Checking Out Local Charities
Charity Navigator, the rating organization that assigns stars to nonprofits based on their achievement measured against its benchmarks, recently announced changes to its underlying ratings formula. Some two and a half years in the making, the new formulas are intended to provide a clearer picture of a nonprofit’s financial equilibrium, and likely will strike nonprofit outsiders as mind-numbingly technical. Changes that could have helped donors assess a charity’s results and impact were anticipated when TCB last wrote about Charity Navigator in January 2014. However, the measurement instruments to track impact are taking longer to develop than planned, and now are expected in another 12 months.
till, the new ratings formulas have resulted in an increase in the number of Minnesota nonprofits with the highest rating (four stars). There are now 80 such organizations in the state, which is a miniscule percentage of Minnesota nonprofits. They include Artspace Projects, Greater Minneapolis Crisis Nursery, Plymouth Christian Youth Center, and Summit Academy OIC, among others. Charity Navigator, which calls itself “the largest and most utilized charity ratings service that exists anywhere,” also self-reported more than 9 million visits to its website in 2015 and said that it has had an impact on at least $10 billion in charitable donations.
Yet most donors do not rely on an online guide like Charity Navigator to determine the recipients of their philanthropy. Instead, a mix of personal experiences and relationships, allegiance to a particular cause, and media reports are more likely drivers of individuals’ donations. According to the Giving USA annual report on charitable giving, more than 71 percent of all philanthropy comes from individual donors. In 2015, individuals gave $264.6 billion to charity. More Americans make charitable contributions than vote. Total giving from individuals, corporations, foundations and charitable bequests reached $373.3 billion, the largest amount since Giving USA began its reporting more than 60 years ago.
So how do people decide where to give and how can they make informed choices? Here are three places you could look for information on charities you’re considering.
- 1. The organization’s website. Perhaps obvious, but these days you can find a significant amount of relevant information from any charity’s website. To receive a high rating on Charity Navigator, for example, organizations must make their board list, senior staff, audited financial statements and tax returns available. Annual reports, evaluation data, and attendance and participation information also are commonly released. By combing through this data it is possible to be your own reporter and determine whether a charity meets your expectations for accountability, transparency and service, and whether its financial status appears sound.
- 2. Guidestar. Guidestar is a charities information website whose content is the tax returns delivered by charities to the IRS. Guidestar’s basic features are free once you register. You can easily search for a charity’s most recent Form 990, the tax return for a nonprofit organization, and read the financial disclosures made there. Form 990 also requires a charity to describe its mission and the main activities of the past year. Because these tax returns are now publicly available, an increasing number of nonprofits make sure that their 990s are not only financially accurate but also present a complete and accurate picture of their current programs and performance. More than 1.8 million charitable organizations are searchable in the Guidestar database. Guidestar Premium, a fee-based service, can be accessed via local libraries and includes even more information.
- 3. The Charities Review Council. A Minnesota organization, the council has developed accountability standards that donors can use to assess charities. The council operates independently of national rating organizations, applying its own locally developed standards for organizational effectiveness. Organizations participate by completing the online “Accountability Wizard” that helps them assess their effectiveness according to standards of financial health, governance, transparency, program evaluation and many others. The council’s website lists charities that have met or exceeded these measures.
There also are less traditional ways to research charities, beyond these formal, sanctioned sources.
- Check out the organization’s Facebook page and look at the kinds of engagement you find there. Does the charity have an up-to-date presence on Facebook and do you see significant interaction with constituents? What voice and tone does the organization use in its interactions?
- Search Twitter for references to the organization itself or hashtags that might be associated with it. What are people saying about the organization and how is the organization interacting with its supporters or critics?
- Sign up for an e-newsletter, if one is available. See what kinds of information the organization shares with its subscribers and how it offers ways to interact and learn about its programs and activities.
- Search Google on the organization, using both the image and news features, to see what you learn.
And yes, there’s Yelp. A surprising number of charities, especially those that serve the public, have user-ratings on platforms like Yelp or similar consumer rating sites. Arts organizations, youth centers, hospitals and clinics, and many other nonprofits are actively reviewed by their participants, making these sites interesting places to explore.
Running a nonprofit today requires actively monitoring both official and unofficial channels of information about your organization. Each of these sites and channels offers a different view into a nonprofit’s work, and any and all are valid as donor research tools. The most important thing to remember is to do your research. With so much information available, you’d be foolish not to make sure your charitable investments are going to healthy and effective nonprofits..
Sarah Lutman is a St. Paul-based independent consultant and writer for clients in the cultural, media and philanthropic sectors.