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Angel Website of the Month

Charity Navigator

Charity Navigator

It is important to give. It is also important to give wisely. Whether you are donating $10.00 or $10,000, it is crucial to be an informed donor. The Angelrock Project feels Charity Navigaor is just the tool that we all need to make informed decisions as we give back to society.

Overview

Founded in 2001, Charity Navigator has become the nation's largest and most-utilized evaluator of charities. In their quest to help donors, their team of professional analysts has examined tens of thousands of non-profit financial documents. As a result, they know as much about the true fiscal operations of charities as anyone. They have used this knowledge to develop an unbiased, objective, numbers-based rating system to assess the financial health of over 5,000 of America's best-known charities.

Specifically, Charity Navigator's rating system examines two broad areas of a charity's financial health -- how responsibly it functions day to day as well as how well positioned it is to sustain its programs over time. Each charity is then awarded an overall rating, ranging from zero to four stars. To help donors avoid becoming victims of mailing-list appeals, each charity's commitment to keeping donors' personal information confidential is assessed. The site is easily navigable by charity name, location or type of activity and also features opinion pieces by Charity Navigator experts, donation tips, and top-10 and bottom-10 lists which rank efficient and inefficient organizations in a number of categories.

Methodology

Charity Navigator works to guide intelligent giving. Their goal is to help people give to charity with confidence. At the same time, they aim to help charities by shining lights on truly effective organizations. In doing so, they believe they can help ensure that charitable giving keeps pace with the growing need for charitable programs. Their approach to rating charities is driven by those two objectives: helping givers and celebrating the work of charities.

How Charity Navigator Rate Charities?

Charity Navigator rate charities by evaluating two broad areas of financial health, their organizational efficiency and their organizational capacity. They use a set of financial ratios or performance categories to rate each of these two areas, and issue an overall rating that combines the charity's performance in both areas. Their ratings show givers how efficiently they believe a charity will use their support today, and to what extent the charities are growing their programs and services over time. They provide these ratings so that givers can make intelligent giving decisions, and so that the philanthropic community can more effectively monitor itself.

At its most general level, the rating system is relatively simple. They base their evaluations on the financial information each charity provides in its informational tax returns, or IRS Forms 990. They use that information to analyze a charity's financial performance in seven key performance categories, described below. After analyzing those performance categories, they compare the charity's performance with the performances of similar charities. They then assign the charity a converted score ranging from zero to ten in all seven performance categories, as well as three ratings for the charity's organizational efficiency, organizational capacity, and overall financial health. Where does the data come from?

Charity Navigator bases their evaluations on the financial information each charity provides annually in its informational tax returns, or IRS Forms 990. This document is created from the charity's professionally audited books and is signed by an executive at the organization affirming it to be factual. Charities submit it under oath to the IRS as the truth and also deliver it to their state attorney general as required by law.

How do I interpret the star system?

No. of Stars Qualitative Rating Description
4 StarsExceptionalExceeds industry standards and outperforms most charities in its Cause.
3 StarsGoodExceeds or meets industry standards and performs as well as or better than most charities in its Cause.
2 StarsNeeds ImprovementMeets or nearly meets industry standards but underperforms most charities in its Cause.
1 StarsPoorFails to meet industry standards and performs well below most charities in its Cause.
NONEExceptionally Poor Performs far below industry standards and below nearly all charities in its Cause.

Tips & Resources

At Charity Navigator, they believe that the well-being of this country is dependent on continued support of well-managed charities and non-profits. To that end, they provide the following tips and resources to guide your intelligent giving:

Top 10 Best Practices of Savvy Donors, 6 Questions To Ask Charities Donating, Tips for Older Diners, What To Do When A Charity Calls, How to Stop Solicitations By Mail, Protecting Yourself From Online Scams, Tips for Giving in Times of Crisis, Evaluating Charities Not Currently Rated Charity Navigator, Tax Benefits of Giving, Guide To Donating Your Car, Guide To Donating Noncash Items, Guide To Volunteering, Guide To Giving In The Workplace, Giving Statistics, A Donor's Bill Of Rights, Giving Calculator.

For more information and to search for information about a charity you are interested in, please click here.

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