Charity Rating Sites

easysurfer

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Jun 11, 2008
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Are there any good charity rating websites?

If I kick the bucket and decide to leave some of my inheritance to charity, I'd like to know what the charities are up to. :)

Thanks.
 
We've been using Charity Reviews and Recommendations | GiveWell for a bit.

It is data intensive; more or less a hedge-fund research approach to giving (unsurprising, give its origins). Focused on most bang for the buck, particularly with respect to lives saved....

E.T.A.: Also no surprise, given the methodology, its recommendations are third world focused.
 
I am a career nonprofit executive and there are a few things to consider that are more important than faulty external ratings services' opinions. You might treat giving decisions like buying an investment: No one cares about your money as much as you do, so you will do best if you do your own thinking and not rely on an advisor.

The most important thing is how well an organization aligns with your very top values. What do you want your legacy on this earth to be - in charitable form? Once you decide what is most important, whether educating the next generation, protecting the environment, medical research or any other field, get to know the leaders in the field. Next, decide if you want your impact to be local or larger scale. Make gifts to a few and see how you like the experience. Finally, after your research phase, contact the major gift or planned giving department of your favorite charity and talk to an expert about what they offer. Ultimately, they can only legally make suggestions that you and your attorney or CPA will need to implement into your plan.

Some of the serious problems with the ratings agencies include the fact they are really businesses. They rate hundreds and hundreds of charities and, therefore, their knowledge is quite superficial. They then turn around and charge the nonprofits a fee to publicize those ratings with their logo! That's their business model and I'll leave it to you whether that presents a conflict of interest. A very serious problem they have specifically created is a public perception that nonprofits should separate "operating expenses" from "program delivery expenses" and that the lower the former are, the better and more "efficient" the charity is. They have created the perception among donors that a 10-15% ceiling for operating expenses is efficient and anything above that is wasteful. Wrong. Such a broad brush standard for a massively complex and diverse field of nonprofit organizations might have superficial appeal but it ignores the real fact that a social service organization, such as a church budget, is going to be almost all operating expenses while one that builds homes or buys land is going to have mostly capital expenses.

Nonprofits have contorted themselves to fit a mythical efficiency standard created by these ratings agencies, which has damaged everyone because, big surprise, it takes money to operate an organization. Program delivery can't be done out of thin air with no staff. Lately, after excoriation, those same agencies are forming a public information campaign to try to walk back the damage they have created, which is widely known as the "Nonprofit Starvation Cycle, while trying to remain in business. But many donors and practitioners are realizing that Charity Navigator, Guidestar and their ilk have discredited themselves through their damaging and simplistic ratings industry, much like Moodys and S&P are no longer very trusted at rating private businesses.

You need to do your homework if you want to have a satisfying donor experience. Thank you for giving and good luck!


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Markola,

I generally agree with much of what you wrote. That is the main reason I have relied on givewell for the past few years. I may be missing something, but it seems like its "business model" is different from the model you take apart--for example, have "CharityNavigator, Guidestar, and their ilk" ever removed "top charity" status on the grounds that the organization in question had already gotten enough money?

Would definitely appreciate your thoughts.
 
I really like efficiency but that is only one element in the non profit world. One group I have volunteered with is Habitat For Humanity, in the Gulf Coast & Los Angeles area. I have come to understand that this organization is really loved, over subscribed for volunteers and in many cases HFH could pay a low cost company to do the construction work for the cost of the of managing donations and volunteers. But a key point of HFH is not only providing housing but also to personally connect volunteers to recipients. And on every project we get to meet the receiving family. It would not ’feel’ the same if we just wrote a check.
And I was a Big Brother for years, it takes a lot of resources to make and support even one match. I knew the office staff and they worked hard & cheap to accomplish something I agreed with but one year they got a ‘bad’ rating from one of the review sites.
Many years ago I was on the LA CFC Board (Combined Federal Campaign, Federal version of United Way) for a couple years. Visited many charities and met with our CFC ‘volunteer’ auditors who were mostly from IRS and knew things to look for. I applaud looking into the purpose, efficiency and effectiveness of volunteer organizations, I just don’t trust any site to do that for me.
 
Would definitely appreciate your thoughts.

Sure, to continue the private investing analogy, it looks to me like GiveWell, which I've heard of, is focused on evaluating small, micro or penny stock equivalents of the nonprofit world. I've never even heard of their top charity picks, nor do they even evaluate my own organization, which has a $50 million/year budget. Nothing wrong with small nonprofits if that is one's thing. They do wonderful, innovative work but their mission impact is also going to be limited. I am dumfounded by GiveWell's belief that any charity ever raises "enough" in their analysis, as I understand it. Is there any equivalent discrimination of corporations, that "Company X has really earned quite enough this year, in our esteemed opinion, and your funds would be better off buying a different company's products.". What a load of bewildering BS. GiveWell seems like yet another outside organization fiddling around trying to regulate the nonprofit market and screwing things up because they are a solution in search of a problem.

There are certainly problems and inefficiencies in nonprofits, as there are with any organization of two or more human beings. By large, nonprofits are composed of idealists who are over-endowed with ethical tendencies, so you are generally not going to make big mistakes. My two cents remain: think about the groups who tackle problems that you agree are the most important to be tackled, according to your top ideals for society. Read online about the national leading orgs in that field and/or those having the most local impact. Just like corporations, the reason they are leaders is because they are doing something right and better than the others. Give to those groups a bit for a while and see how you like the experience and what you learn. In my view, the ratings agencies are out for themselves and really don't have much light to shed on making you a happy donor.

Hope that helps and thanks again for giving, wherever you choose to. As always, if you don't want to choose, you will by default support your government. See? You can't lose. :) Good luck!



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