Charity Navigator: The Watchdog for the Pound - Charity Week on BTR

ADDITIONAL CONTRIBUTORS Matthew DeMello

Photo by Steve Nagata.

As a Website, Charity Navigator has become about as synonymous with responsible giving as much as Google has with searching, Anthony Weiner with Twitter; or as Facebook has with Orwellian prophecy. Curiously, the site’s beginnings are nestled between the early dot-com economic burst and the proliferation of social networks–a medium whose profit potential relies on its users making product recommendations based on reviews.

Founded in 2001 by two New York philanthropists, Pat and Marion Dugan envisioned an online version of Consumer Reports that would help the wider market of donors to make informed decisions. In the beginning, their focus was on accessibility — making sure that everyday, kind-hearted Americans would be able to access the same reports that were then only available to those donating in the millions.

Hence Charity Navigator takes form, in itself, as a charitable cause–an organization putting their work before their potential winnings; no different in structure from the subjects of their rigorous reviews.

“On the donor end, I think there are some donors that would be willing to pay for that information,” says Sandra Miniutti, CFO for Charity Navigator. “We don’t ever want to get in the middle, in between the charity and the donor; or make anyone feel like they had to pay to make the smart choice.”

Since their website launch in April 2002, the nonprofit watchdog has not only gained the nearly exclusive trust of the donor market but also caused an entire industry to conduct itself in a more transparent and accountable fashion.

Those two concepts—transparency and accountability—lie at the heart of the organization’s criteria, which was revised last year, for judging the efficiency of a charitable organization. However, what those words mean to the Executive Director of a 501(c)3 nonprofit and your average altruistic donor can be two different things. To those of us with our hearts and wallets open to the needs of the underprivileged, that means knowing that most of our donation is going exactly to where it is promised. In the eyes of those at Charity Navigator, that means at least 75 cents on the dollar, having an independent board of directors, providing reasonable public oversight over executive salaries and a discernibly pragmatic approach toward’s judging an organization’s overall output.

The difference between the two may seem subjective to the eye quickly reading through this article, but it presents a challenge for the media team at Charity Navigator to communicate to the site’s users–especially in terms of how Charity Navigator itself stands up to it’s own criteria.

The organization is, after all, entirely privately funded and receives no support from any state or federal funding– a category that also includes organizations like the Bill and Melinda Gates Foundation. Such a rating prevents Charity Navigator from printing itself with its own star-rating (though, they would be happy to do so) as it’s only applicable to public charities. This status changes once an organization has held their financial records in the public eye for more than four years, according to federal requirements for nonprofits. In the industry this transformation is known, somewhat dubiously, as becoming ‘public.’ The process is not to be confused with the for-profit term, ‘going public,’ which is inapplicable.

Out of fairness, says Miniutti, Charity Navigator does not rate it’s peers for this reason, as it would be unfair. Yes, and there are others–the Better Business Bureau offers its own standards and reviews of charities and another website (www.guidestar.org), who have existed for years as a publisher for public information on a variety of charities. Only recently has GuideStar offered a criteria for the data it offers.

As far as Charity Navigator’s efficacy is concerned, the emergence of the philanthropic industry on the Internet has become much more structured than it’s premier entrance. The sector is no longer the “wild west” it once was. An example of such ‘dark ages’ that Miniutti points to occurred in the months after Hurricane Katrina when the Internet was flooded with bogus charities pledging to use funds to assist victims.

“Especially in times of crisis, you need to be careful where you’re giving your money,” says Miniutti. In more recent times, the recent earthquake and radiation leak in Japan gave way to a much smaller spike in the appearance of fraudulent sites advertising themselves as charitable causes.

Last year’s oil spill in the Gulf of Mexico provides a unique example, notes Miniutti, of a crisis that was different than anything the sector had previously experienced. In normal circumstances following a hurricane or earthquake, the Red Cross mobilizes quickly, as it did for Japan three months ago. However, in the months following the initial explosions at the Deepwater Horizon oil rig over a year ago, charities (like both the authorities and media) were slow to respond to the crisis with a proper focus.  Only as of late, as the detrimental effects of the spill on the coastal population can be properly gauged in retrospect, has philanthropy been able to sufficiently provide real assistance.

The trouble is that such organizations–whether offering support to disasters foreign or domestic– are not just on the Internet, they’re outside the local supermarket or church. Despite the depth of Charity Navigator’s online shadow, there is a demand for it’s presence in the physical transaction–one that the organization recognizes, according to Miniutti.

When Charity Navigator first organized their criteria, they had done so in a one-dimensional framework. To critics at the time, such standards are more relevant to businesses than nonprofits. Primarily, they argued that crediting ‘points’ to an organization’s financial strength for having both growing revenues and expenditures took for granted whether anything was actually accomplished. Over time, the site learned that not only was the physical presence of a public nonprofit to be taken into consideration, but also what maintaining transparency and accountability meant for their results. For these reasons, Charity Navigator revised their criteria last year to reflect these measures of duty and responsibility to their respective causes.

“We began to add that second dimension–the transparency and accountability metrics –and we hope to ‘flip the switch’ in the next couple of months, and have that information impact each charity’s star rating,” reports Miniutti. “We didn’t want a system where we were half-in and half-out, which took us a year to collect those data points on 5,500 charities.”

Until that ‘flip’ of the switch, Charity Navigator finds itself between two audiences: the mainstream public who has trustfully translated their name-brand recognition for integrity, and industry voices (such as the passionate writer of this article from netsquared.org) whose critiques are about to be answered.

“Over time as we begin to publish more of this information on our website and donors are calling charities to get that data, Executive Directors will take their responsibility more seriously,” says Miniutti. However, she concedes, “Charities have so much that they have to juggle, they have a lot on their minds.”

The question for a strained industry then becomes: Should reporting results be as important as achieving them? From the perspective of Charity Navigator, these functions are one in the same.

“Our biggest concern right now is getting charities to the point where they’re reporting their results,” continues Miniutti. “When they are concentrating on measuring their performance, and find that a program is failing, they will be able to tweak that program to get better results.”

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