What Do Charity Watchdog Ratings Really Mean? 

Thanksgiving and Giving Tuesday traditionally signals the kick-off of giving season for nonprofits.  For many organizations, as much or more than one-third of their annual giving is received during this time. In fact, nearly 12 percent of all donations to charities occur in the last three days of the year.

With 1.8 million non-profits raising their hand during this time, the challenge for donors is understanding how to make the most of their charitable giving.

Fortunately, organizations like Charity Navigator, the Better Business Bureau and other watchdog organizations have developed criteria to evaluate how well a non-profit uses its resources to do the most good. These watchdogs pour through millions of audit reports, websites and IRS 990 forms to assess just how accountable nonprofits are with their donations.

Some watchdogs like Charity Navigator have taken these assessments to a higher level by looking beyond fundraising costs and executive salaries to grade charities by how large a proportion of their budgets is directly spent on impactful activities and how transparent they are with their records.

Charity Navigator, for example, states their objective is to equip the entire philanthropic ecosystem with the tools, ratings, and information they need to make impactful investments, expand the number of people and organizations who understand and commit to the idea of intentional philanthropy.

Two PQMD member nonprofits have achieved Charity Navigator’s 4-star, perfect ‘100’ score. They include Direct Relief and MAP International. Overall, there are only 58 charities in the United States achieved scores of 100 on both financial performance and accountability.

Like Charity Navigator, the Better Business Bureau’s Wise Giving Alliance looks at more than 20 criteria to evaluate charities.  These include audit reports, privacy policies and website disclosures. The BBB evaluates if a charity is “financially transparent and spends its funds in accordance with its mission and donor expectations.”

With so many nonprofits vying for the same charitable dollars, why not check out the charity watchdog ratings to get the most value out of your charitable giving.