CHARITY NAVIGATOR is an American independent charity watchdog
organization that evaluates charitable organizations in the United
States . Its stated goal is "to advance a more efficient and
responsive philanthropic marketplace in which givers and the charities
they support work in tandem to overcome our nation’s and the
world’s most persistent challenges".
* 1 About
* 2 Evaluation method
* 3 Governance
* 4 See also
* 5 References
* 6 External links
Charity Navigator was launched in spring 2001 by John P. (Pat) Dugan,
a wealthy pharmaceutical executive and philanthropist. The group's
mission was to help "...donors make informed giving decisions and
enabling well-run charities to demonstrate their commitment to proper
stewardship" of donor dollars. Initially,
Charity Navigator provided
financial ratings for 1,100 charities, and has data on 8,500 as of
The site also features opinion pieces (articles and two blog sites)
Charity Navigator experts, donation tips, and top-10 and bottom-10
lists that rank efficient and inefficient organizations in a number of
Charity Navigator conducts a national study to
determine and analyze any statistical differences that exist in the
financial practices of charities in metropolitan markets across
The service is free, and the site is navigable by charity name,
location or type of activity.
Charity Navigator is a 501(c)(3)
organization that accepts no advertising or donations from the
organizations it evaluates.
In 2006 Time magazine named it in one of the 50 top websites of the
year. In 2011, Kiplinger\'s Personal Finance selected Charity
Navigator as a Money Management Innovation for "helping millions of
people become philanthropists", putting it in the same category as
TurboTax and Mobile Banking Apps.
In a September 15, 2014
Chronicle of Philanthropy interview on the
Nicholas Kristof identified
Charity Navigator with
a trend he deplored. "There is too much emphasis on inputs and not
enough on impact," Kristof said. "This has been worsened by an effort
to create more accountability through sites like Charity Navigator.
There is so much emphasis now on expense ratios that there is an
underinvestment in administration and efficiency."
In a 2014 survey of attitudes toward charity evaluation seals shaping
donor decisions about a charity, Charity Navigator's was rated six of
seven on a list of those presented in the survey.
Using publicly available tax returns (
IRS Form 990 ) filed with the
Internal Revenue Service and information posted by charities on their
web sites, the
Charity Navigator rating system bases its evaluations
in two broad areas—financial health and accountability/transparency.
Based on how the charity rates in each of the two areas, it is
assigned an overall rating, ranging from zero to four stars. To help
donors avoid becoming victims of mailing-list appeals, each assessment
of a charity's performance is accompanied by a review of its
commitment to keeping donors' personal information confidential.
This method was criticized in an article in the Stanford Social
Innovation Review for taking into account only a single year's IRS
Form 990. This can lead to significant fluctuation in the ranking of
a charity from year to year. Also, the focus on the
IRS Form 990 has
itself been criticized, as the accuracy and reliability of IRS Form
990 data is questionable. Form 990 categorizes a charity's
expenditures into three broad categories that are open to accounting
manipulation. The nonprofit sector does not have the strict financial
regulation and transparency required from public corporations (under
Securities Act of 1933
Securities Act of 1933 , the
Securities Exchange Act of 1934 , and
Sarbanes-Oxley Act , among others), creating limitations on how
accurately a charity's efficiency can be graded based on a tax return.
Particularly relevant to Charity Navigator's methodology is that 59%
of the 58,000 charities receiving public donations in 1999 failed to
report any fundraising expenditures, illustrating a potential problem
with relying on Form 990 figures alone when analyzing an organization.
Charity Navigator never included charities that claim to
have no fundraising expenditures. Furthermore, it only rates the 6%
of charity organizations in the
United States that have over $1
million in annual revenue (these 6% get 94% of the revenues that come
into the nonprofit sector each year), and argues these charities have
better expertise for reporting to the IRS, are under greater public
scrutiny and therefore their reporting tends to be more accurate.
As of December 2007,
Charity Navigator would recommend donors support
concerns that meet six criteria:
* Able to communicate who they are and what they do
* Defined short-term and long-term goals
* Able to state the progress it has made (or is making) toward its
* Programs make sense to the donor
* Programs that the donor feels they can make a long-term commitment
In December 2008, President and
CEO Ken Berger announced on his blog
that the organization intends to expand its rating system to include
measures of the outcomes of the work of charities it evaluates. This
was described in further detail in a podcast for The Chronicle of
Philanthropy in September 2009. The article explained that plans for a
revised rating system will also include measures of accountability
(including transparency, governance and management practices) as well
as outcomes (the results of the work of the charity).
In July 2010,
Charity Navigator announced the first major revamp.
This revamping begins what the organization states is the process to
move toward CN 3.0, which is a three-dimensional rating system that
will include what they consider the critical elements to consider in
making a wise charitable investment – (1) financial health (Charity
Navigator evaluated this from its inception), (2) accountability and
transparency (begun in July 2010) and (3) results reporting (slated to
begin rating this dimension in July 2012). After collecting data for
more than a year, in September 2011
Charity Navigator launched CN 2.0,
which is a two-dimensional rating system that rates a charity's (1)
financial health and (2) accountability and transparency.
In January 2013,
Charity Navigator announced another expansion to its
rating methodology, "Results Reporting: The Third Dimension of
Intelligent Giving." Because mission-related results are the very
reason that charities exist,
Charity Navigator developed this new
rating dimension to specifically examine how well charities report on
their results. Charity Navigator's website explains the new
methodology and its plans for the future.
In recent years,
Charity Navigator has become outspoken against what
it calls high
CEO compensation. At the same time, they note that
nonprofit CEOs should be paid what the market demands. They complete a
CEO compensation study each year. In the study, they have
consistently argued that a low six-figure salary for a
CEO of a
mid-to-large sized nonprofit is the norm and should be acceptable to
donors. They further argue that these are complex multimillion dollar
operations that require a high level of expertise. They are however,
outspoken against the phenomenon of million dollar plus compensation,
which they do not believe is justified for a tax-exempt public
On its 2014 Form 990,
Charity Navigator reported the salary of CEO
Ken Berger as $160,644.
* Ethics portal
American Institute of Philanthropy
* ^ A B C D E "Board and Staff". Charity Navigator.
* ^ "
Charity Navigator Mission". Charity Navigator. 2014. Retrieved
14 January 2014.
* ^ Gunther, Marc (5 April 2015). "Why
Charity Navigator needs an
upgrade". Nonprofit Chronicles. Retrieved 6 July 2015.
* ^ Overholt, Alison. Charitable Deductions: Charity Navigator
dares to hold the nation\'s nonprofits accountable for their
fund-raising, August 2003.
* ^ Ann Carrns.
Charity Navigator Tweaks Its Rating System. New
York Times. 27 May 2016.
* ^ "50 Coolest Websites for 2006". TIME Magazine. No. August 2006.