Charity Navigator’s Big Move

Long time readers of this blog know that through out much of 2007, I wrote critically about Charity Navigator many times. I also played hosted to numerous guest blog posts and reader comments from people who were critical of Charity Navigator. The heart of my argument was that Charity Navigator’s core metric rewards nonprofits that keep organizational expenses low. The metric is fine as a small part of a comprehensive evaluation, but it is damaging to the nonprofit sector if it is taken as a way to evaluate nonprofits by itself.

While Charity Navigator has always told donors that their metric was only part of a proper evaluation, the organization’s outstanding media outreach made their site and their metric the #1 way in which every day donors think about judging whether a nonprofit is “good” or “bad”.

Late last year, Trent Stamp, the CEO of Charity Navigator left for a new job. At the time, I wrote that I would cease my criticism and see what Charity Navigator would do next. Five months ago they hire Ken Berger.

Ken is shaking things up.

From Ken’s blog today:

We believe that our rating system gives a decent snap shot of the financial efficiency and capacity of charities in every sector from health care to animal welfare, from human services to the arts and humanities. However, this is not a time for us to rest on our laurels or to assume that we have got the whole picture in hand. I noted a while back that one of my core values is the belief in a continuous improvement process. That means we need to continually strive to make our services better. I believe that we are now at a point of opportunity to do just that by expanding our ratings into a whole new dimension.

We have advised donors that to make their giving decisions, our ratings are a “part of the puzzle”…. [However] Over our six plus years, we have come to the conclusion that some donors are not taking the additional steps we recommend to assess outcomes and are relying almost entirely on our ratings. In addition, while we assume that financially strong organizations are far more likely to be effective in their outcomes, it may not always be the case. Alternatively, charities with mediocre financial strength may not necessarily have mediocre outcomes. Therefore, to help donors know with greater certainty which charities are achieving program results, we are exploring integrating outcome measurement into our rating system.

The leadership of Charity Navigator believes it is well worth the challenges it entails and as a result we are setting a goal of over time of offering an expanded rating system to more comprehensively evaluate nonprofits and separate great organizations from the rest. We look forward to collaborating with our colleagues who are working on this issue to improve the state of charitable giving. I am certain that we are up to the challenge and will get to the right outcome as soon as we can!

Ken was at the Alliance for Effective Social Investing meeting that I attended in DC last month. I’ve had a number of conversations with him and traded many emails. I am convinced that he will follow up on his promises and I look forward to help him however I can. CharityNavigator.org gets 5 million visitors a year and between Thanksgiving and New Year’s is referenced in the media every day. If you are interested in changing the way that individual donors think about giving, there is no better platform than Charity Navigator.