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- Ever taken a good look at Charity Navigator?
Ever taken a good look at Charity Navigator?
75% of the giving in the U.S. is given by individual donors, not to or through foundations. You think looking through 150 proposals is tough - how are they supposed to figure out which of 1.5 million well-meaning organizations to fund? Currently, the "leading" online resource for helping them figure this out is Charity Navigator ... and that is nothing short of a tragedy, for them and the people they're trying to help.
To its credit, Charity Navigator is completely transparent with its methodology, which you can read about in all its detail right here. Unfortunately, this methodology is completely useless in separating the good from the better.
The cornerstone of the rating is the program expenses divided by total expenses, or "how much of your dollar 'really' goes to the charitable purpose." This may be useful in weeding out the charities that are literally trying to scam you, but it is a backwards way to figuring out who actually helps people as effectively as possible. Great businesses have great people (who need high salaries); great infrastructure (including technology); and constant self-evaluation. All of these are "overhead." Nobody tries to minimize overhead in business - they just try to get things done as well as possible, and that usually involves a lot of "overhead" because the quality of your plan is so much more important than the size of your budget. The emphasis on "low overhead" in charity means that charities are trying to do one of the most difficult things in the world - helping people - while skimping on salaries, technology, and evaluation. We've seen the results first hand, and we believe the needy deserve better.
The rest of Charity Navigator's criteria are even more nonsensical. Charities are rewarded for having growing revenues (i.e., good fundraisers) and growing expenses (so apparently finishing a project or reducing costs is a bad thing). They're rewarded for accumulating large amounts of assets rather than spending (makes sense sometimes, no sense other times - not a reasonable rule). Maybe the "fundraising efficiency" metric would have some meaning if ability to raise funds were at all connected to ability to help people ... but that's just the problem. It isn't, as long as donors have no sources of real information.
The Gates Foundation, and other major grantmakers and megadonors, wouldn't rely on this stuff in a million years. They have their own staffs; they question charities thoroughly; they evaluate them by doing difficult studies; in short, they gather information on what charities actually do and whether it actually works. This takes money and time, and a heck of a lot more than a glance at the IRS Form 990.
What's too bad is that these grantmakers don't and won't share any of what they find. So they're doing the useful research and hiding it in a safe; meanwhile, 75% of the pie has absolutely nothing to go on except for ratings that barely narrow the field and border on farcical. That's why I think it's about time for the world's most transparent grantmaker, and that's why I'm devoting myself to GiveWell. Please question us; please criticize us; please don't dismiss us as a Charity Navigator knockoff.
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- Awesome
1 day 9 hours ago - Many thanks Laura
2 days 17 hours ago - Great list of resources Beth
2 days 18 hours ago
Comments
Actually....
...fiscal responsibility and overhead are fairly good indicators of a charity's effectiveness, efficiency and responsibility regarding donor dollars and its own operations. Charity Nav also shows executive level salaries; people should dig into that info as well. Hint: nonprofits having CEOs who earn over, let's say $400K/year should probably give one pause.
So, the service that Charity Nav provides is a valid and valuable one. It might be just one stop online when learning more about a particular charity, but it's definitely a valid one.
thanks for the blog entry
I'm sorry I am only finding this now. I feel that all of these criticisms of CharityNavigator are quite valid, and I've had many of them myself.
I too have been frustrated
I too have been frustrated by the fact that Charity Navigator does not rate effectiveness. So I was interested in Givewell. But I went to the website and as far as I could tell, an individual would need to pay $490 to subscribe. For all practical urposes, that makes Givewell inaccessible to the individual donor.
GiveWell.net
Hello, I'm guessing you are looking at givewell.com.au, an Australian organization that is unrelated to the GiveWell described here. This GiveWell is located at www.GiveWell.net, and makes all of the reasoning behind our decisions fully public; we do not charge any fees, nor have we at any point. I hope you find our research helpful; please let me know if you have any questions.
Thanks,
Holden Karnofsky
Program Officer, GiveWell
Charity Navigator's Unintended Consequences
By relying only on the 990 report, Charity Navigator gives an inaccurate snapshot of an organization's fiscal and management health. For example, when one switches its fiscal year from calendar year to mid-year. The half-year on the six-month report may the half that had historically been low on revenue, while costs were fixed. Another example is around new fundraising events or activities. Unless the organization is extremely lucky the first year, the real cost to raise a dollar might be close to a dollar. But you expect that the event will build momentum and become profitable over a couple of years. Certainly in private business, you expect an up-front cost for a new product line! I believe it's called an investment.
By going strictly by the numbers, Charity Navigator makes no attempt to evaluate the effectiveness of the actual PROGRAMS of the organization. My last employer was clearly considered the leader of the pack by its peers. Yet Charity Navigator zapped us based strictly on the 990.
