Today is a very important moment for the charity evaluation movement. For years, I and many others have complained that Charity Navigator’s focus on overhead expense ratios in evaluating nonprofits was counter productive. Then in 2008, Charity Navigator hired a new CEO. At the time I called for a “cease fire” in criticisms of Charity Navigator until we saw what direction the new CEO would take. Since then, Ken Berger has emerged as an enlightened leader who is willing to undertake a major makeover of Charity Navigator’s rating methodology.
According to Ken, Charity Navigator will role out a new system starting in early 2010 that rates charities based on transparency, governance, financial strength and, importantly, outcomes achieved (full disclosure: I’ve recently joined an Charity Navigator advisory board that will help guide this effort).
Today, Ken has put his chips down big and made a huge bet that he’s going to pull this all off. Charity Navigator, Guidestar, Philanthropedia, GiveWell and GreatNonprofits have issued a press release calling overhead ratios “red herrings” in the charity evaluation process and calling for a focus on measuring effectiveness. In the press release, Ken states:
“There is a place for financial measures, but donors need a complete picture of a charity to make a smart choice. We believe that too many donors are paying too much attention to measures like overhead.”
This is like McDonald’s committing to change their focus to selling healthy food and telling people to not eat too much of their current junk food menu before the new, healthy options are for sale.
Why would he do this? Because it is the right thing to do.
In a sector designed to put the public interest ahead of private interests, Ken Berger just offered a shining example. Ken knows that his current offering is part of an appropriate approach to charity evaluation, but he also knows that used by itself Charity Navigator does not tell the whole story and can be counterproductive.
When I called for a cease fire in criticism of Charity Navigator last year, I never expected that I would be leading a standing ovation of the same organization. In all seriousness, if you care about the future of charity evaluation, leave Ken a congratulatory comment on the blog post he wrote explaining his decision. It is important that the Charity Navigator board understand just how daring and morally righteous their CEO is.
Click here to visit Ken’s post and leave him a comment.
The joint press release does something else. It puts a stamp of approval on Philanthropedia, GiveWell and GreatNonprofits from Guidestar and Charity Navigator. I’ve viewed these three small organizations as the leading examples of how the web enables new approaches to charity evaluation. I think today demonstrates they are best in class.
Congrats to all the orgs for pulling this together and speaking with a single voice. I do believe that the coming decade will be one where more and more money flows to effective nonprofits. Everyone behind this press release has a major opportunity to help that transition occur.