A United Way Quandary in Syracuse

October 26, 2010; Source: Syracuse.com | The United Way of Central New York has been given the lowest possible rating of “1” by Charity Navigator for having higher than usual administrative costs and less reserves than the watchdog advises. This editorial on the Syracuse.com website discusses the fact that the take from the campaign for the past two years has been smaller than anticipated and that this makes costs per dollar raised higher, but it encourages people to keep giving based on the organization’s reduction of costs. A woman I spoke with at the Compasspoint conference over a year ago suggested that if the recession dragged on  nonprofits might end up facing lower ratings from watchdogs for just these kinds of reasons. Smart woman. This situation leaves us wondering if the oft cited “spend money to make money,” and traditional reserve calculations  should apply as usual in these times. Thoughts?—Ruth McCambridge

  • Lindsay

    My organization went from 4-star to 2-star on Charity Navigator and you wouldn’t believe how quickly donations through their site nearly dried up. A high ranking is a blessing, and clearly a low ranking is a curse.

    I’m interested to see how many charities start spending more/less in certain areas to get higher rankings. I know it’s something we’ve talked about.

  • Nick L

    This is further proof of the incomplete picture Charity Navigator paints of a nonprofit. Regardless of your opinion on United Way, I don’t think that’s the fundamental issue here.

    It’s an arbitrary standard. Perhaps we should adjust expectations about efficiency in lean times. No doubt the recipients of UW funds need help more than ever in these hard times. The UW probably would have taken in less if they spent less on fundamental campaign resources. How would that help the UW, the nonprofits its funds, or the recipients of the charitable work???

  • Peggy M. Owens

    Most of the nonprofits I work with are so short of administrative help that the executive ends up doing work that someone could be paid a lot less to do.

    This does not help further the mission since the nonprofit leader could be spending her/his time on more important activities that may not be urgent but will result in more good to the community.

    Despite this many small nonprofits may stll be viewed in a negative light as they appear to have too much overhead.

    These ratings are arbitrary and don’t paint a true picture of how the nonprofit is functioning.

  • Ira Kaminow

    Live by the sword, die by the sword. Nonprofits love to boast about their four stars from CN…when they get them. That, of course adds legitimacy to the CN ratings. Charities, all of whom know that CN ratings are worse than useless, should ignore them regardless of the number of stars each gets. Better yet the nonprofit community needs to tell the public though all means possible that the ratings like CN’s have no bearing whatsoever on the quality of any nonprofit and using them as a guide does a great disservice to many highly effective charities.

  • Julie Bornhoeft

    There’s two issues here for me.

    First, the Charity Navigator means of assigning stars if fundamentally flawed and I believe the sector is beginning to get this information out there.

    The second is the irony of a United Way getting a poor rating for high overhead. United Ways are promoters of the low overhead = good mentality and it shows up in their own decision making.

    I hope there is a larger lesson learned here that applying an archaic formula does little to demonstrate the efficiency or lack there for any not-for-profit organization.