It’s time for Charity Navigator to leave the scene. The watchdog service has done enough damage.
Nonprofits are supposed to improve society, but Charity Navigator has improved nothing.
Its tag line, “Your Guide to Intelligent Giving,” couldn’t be more misleading. Its mission statement — “We aim to advance a more efficient and responsive philanthropic marketplace in which givers and the charities they support work in tandem to overcome our nation’s and the world’s most persistent challenges” — does not reflect the services it provides.
Instead, Charity Navigator dumbs down the conversation about the real impact charities have, or should have, on our society. As a result, the news media, donors, and the rest of the public too often needlessly focus on irrelevant information, such as the share of budget spent on salaries or overhead. The site is full of meaningless statistics, disguised — or promoted — as relevant data under the illusion of helping donors support solutions to the world’s persistent challenges.
In the past two days, we saw this dangerous dynamic play out as CBS and The New York Times both released devastating investigative reports about the Wounded Warrior Project. Citing Charity Navigator, CBS launched its critique with what it considered the low amount — 60 percent — of its budget going to support programs, and the Times report took a similar path.
The investigations were disturbing, suggesting that Wounded Warrior may have questionable management and fundraising practices, but Charity Navigator is not a competent organization to evaluate Wounded Warrior, and neither donors nor journalists should make decisions or judgments based on its advice. While it is true that other charities spend 80 percent or 90 percent on programs, the percentage of budget devoted to helping people does not come close to telling whether Wounded Warrior is making a difference.
And if we look at the big scandals in the nonprofit world over the past 15 years, I can’t think of many that were exposed by anything found by Charity Navigator.
Take one of the most egregious fundraising issues the nonprofit world has ever had to deal with: the Red Cross’s misappropriation of gifts after the September 11 terrorist attacks. The Red Cross’s 990 informational tax return — Charity Navigator’s sole source of data — showed nothing amiss for that year, and that’s because, based on what the 990 asks, nothing was amiss. It took dogged investigations by journalists and state regulators to discover that much of the money donors had pledged to help victims of 9/11 was being channeled to other purposes.
Charity Navigator sends the message that it has expertise and authority when it has neither. It takes work — the kind of work that Charity Navigator seems to have eschewed — to convey truly relevant and comprehensive information about a charity’s impact and importance to society. When we should be taking a calculus class to solve a complex mathematical problem, Charity Navigator insists that simple arithmetic will suffice. It essentially takes a few figures off the information returns and compares them — say, spending on a charity’s salaries compared with donations raised — and then posts them. That tells a donor nothing.
In the 15 years since Charity Navigator was started, I see no signs that nonprofits are more efficient than they were before Charity Navigator started or that donors are giving more wisely.
Plenty of donors, on the other hand, have done the hard work on their own of determining whether a charity is worthy. Those donors, some of whom I have advised, take the time to understand the goals of a charity’s senior leadership, the board’s dedication to mission, the organization’s commitment to transparency and measuring its effectiveness, and the appreciation for the work the charity performs from the people it serves.
Believe me, very few donors (measured as a percentage of all givers) use Charity Navigator as a guide. For the most part, the only people who feel an impact from Charity Navigator are those who work at charities, and the impact on them has not been positive. I can only imagine the number of 990s that have probably been manipulated to show low fundraising costs so organizations can get a high rating, even though that figure is painfully meaningless.
I say all this with some poignancy. In late 2000, I did the first work at what became Charity Navigator after Pat Dugan, the donor who funded it, wanted to begin a ratings service for charities akin to what Morningstar is to mutual funds. I had just come off a devastating financial failure of trying to put charity information on a new site (a dot-com begun in 1998). I was reluctant to rate disparate organizations on the same scale, but I needed the work and I knew the nonprofit world actually did (and still does) need better ways to evaluate itself. I thought maybe something useful could evolve and so created the initial calculations to get the group started.
The situation in the nonprofit world today is the same as it was then. Some executive directors are paid too much, and some charities spend excessively on goods and services that have nothing to do with their mission. Bad things take place at many charities, and we still need to weed out the fraudsters among us.
But in all these years, Charity Navigator hasn’t earned the right to be the arbiter in the process of figuring out who the bad actors are. Worse, the organization brands many worthwhile charities as “bad” — what else can its ratings of zero or one out of four stars mean? — because they didn’t measure up to the subjective and biased “standards” Charity Navigator puts forth.
People who work at charities should be paid a fair wage, and nonprofit organizations, just like businesses, need a healthy organizational structure to carry out their work, and that costs money. We shouldn’t have to keep proving that to donors, regulators, and journalists. But because Charity Navigator has hijacked the conversation to define what’s important and what’s not, many nonprofits that are doing good work have unfairly lost the trust of donors.
For some years now, Charity Navigator has heard, although, it seems, with a wooden ear, that it its process and approach are harmful to nonprofits and to donors. As a result, it announced that it would focus on reporting the results of how well charity programs worked. But the organization recently declared that it was putting that effort on hold. The reason, according to its website, is that “most organizations are not yet truly working on a results basis.”
The biggest issue nonprofits are grappling with these days is measuring their impact and results, but Charity Navigator would have us think its effort marked the first time anyone asked them to measure their performance.
The organization’s new executive director, Michael Thatcher, hired this past August after working in a senior role at Microsoft, told The Chronicle in an interview that as he has spent time on the job, he has learned more about the challenges nonprofits face in measuring impact.
But Charity Navigator didn’t hire a nonprofit expert; instead it hired a technology expert. And why not? What does the head of an organization that promotes itself as advancing philanthropy and improving nonprofits need to know about philanthropy or the way nonprofits work?
Charities should not take pride in a good rating from Charity Navigator. It pretty much means nothing, all the while granting false license to claim success. Instead, charities should intelligently, comprehensively, and voluntarily report their impact on society. That the level of such reporting is nowhere near where it should be is no reason to rely on simplistic and irrelevant factors.
Some people might say that Charity Navigator is the best we have in an imperfect world, and so, until we build something better, let’s continue to rely on its results. It’s better than nothing, right?
No, Charity Navigator is far worse than nothing. The best that could happen is for the group to sink into oblivion, with no charities, no news outlets, and no donors giving it any thought. Or the group could take serious steps to grow up, humbly taking the time and effort to truly try to understand the charitable world. After all, the task is still undone, and somebody needs to take it on.
Doug White directs operations in the fundraising management program at Columbia University and is author of Abusing Donor Intent: The Robertson Family’s Epic Lawsuit Against Princeton University.
