
Larger charities struggling to cut administrative costs to get a coveted third or fourth star from Charity Navigator may be wasting their time, a recent study suggests. Their fundraising didn’t get a boost when their ratings from the charity watchdog improved.
But for smaller charities, getting another star can be a bonanza: Those with less than $8.5 million in assets and relatively low fundraising expenses saw contributions soar by nearly 20 percent.
THE DATA
Bariş Yörük, an economist at the State University of New York at Albany, studied four years of Charity Navigator data, and his findings mirror research in the business world. Studies have shown, for instance, that a one-star increase in a rating on consumer-driven review site Yelp can help nonchain restaurants increase sales by up to 9 percent, but the site has a negligible effect on revenue at chain eateries.
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