Largest Charity Evaluator Responds by Adjusting Ratings Benchmarks
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(HealthNewsDigest.com) – Glen Rock, N.J., – In response to the negative impact the recession has had on certain types of charities, Charity Navigator, America’s largest and most utilized charity evaluator, has adjusted the way in which it rates those charities.
Charity Navigator rates 5,500 of America’s best-known charities in order to help donors make informed giving decisions. Its methodology was designed, from the very start, to be both objective and fair. Rather than picking arbitrary benchmarks by which to compare and rate charities, Charity Navigator has always been guided by the real world data. This has lead Charity Navigator to establish different performance benchmarks for the different types of charities. For example, museums, with expensive collections and property to maintain, understandably have above-average administrative costs. Adjustments are made to the rating system so that museums are not penalized for spending slightly more in this area than other charities.
Analysts at Charity Navigator have been on the lookout for changes in the financial position of charities because of the recession. Their analysis of thousands of Forms 990 – informational tax returns charities file annually with the IRS – reveals that in 2009 certain types of charities began to feel the impact of the recession more dramatically than others. The research shows that nine different causes of charities were impacted enough to warrant a change to the benchmarks by which Charity Navigator assigns their scores.
Adjustments were needed to two metrics of the organizational capacity rating – primary revenue growth (a charity’s average revenue growth over the last 3 to 5 years) and program expense growth (a charity’s average increase in spending on programs over the last 3 to 5 years). The following causes received adjustments to both metrics:
* Museums
* Fundraising Organizations
* Religious Activities
This cause received adjustments only to its primary revenue growth score:
* Community Foundations
And these causes were issued new benchmarks for their program expense growth:
* Performing Arts
* Libraries, Historical Societies and Landmark Preservation
* Botanical Gardens, Parks, and Nature Centers
* Diseases, Disorders, and Disciplines
* Medical Research
“It comes as no surprise that many of the causes requiring adjustments are in the area of arts and culture,” said Charity Navigator president & CEO Ken Berger. “We know intuitively and historically that during recessions donors redirect their giving away from such charities towards those that provide assistance to those in need. Now that we have irrefutable data to substantiate this trend, we will immediately make the necessary modifications to our rating system to ensure that we continue to rate all charities fairly, especially during these challenging economic times.”
As a result of these changes, 97 charities have improved star ratings. Some of the well-known charities that have now received 4-star ratings because of this adjustment include: EarthShare, Breast Cancer Research Foundation, Metropolitan Museum of Art, and the American Lung Association, National Headquarters. 363 additional charities have improved scores. No charities received lower scores or ratings. These changes are just for ratings based on fiscal years starting with 2009 as the data did not warrant adjustments in earlier years. A complete list of the charities with improved ratings is available on the Charity Navigator website: www.charitynavigator.org/adjustedratings.
Charity Navigator’s ratings are accessible at no charge at http://www.charitynavigator.org/ and catalog the financial health of over 5,500 of America’s best-known charities. Charity Navigator recently added a new dimension to its rating system which includes a review of each charity’s commitment to accountability and transparency — tracking metrics such as whether or not the charity used an objective process to determine their CEO’s salary, whether or not the charity has a whistleblower and conflict of interest policy and whether it has made loan(s) to related parties. Its website offers a wide variety of tips and other tools to help donors make informed choices about where their contributions will be used most effectively this holiday season. Visit the guide at: www.charitynavigator.org/holiday.
About Charity Navigator
Charity Navigator is the largest charity evaluator in America and its website, http://www.charitynavigator.org/, attracts more visitors than all other charity rating groups combined. The organization helps guide intelligent giving by evaluating over 5,500 charities. Charity Navigator is a 501 (c)(3) organization which accepts no advertising or donations from the organizations it evaluates, ensuring unbiased evaluations. Charity Navigator, can be reached directly by telephone at (201) 818-1288, or by mail at 139 Harristown Road, Suite 201, Glen Rock, N.J., 07452.
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