In an effort to clarify its advisory system for donors, Charity Navigator will now flag some nonprofits as presenting a low, medium, or high concern.
On Thursday, the watchdog group replaced its former Donor Advisories and CN Watchlist with the consolidated CN Advisory System, aiming to warn donors about what it deems potential mismanagement, scams, or misconduct.
A committee of Charity Navigator staff members reviews nonprofits on a case-by-case basis, considering factors including the credibility of media reports about a charity’s ethical or legal misconduct and whether allegations have been proved. The watchdog group will maintain a list of nonprofits of concern, and the advisories will appear on individual nonprofits’ profile pages.
The new classification system will work as follows:
- Low-concern advisories highlight circumstances that the watchdog group believes donors should regard with caution, such as questions about organizational mismanagement but not criminal activity.
- Moderate-concern advisories indicate that allegations have been made against a charity but not confirmed as well as concerns related to Form 990 reporting issues.
- The high-concern classification applies to organizations that may be “fake charities” or are allegedly in violation of federal tax law.
Of the 373 advisories on September 1, about 11 percent are categorized as a low concern, 43 percent as a moderate concern, and 46 percent a high concern.
Once charities are notified, they have two to four days to respond, depending on the level of concern, before they are added to an advisory list. Charities can at any time provide additional publicly available information to show that they’ve resolved the issue. The committee reviews low-level advisories every six months and the others every year. If there is no evidence that the issue is resolved, the advisories may remain.