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How should charities be rated?

Published: Tuesday, Oct. 22 2013 6:15 p.m. MDT

With the growth of the nonprofit sector, Charity Navigator, a website designed to inform donors, will revamp its rating system to reflect results.

http://www.charitynavigator.org/

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While the nonprofit sector continues to flourish, the means to track results of individual entities is going to change.

NPR recently reported that Charity Navigator, a website that rates charities from Adopt-A-Native-Elder Program to The Zoo Society in an effort to create informed donors, may be lacking when it comes to judging a cause's effectiveness.

There's no doubt among researchers at The Urban Institue that the philanthropic plane in this country is growing.

"Between 2001 and 2011, the number of nonprofits has increased 25 percent; from 1,259,764 million to 1,574,674 million today. The growth rate of the nonprofit sector has surpassed the rate of both the business and government sectors," according to research from The Urban Institute.

Quantifying the quality of each non-for-profit organization, however, can be another matter entirely.

But all of that is about to change, according to the NPR article.

"Now, Charity Navigator is planning to change its ratings system. President and CEO Ken Berger says donors deserve to know if the money they're giving is going to programs that work," according to NPR.

The article reports that Charity Navigator currently rates nonprofits by how much money they spend on a program compared with how much money is spent "overhead."

The new rating system, which will go into effect at the start of 2016, will also be indicative of the results of each charity, according to the article.

This announcement comes after debate as to what factors make a charity "successful."

"Some argue, though, rating systems, which overwhelmingly focus on analyzing financial data, only capture part of what makes a nonprofit successful," the Deseret News reported last year. "While concern about how their money will be spent does rate high on a donor's list of priorities when choosing charities, according to research from Hope Consulting, donors are equally concerned about the impact a nonprofit is having on the community."

Charity Navigator has suggested evaluating effectiveness through a simple survey, NPR reported though the feasibility of such a measurement varies depending on the type of charity offered.

But complaints and debates have circulated for the last 11 years the organization has been in business, Berger told NPR.

"The outcry from the sector was, 'You're not measuring what matters most,' 'You need to evaluate us on our results.' That's what we were told until 2011," he says in the NPR article. "Now that we've got this, now we're being told, 'No, wait. It's too hard, it's too complicated, it's too expensive.' It's this, that and the other thing."

Emmilie Buchanan-Whitlock is an intern for the Deseret News. She recently graduated from Brigham Young University-Idaho. Contact her by email: ebuchanan@deseretnews.com or on Twitter: emmiliewhitlock

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