One Charity, Many Different Ratings: What’s a Donor to Do?


January 4, 2013; Source: Barron’s

Writing for Barron’s Penta Daily blog (oriented to give advice to families with $5 million or more in assets), Richard Marais notes the difficulty of assessing charities. How is a donor to know who’s doing a better job than others? As a case study, Marais points to the Wounded Warriors Project (WWP), which get a “D” rating from Dan Borochoff’s CharityWatch but also received three out of four stars from Ken Berger’s Charity Navigator. In response to the low CharityWatch rating, WWP founder Steven Nardizzi said WWP relies on the Better Business Bureau’s (BBB) charity ratings because, according to Nardizzi, they assess program outcomes.

We’re not sure that Nardizzi is correct that the BBB Wise Giving Alliance rates organizations based on outcomes, as that is an issue still being worked on by a variety of the rating groups; the Wise Giving Alliance is, for instance, cooperating on the development of the Charting Impact framework. In any case, Marais is correct that the different rating groups sometimes come up with sharply different ratings of the same charities.

According to Borochoff’s organization, the Wounded Warriors Project’s “D” rating is partly due to its low proportion of revenues devoted to program activities. Program activities account for only 43 percent of the charity’s spending if one excludes the costs of direct mail, telemarketing, and other solicitation costs that it includes as program services. Without that exclusion, WWP’s program expenditure proportion is 63 percent, but that is still below Charity Watch’s recommended 75 percent mark. According to CharityWatch, out of $74.4 million in 2011 revenues, WWP spent $13.8 million on fundraising, $11.5 million on salaries, $8.9 million on consulting and outside services, $5.5 million on meetings and events, and $3.1 million on travel.

The BBB Wise Giving Alliance reports that the Wounded Warriors Project met the BBB’s standards for charity accountability. The BBB reports that WWP’s fundraising costs were 11 percent of contributions received as a result of fundraising activities, a calculation reached by allocating activities that included “informational materials and activities” to program activities instead of fundraising. However, regarding the charity’s total expenses, the BBB’s Wise Giving Alliance concluded that 13 percent went to fundraising, 83 percent went to programs, and four percent went to administrative expenses.

Charity Navigator’s three-star rating of WWP is due to its having scored only 54.18 out of a possible 70 points in its rating system, including a two-star rating on its finances. Charity Navigator’s review of WWP’s financial metrics found only 55 percent of its total budget spent on programs and services, eight percent spent on administrative costs, and 36.8 percent spent on fundraising. Oddly, in four Charity Navigator reviews of WWP published since 2010, the 2012 analysis shows WWP with its lowest program percentage and highest fundraising proportion.

Depending on the rater, the Wounded Warriors Project seems to have scored low (Charity Watch), high (BBB Wise Giving Alliance) or somewhere in the middle (Charity Navigator). What should a donor do? Marais suggests that donors perform their due diligence and not rely on any one rating source. With such a mixed message about a charity from three well-meaning charity-rating groups, a donor has no other choice than to be an informed consumer and to pick a charitable recipient thoughtfully. –Rick Cohen

CORRECTION: An earlier version of this article wrongly stated that Charity Navigator is involved in the Charting Impact project. NPQ regrets the error.

  • Mgallece

    None of the charity ratring organizations mentioned in this article are ones I would consider dependable nor accurate. They do not haver decent accountability controls in place. As for the BBB, it protects it’s members and is not a consumer protection entity but a business oriented club.

    I find it odd that the best charitable rating site, GuideStar, isn’t even mentioned here. You can view an organization’s 990 filing on GuideStar. On the other hand, I have found sevetral defunct and almost non existent or poorly run chariities listed with great ratings on Charity Navigator.

  • Lindom

    I totally agree with the other poster plus 2 of the organizations mentioned usually only report on the bigger organizaitons with income of a million dolars. The BBB is more concerned that an organizaiton can prove the have in place or perform the various functions as defined in the 20 Standards of Accountabiilty and the documentation provided shows that program expenses were 65% or above and fundraising related expenses reported were under 35%. We submitted documentation to different state BBBs. First one was state our national operations were located where we met 19 of the 20 standards (1 standard related to how many meetings we had and how many were face to face. As our board members are located in states different than the National office/CEO we hold quarterly conference calls (4 meetings a year BBB only requires 3 meetings a year, but we don’t do face-to-face as the related cost and board members time is not feasible for us. The states regs regarding conference call meetings stipulates everyone must be able to hear each other and is consider the same as meeting face-to-face. The big isse we had with the BBB that the meeting criteria is outdated (put in place before conference call capabilites and the meeting criteria is based on all board members being in the same state. So our board felt reaching and meeting 19 of the 20 BBB standards was a lot better than other BBB rated organizations. The other state BBB, though all supporting documentation was submitted to them, they choose not to publish an online report unless they receive an officical complaint from a consumer in that state. We are on Guidestar and continue to keep the required information up to date for potential donors or grantors to see, plus will provide current info to anyone who asks for it. Over all we believe it is up to the prospective donor or grantor is due proper research and speak the charities ED/CEO, requresting the most current info if not on their website (Public Disclosures) such IRS Letter of Determination, latest financials for prior years or the lates info within the year they are considering donating to an organization. Many charities with a budget or expenses under a milion dollars don’t used 3rd party fundraisers/donation solicitors as they would rather use a simple way of accepting online donations through PayPal where if $100 donation, they get 97.50 after the PayPal fee immediately and don’t have to wait for end of the month or quarter before they have the donation in hand. Course expenses are completely different between a charity with employees versus a charity with volunteers (no employee salaries and benefits). The charity world has changed but many groups/organizations that monitor/rate charities work via systems set long ago and not in the mordern and Hi-Tech world we operate in today. Just my thoughts based on this matter.

