving donors the information they need to inform their charitable giving. Under our unified system, all donors will be able to objectively compare nonprofit performance and impact and find organizations that align with their values and preferences. For nonprofits, the robust system allows them to tell stories beyond financial health and accountability, enabling them to be rigorously evaluated on impact and other dimensions of nonprofit performance.  The strength of this system lies in its overall rigor and objectivity, paired with the flexibility it provides donors to find impact nonprofits whose work and performance align with their values. 


Written by Laura Andes, Chief Programs Officer at Charity Navigator.

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