Charity Navigator
Charity Navigator is a 501(c)(3) nonprofit organization that evaluates charitable organizations. They claim to have evaluated nearly 200,000 nonprofits in order for charitable givers to donate with confidence. [1]
Contents
Types of Charities Rated
Charity Navigator does not attempt, by its own admission, to rate every charity. It limits its ratings to charities meeting the following criteria:
- It must be registered with the Internal Revenue Service as 501(c)(3) organizations, and must file an IRS Form 990 (Return of Organization Exempt From Income Tax). (As such, churches -- which are categorically exempt from filing -- are not reviewed.)
- It must have generated at least $1 million in revenue for the last two consecutive years.
- It must have been in existence for at least seven years and have filed a Form 990 in each of those years.
- It must be based in the United States (though its scope can be international).
- It must have at least $500,000 in public support, and such support must constitute at least 40% of its revenue for the last two consecutive years.
- At least 1% of its expenses must be allocated to fundraising for the last three consecutive years, and at least 1% of its expenses must be allocated to administrative costs for the last three consecutive years.
- The following types of charities, even if meeting the criteria above, are categorically not reviewed:
- land trusts
- hospitals and hospital foundations
- universities, colleges, private elementary and secondary schools, and their foundations
- sorority and fraternity foundations
- donor advised funds
- fiscal sponsors
Classification and Rating Methodology
Charity Navigator classifies those charities it rates under 38 different Causes, grouped under 11 broadly-defined Categories. It uses the following criteria to determine the Cause and Category:
- First, the activity code the charity itself uses to file its Form 990
- Second, by examination of the charity's programs and services
- Third, by examination of the charity's financial statements
The rating methodology uses seven key "financial health" and 17 key "accountability and transparency" metrics to calculate an overall score, which is not a sum but a measurement of the distance between 100 (a perfect score in its system) and the charity's actual score; the smaller the distance the higher the score. Charity Navigator then assigns a charity a "star rating" based on the score:
- A score >=90 earns four stars
- A score between 80-90 earns three stars
- A score between 70-80 earns two stars
- A score between 55-79 earns one star
- A score <55 earns no stars
- Any charity which is placed on an "advisory" is not rated
Whenever Charity Navigator learns of information about the conduct or operations of a charity (or an "alleged charity"), after internal review (it lacks, and therefore does not attempt, to verify the validity of the information) it decides whether to issue an advisory, and at what level:
- Low Concern: the advisory appears in conjunction with the current rating, and remains for a minimum of six months
- Medium and High Concerns: the advisory replaces the rating, and remains for a minimum of 12 months
- CN may consider removing the advisory sooner if the charity can provide verifiable information that the issue was resolved and steps have been taken to prevent reoccurrence.
