Charity Navigator Adjusts Ratings System for Recession

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November 30, 2010; Source: South Florida Business Journal | NPQ has written a number of newswires on the recession related problems some nonprofits are having with the rating system used by Charity Navigator. Now 97 of the 5,500 nonprofits Charity Navigator rates have had their ratings raised by the watchdog after it looked more carefully at the “negative impact that the recession has had on certain types of nonprofits.”

Two parts of the formula have been adjusted—a charity’s average revenue growth over the last three to five years and a charity’s average increase in spending on programs over the last three to five years.

The types of nonprofits that have had their ratings adjusted are museums, fundraising organizations, and religious groups, which were all adjusted based on both revenue growth and program spending. Community foundations were adjusted just on revenue growth. Performing arts groups, libraries, historical societies, landmark preservation groups, botanical gardens, parks, nature centers, as well as groups who focus on causes such as diseases, disorders, and medical research which were adjusted based only on program spending.

The names of the 97 upgraded organizations can be accessed here. NPQ is surprised that so few needed the upgrading but we commend charity watchdog for taking action.—Ruth McCambridge