Pushback for Syracuse Paper’s Use of Charity Navigator

October 31, 2010; Source: The Post-Standard |Last week NPQ covered a story about the the United Way of Central New York’s Charity navigator rating which was the lowest possible at a “1”. They received the rating for two reasons—because their reserves were down below what is recommended and because their overhead was up—a not uncommon situation in these times of reduced charity. We asked the question then about the legitimacy of the rating during this time of extended recession and we heard back from a number of NPQ readers who felt the Charity Navigator system is flawed even in the best of times. Here is a subsequent letter to the editor from Daniel Moynihan, a CPA in the Syracuse area basically making the same point. He says the article fell completely short in depending upon the Charity Navigator rating for a reasonable assessment of the group’s financial health. “Did you actually consult with a financial expert, such as a certified public accountant, to review the financial results of the United Way of Central New York?” He asked, “I believe if you had, you would have learned of the pitfalls in the Charity Navigator reporting system and the overall financial strength of our local United Way.”

NPQ is interested in hearing more about what readers think about the watchdog ratings systems in these times—pro and con. Weigh in.—Ruth McCambridge

  • lisa christie

    It has alwasy puzzled me that none of the charity watchdog sites seem to care at all about quality of programs and services.. would i rather give myh donation to a quality program that is meeting people’s needs and has an administrative cost of 21% or a poorly run program that treats clients badly by only has administrative costs of 5%?

  • Daniel Borochoff

    It is important to realize that each rating system is very different. CN has an automated system that grabs numbers off of tax forms and runs it through a formula, whereas the American Institute of Philanthropy individually scrutinizes audits and other information of each each nonprofit. This can produce very different results. For instance, AIP gives Intrepid Fallen Heroes Fund an A whereas, CN gives them zero stars for efficiency. AIP gives Feed the Children an F whereas, CN gives this group 4 stars. Please see the AIP Difference: http://www.charitywatch.org/aboutaip.html#difference

  • Tish Mogan

    While the Urban Insitute Report of 2007 did take place three years ago, we believe there is still validity to it. This reported on an audit of 220,000 Form 990’s. Several statistics were cited to show the inaccuracies that occur in reporting on the Form 990’s, the most startling of which is that 25% or organizations that report up to $5,000,000 in fundraising revenues reported “$0.00” dollars in funrdaising expenses.

    Until we do a much better job in ensuring nonprofits understand what fundraising and program revenues and expenses are we will continue to question the validity of ratings based on Form 990 numbers.

    Tish Mogan