Charity Navigator is a 501(c)(3) organisation that provides the most extensive and up-to-date charity evaluation tool. Essentially, the organisation seeks to help donors easily identify charities that are making a difference on the issues that are most crucial to them. Also, it helps nonprofits better understand their donors, raise funds and awareness, and operate more efficiently.
- Charity Navigator is one of the most renowned rating services for nonprofits.
- Organisations that depend on charitable contributions can leverage Charity Navigator to attract donors by attaining high ratings.
What to know about Charity Navigator and the Encompass Rating System
Charity Navigator is the biggest independent evaluator of nonprofit organisations. In July 2020, the organisation launched the Encompass Rating System. This enabled the platform to assess smaller nonprofits that don’t fit the Star Rating System’s experience and revenue requirements. Hence, donors can now guarantee that their contributions to small charities are being used effectively. Also, smaller nonprofits are allowed to showcase their impact.
Through its sophisticated and evolving evaluation process, Charity Navigator’s expanded ratings offer a comprehensive assessment of a charity’s dependability and efficiency. However, the original Charity Navigator Star Rating System will remain the rating system for all qualifying organisations. This includes the defined minimum revenue amounts and number of years of operation. Currently, the platform has rated more than 200,000 new charities.
Non-profit organisations with headquarters in the United States that fulfil the following criteria can be rated:
- A nonprofit organisation operational for a minimum of seven years
- Yearly Form 990 filings
- $1 million in revenue,
- $500,000 in public support for two years in a row, and
- fundraising and administrative costs that account for at least 1% of total costs for three years in a row.
How does the Encompass Rating System work?
To begin with, a nonprofit is given a score between 0 and 100 by Encompass Rating. Overall, organisations with scores of 75 and above are deemed effective by Charity Navigator. Hence, the “Give with Confidence” badge is bestowed on them. Also, these organisations can further promote their achievement by posting the badge on their platforms.
Here are the four “beacons,” or important performance indicators for the nonprofit’s impact effectiveness evaluated by Encompass Rating.
a. Finance & Accounting:
This gauges sustainability, efficiency, stability, and sound financial standing. Also, this rating offers details on how an organisation operates and how donations are received, based on IRS Form 990 and other data sources. Other key metrics for assessment include financial statement audits, board compensation, related party loans, whistleblower policies, CEO salary, and other key metrics.
b. Impact & Results:
This beacon assesses the program delivery and cost-effectiveness of the organisation. In this section, the direct impact of programming is assessed in relation to the operating costs. Likewise, impact is assessed using cost benchmarking, the ability to achieve mission-driven outcomes, and publicly available data and how it has impacted people’s lives.
Essentially, the programmatic impact is assessed differently based on the kind of charity and the people it serves. For instance, the improvement in participants’ FICO scores would be used to assess financial counselling programmes.
c. Leadership & Adaptability:
This evaluates how well the organisation’s leadership is developing and how adaptable it is to outside changes. Change-adapting organisations are more likely to have capable leadership, a well-defined strategic plan, and a mission-focused approach.
Hence, three metrics are assessed: adaptability, leadership, and strategy. Also, other criteria assessed include the mission statement, vision, leadership investment, and external focus on mission mobilisation.
d. Culture & Community;
Lastly, this beacon assesses how well the organisation interacts with the people who benefit from its initiatives. The goal is to evaluate the overall culture of an organisation and its relationship to the people and communities it serves.
Employers who attend to their clients and take advantage of the feedback they receive are more likely to create and maintain a diverse, welcoming, and equitable work environment. The sections of the organisation’s profile titled “Equity Strategies” and “How We Listen” are used to determine engagement.
Conclusion
In summary, Charity Navigator is one of the most renowned rating services for nonprofits. Hence, organisations that depend on charitable contributions can leverage the platform to attract donors by attaining high ratings.
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