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How Are Charity Ratings Organizations Evaluating Your How are Charity Ratings Organizations Evaluating Your Charity? December 12, 2017 You’re scoping out prospective donors – while they do their homework on you Getting questions answered: • Who could best use my money? • How would they use it? • What kind of impact? • Where do I get the information to make an informed decision? Resources – beyond personal relationships: • Independent evaluators: Charity Navigator: “Intelligent Giving” • https://www.charitynavigator.org/ • 501c3 • Founded 2001 by Pat and Marion Dugan • Born out of the horrors of Hale House • Substituting the emotion with unbiased financial data • “Finding a charity you can trust” • 10+ million visitors per year What they do: • 4-star rating system based on formulas • Two major areas: • Financial Health • Accountability & Transparency • 9,000+ charities rated though provide unrated charities with info pages • Info free to public Who they evaluate: • Those required to file 990’s (but not 990-PF’s) • > $100 million in revenue in most recent year w/$500+k coming from private donors • Provided at least 7 years of Forms 990’s to CN • US-based charities registered with IRS, though scope of work can be international • Orgs who actively solicit donations • Type of charity not a consideration Financial Health • Use your 990 filings (no family foundations) to see where/how $ spent: • dedicated to programs • managing/administering operations • raising funds • Focus on how much of $1 donated spent on mission Accountability & Transparency • Added in 2011 - using your 990 filings plus your website to look at: • Governance practices • Independent audits and reports • Leadership salaries – and reasoning behind it • Board members, meeting minutes and related activities • Is there a donor privacy policy on your site • And more . How help donors: • Searchable list of charities (both rated and non-rated) by name or other features • Breakdown on categories and the sub-areas – showing what was included and not • Specific scores and financial reports • History of ratings/scores with acknowledgement of changes in evaluation process How help donors: • Different lists – “Top Ten Lists” including one of those with Perfect Scores • Advisories – the lists you don’t want to be on based on ethical or legal objective data • Low Concern • Moderate Concern • High Concern • Let’s look at live site What can you do • If an unrated organization – nothing directly. All info comes from IRS. Submit changes to 990’s to IRS. • If a rated organization – financial info comes from IRS, so amended 990 will be incorporated. Other info updates (changes in leadership; mission statements; etc.) through a login on site – will be evaluated by reviewer. What can you do • Be ready – started collecting data on results or “impact” and sometime in near future will begin to incorporate into ratings. CharityWatch: “You give wisely” • https://www.charitywatch.org/ • 501c3 • Founded 25 years ago as American Institute of Philanthropy (AIP) • Getting beyond the self-reported data • Adjust numbers based on research What they do: • More than tax filings – includes audit financial statements and annual reports • According to CharityWatch, ratings are most stringent in the sector – though fair. • Approx. 624 orgs reviewed – including social welfare groups (not eligible to receive tax- deductible donations (ACLU, Sierra Club, etc.) • Grade free to public Who they evaluate: • Those required to file 990’s (but not 990-PF’s) • > $1 million or more of public support each year • Are of interest to donors nationally • Been in existence 3+ years • Those of interest to their “members” – supporters Investigators • Getting beyond basic numbers to see what holes and/or what is not being represented • Directly quiz the nonprofit, when needed • Focus on how much of $1 donated is really spent on mission How help donors: • Searchable list of charities (both rated and non-rated) • A to F grade plus some aggregated/select financials available to public; specifics to members – those who pay an annual fee/donation to help support the research How help donors: • A few lists – “Top-Rated Charities” – less than 25 cents to raise a dollar – B+ or better grade • Top Compensation – for charities whose leaders receive high compensation (a blend of compensation, contribution to benefit plans and expense accounts/allowances) • High Assets – those holding more than 3 years of operating costs – members only • Let’s look at live site What can you do • Not much - beyond what you would do anyway – provide best information possible and if contacted, provide requested info. GuideStar: “Powering Philanthropy” • http://www.guidestar.org/ • 501c3 • Neutral – no ratings • Highly respected resource • All about transparency • Wants to include all 501c3 organizations – 1.8+ million organizations listed What they do: • Multi-prong approach – reported data via IRS; financial audits; donor info (some via GreatNonprofits) and self-reported information from nonprofit • “The search engine for nonprofit information” • Supports others - including funders and businesses collecting donations for nonprofits - like AmazonSmile • Verifies and informs Who they evaluate collect info about: • 1.8 million IRS-recognized tax exempt organizations • Faith-based nonprofits who aren’t required to register with IRS Wants comprehensive view: • Financial – both reported (filings) and audited • Details and insights not part of other profiles, including reviews from donors and volunteers of nonprofit (typically from GreatNonprofits) How helps donors, funders – and others: • Searchable list of charities by name or other features • Additional layers of detail and analytics available to members (foundations, typically) How helps donors, funders – and others: • Data (both free level and more detailed paid) available via API for automating information to be used in other ways – like providing crowdwise with the list of 501c3s and their addresses for crowdfunders. • Let’s look at live site What can you do • Complete your online profile – not everyone has (less than 150k at this point) • Invite those who love you to give their feedback at GreatNonprofits (a sister organization of GuideStar) – used as “color commentary” on GuideStar profiles GreatNonprofits: “Community-Sourced Stories” • http://www.greatnonprofits.org/ • 501c3 • Newest, most different – this is all about the people who are engaged with your organization – donors, constituents, participants, volunteers, community members • Sister organization to GuideStar – Zagat’s for nonprofits What they do: • Provide central hub for collecting stories about your work – and ratings • Post the specific stories/ratings for others to see specific details • “Gamification” of nonprofit rankings – badges/awards for reaching certain milestones (# or level of ratings) and opportunities to be featured – can be shared on your site & social media Who info about: • Any nonprofit – whether you’ve chosen to complete or “claim” your nonprofit or not How help donors: • Searchable list of charities by mission area or other features • Helps them better understand why others respect / donate to / volunteer with you • Human impact from your work – and how that is valued from the mouths of your clients and constituents • Let’s look at live site What can you do • Claim your profile! • Invite your inner circle to nominate and/or provide input • Share your participation via your site (“how to support”) So make sure you do these things… • If at all possible, provide more complete information • Invite others to weigh in • Plan for future – identify how to measure/ manage – and start collecting and sharing results and/or impact data Q&A Also, feel free to reach out to us anytime! Kevin LaManna: [email protected] or 312- 971-3111 Cassie Dennis: [email protected] or 312- 973-1112.
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