I know it would be hard to get an objective evaluation of an organization's effectiveness. However, as a start, I recommend allowing us to at least offer an explanation by way of a footnote!
-- Cliff Sanderlin, Seattle
"The Gates Foundation, and
"The Gates Foundation, and other major grantmakers and megadonors, wouldn't rely on this stuff in a million years."
I don't know about Gates, but most private foundations use these basic metrics and are actually the source of much of the efforts to push down "administrative" costs. The level of analysis in major private foundations is far less in depth than you might imagine, at least in my experience.
What is missing is a equivalent of "profit" in the nonprofit sector. We compare businesses based on profitability and invest in profitable ones and let unprofitable ones die.
In the nonprofit sector, the analog is a measurable outcome... For example, what is the average cost to house a homeless person? The outcome is having a roof over one's head for the night. The cost should be known in the sector, published widely (good project for government or private foundations), and aggregated into GiveWell and Charity Navigator.
But it is far more complex... roof + food for one night? Not homeless one year from the intervention? Some other outcome measurement?
Transparency is a huge positive.... that is the first step. But the real challenge is to provide methods for donors to make apples to apples comparisons.
David Geilhufe
CivicSpace
Apples to apples
You're right, I am specifically thinking of the best foundations, including Gates - I can't say that all the foundations in the nation are going beyond the "overhead measure" (in fact, I have very little idea of what any of them do, due to lack of transparency), but I know that the ones who think the most and care the most are investigating charities in depth.
An "apples to apples" comparison is one of the hardest, as well as most important, things to do, as you point out. We have struggled with how to give donors control over philosophical decisions (we don't want our reviews to reflect our own philosophical views of the value of things like improving education vs. fighting disease), while still meaningfully comparing charities. Our standing approach, written up in detail in our business plan and summarized informally on our blog, is to separate charities into "causes" and try to compare charities within causes, not between them, knowing that we will never have all the information necessary to make a perfect apples-to-apples comparison. So two disease-fighting charities are compared on their ability to save lives; two education-centered charities are compared on their ability to give students a good academic grounding.
As you recognize, this endeavor is so qualitatively different form Charity Navigator that it takes a whole new approach. It's a difficult and ambitious project, but the benefits of helping even a tiny part of the huge pool of donors would be so enormous. If you question our ability to carry it out, I highly suggest you look more into our project - the blog and the business plan - for more on how we think and how we've wrestled with the tough questions.
You have my vote!
With so many - if not all - of the organizations proposing projects here being in need of additional support and/or exposure, this just makes sense.
For organizations that are truly just trying to meet needs and not trying to build dynasties, this just makes sense.
For donors who want to give but want to ensure what they give is used productively, this just makes sense.
For true accountability on both sides of the philanthropic fence, this just makes sense.
Again... you have my vote! Well done! When this is all over, I need to talk with you.
Randy Roberson - Disaster Logistics
H.E.L.P.
rroberson@disasterlogistics.org
www.disasterlogistics.org
I went to your homepage to
I went to your homepage to see what you are doing and how. The link to your Board is broken...conveniently? When I googled 'disaster logistics' I found that particular catch phrase used by educational and governmental entities to headline seminars and papers. The Accountability page gives little information about your non-profit, such as how much you are paid. I think you are a person with very good marketing skills but that will not persuade me to donate to your organization, although your giving intentions may be legitimate. With the proliferation of non-profits increasing exponentially, seeking information about each is a monumental task. I will definitely continue to rely with confidence upon the transparent methodology of Charity Navigator. I have a sneaking suspicion, however, that I will never see your organization listed among those evaluated by Charity Navigator.
FYI, I am not employed by a non-profit nor an evaluating agency such as Charity Navigator.
Elena deCastro
Austin TX
overhead
"Nobody tries to minimize overhead in business"
Seriously? What business doesn't try to minimize overhead? Mature businesses definately DO try to minimze overhead, while paying overhead that is necessary.
In fairness to Charity
In fairness to Charity Nagigator: I believe that they do not claim to provide the only bases for evaluating or donating money to a charity. They are simply providing available data on the financial viability of an organization. The value of its mission or effectiveness, though ultimately the most important issues, are beyond its scope.
A fine organization, such as, the NAACP, receives a low overall rating because of the financial evaluation. Of course, historically it has been a vital and important organization in American history. Charity Navigator does not state that one should not contribute to the NAACP. Because of its fiscal difficulties, one may decide that they need one's money more than other organizations. However, it is reasonable to be clear about why one is donating to an organization.
I do think that you are right in pointing out Charity Navigator's methodology in order that its ratings do not form the only framework for charitable donation.