Local Community Responds to United Way’s Low Charity Navigator Rating

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April 12, 2011; Source: The Register Guard | Two days ago NPQ did a story on a low rating given by Charity Navigator to The United Way of Lane County in Oregon. We questioned the rationale of the rating, which was based on reduced revenue from fundraising and eroded reserves.

The intermediary had been affected, as had the entire community, by plant closings dating back to 2003 and the recession. This led Charity Navigator to cast doubt on the United Way’s “sustainability” and therefore its soundness as a recipient of donor dollars. NPQ took the position that the behavior of this United Way should give donors more faith in them – not less – since they did not hold themselves above their grantees. All were working through an economically difficult time. We mentioned in that Newswire that we hoped the local community was smarter than to take seriously the evaluators at Charity Navigator and apparently they are, if this editorial from the Register Guard is any indicator. Make sure you link back for a dialogue on this issue in the comments section under that previous article for reader response.

Saying that the “many people who benefited from (the United Way’s) decision would restore those lost stars in a heartbeat” the editorial goes on, “The decision to draw down its reserves was both rational and humane. During a recession, greater numbers of people have more urgent needs for the services supported by the United Way. A recession is not the time to be sitting on a plump cushion of reserves – not when people are desperate for the food, health care and family support services provided by United Way-funded agencies. Declining revenues meant that United Way’s allocations to many of its agencies had to be reduced, but tapping the reserves helped soften the effects of those reductions.”

The editorial concludes with this, “The United Way might have a higher rating if it had kept more money in the bank. But the agency’s board understood that its savings were meant to be used, and that the services it supports are more important than stars.”—Ruth McCambridge

  • Marc Baizman

    I think this makes it pretty clear that the Charity Navigator auto-ratings based on 990 data don’t reflect the reality of life in the communities that these organizations serve. There needs to be a hybrid solution that rates nonprofits based on their impact on the community in addition to the raw financial data. Sites like Philanthropedia, GiveWell, Root Cause, and GreatNonprofits are trying to change the model (Charity Navigator stars) but it’s a long, hard slog.