Yesterday, Charity Navigator launched a major update to their rating methodology. Going forward, they will begin to include areas of both accountability and transparency:
A major step forward in our efforts to revamp our rating system occurred on July 1st. We went live with the Accountability and Transparency methodology, along with showcasing the new information for one organization that we believe is a role model for the sector. Accountability and transparency are frequently used terms in our society that have very broad meanings. These terms can encompass everything that an organization reports on to all of its audiences. In the case of charities, these audiences include donors, clients, Board members, government regulators, and independent evaluators like Charity Navigator, among many others. Our focus in this new element to our rating system is on how the charity reports publicly – both on the IRS 990 and on its web site. We consider in our methodology whether the charity is making easily available, information regarding its governance practices, ethical practices, financial information, effectiveness and results. [emphasis ours]
At this stage, we are not in a position to make a judgment as to the proof of its self reported information, just whether or not it reports anything at all! Sadly, even this minimal requirement is not met by many charities. The tradition of charities keeping information “close to the vest” continues to be a major problem for the sector. With the addition of this new dimension to our rating system, we have the opportunity to showcase the most open organizations and hopefully encourage those who are more secretive to rethink their approach. How can you make a wise giving decision if information about the organization is unavailable to you? Implicit in all of this is our belief that, if an organization is not “donor friendly” and highly open about its activities and internal practices, it does not warrant your support.
We’re curious to see how this needed information plays out in the Jewish world, both among the organizations themselves and potential donors. On the organizational side, one global Jewish powerhouse (with a 4 star rating) told me last year, “we’re totally transparent; we tell our Board everything we do” (duh). On the donor/evaluator side, we know several individuals who make their judgment of an organizations effectiveness solely on the percent of administrative expense without considering, among other things, how well the organization delivers services (programs, or fulfills mission).
Charity Navigator is one of many valuable tools on the donor landscape. We’re glad to see them moving forward with their ratings model.