Charity Navigator has updated its methodology for rating charities. Instead of the 1-dimension tool that formerly rated only a charity’s financial health, a second dimension has been added to each rating.
The new criteria evaluate a charity’s accountability and transparency, factors relating to how well a charity manages and evaluates its mission and shares that information with others. A charity can no longer receive a top score of four stars if it doesn’t have a board of at least five people, if its money has been diverted for purposes that don’t relate to the charity’s mission, and if the group lacks an independent audit of its financial information.
In a recent blog posting, Charity Navigator‘s CEO, Ken Berger, noted that 40% of the charities that scored four stars in the first iteration (CN1.0) had a drop in their rating because they didn’t have some of the basics of governance in place. However, it is heartening that many organizations have already implemented best practices, as more charities saw an increase in their overall rating (30%) than those that saw a decline (19%); over 330 formerly lower rated charities are now getting four stars. Furthermore, the total number of charities with a good (3 star) or better rating increased from 61% to 69%.
Maybe this is a good time to assess your organization’s best practices. Here’s a great tool to get you started.