  • Alex Hodge

    The American Institute of Philanthropy nonprofit ‘watch-dog’ organization and its media hound leader Daniel Borochoff are often touted as the best ‘watch-dog’ organization around. However, I notice that no nonprofit magazine or media bothers to check its actual finances.

    Daniel Borochoff, the founder and director of AIP earned over $ 153,373 in salary and benefits of $ 483,257 in total budget income. That’s a whopping 32% of entire nonprofit AIP budget goes to the CEO. Add in the next highest paid person at AIP and it goes to over 50% of the entire budget! Industry accepted standard is 5-8% maximum budget for CEO salary. Borochoff does not practice what he preaches, and should score an F by industry standards.

  • Daniel Borochoff

    Nonprofit salaries should be based on the skills, experience, education and market value of the nonprofit worker. Salaries should not be based on an arbitrary percentage of income. Your 5 to 8 percent of income as a maximum salary is ludicrous. It would mean that a $500,000 organization such as AIP could only pay its CEO $25,000 to $40,000. All the bad charities in the country and their fundraising and PR consultants (People I suspect like you Alex Hodge, if that is your real name.) would love to weaken small watchdog agencies by forcing them to hire chiefs with the skill level and expertise comparable to a low level clerical worker with a salary in the range that you falsely claim is industry standard.

    According to Hodge’s reasoning , a nonprofit CEO that wanted a bigger salary without having to do any additional work could hire a professional fundraising company to go out and raise ten million dollars and even if it cost the charity $9 million to do it; the CEO would be entitled to an $800,000 larger salary. This is just one of many examples of why it makes no sense to base a salary on the income of a nonprofit.

    “Alex Hodge” and “Alex Hodges” has been posting his uninformed comment above in multiple places on the internet probably because he doesn’t like the critical comments that AIP has made about his nonprofit or client. He does not understand that salaries make up the major portion of any research organization’s budget. He also doesn’t understand that except for fundraising personnel, the salary of most nonprofit workers is appropriately allocated to programs. Please read this article for more discussion on nonprofit salaries: Debunking Charity Salary Myths at

  • Tyler B Grupe

    hi, I’m a 6th grade student doing a charity research project. i was interested in your charity and i was wondering if you could send me some info. on your work. Thank you

  • Ben Katz

    I just came across this article but find it still quite accurate. No one rating site does a perfect job of reviewing nonprofits. At Givalike (where I’m a co-founder), we’ve tried to address this by provided an aggregation of rankings.

    It’s still not perfect but avoids the various individual biases of each existing ranking site. Suggestions and feedback are greatly appreciated —

    – Ben

  • harris

    WWW project should be shut down it is a rip off to all who donate!

  • Belinda Bee

    Let’s not forget ANYONE can get a good rating from BBB. BBB no longer rates on “their research”. Organizations now PAY for a “Good Rating”. So anyone using BBB might try researching themselves!

  • Marguerite Hrebenach

    Is there a charity working for Wounded Servicemen that is doing a good job????

  • Steven Rafferty

    When reviewing the Wounded Warrior Project’s website about two years ago (late 2012) and looking at their many TV ads, I was concerned that almost all the faces I saw were White, including the faces of management staff and board of directors. Occasionally I see a veteran of color on one of the tv ads. Certainly, that does not conform to the makeup of the U.S. military. I wrote WWP about this and asked what criteria are used to ensure that donations are distributed in a way that properly reflects the demographics of our wounded warriors. After a long wait, I got a reply that provided no specific information. As I look at the salaries of the top folks at WWP, this issue gives me pause for concern. I took my donation dollars elsewhere.

  • ralph

    how much does the ceo and staff of this program get payed

  • Ed

    Why not donate to one Veterans groups that gets high rating from everyone?

  • J.T. Smith

    As a retired Vietnam Veteran, I was shocked to hear that the the director of the Wounded Warrior program receives a
    salary of $375,000 annual. Please tell me this is not correct, I know no one would rip off our wounded veterans like that.
    Its bad enough you take over 50% for operatinal expenses. Our organizations (Branch 110 Fleet Reserves) does an
    annual stand down for veterans and we take no Operational funds.
    I certainly hope an individual or indivduals family is getting wealthy at the benifit on assisting our wounded veterans.

    J.T. Smith

  • Robert Stansbury

    Why can’t the rating people tell the actual money spent on veterans from the actual money sent in and the amount that is donated ? That way you could tell what percentage they are spending on veterans. In my opinion there would be less political accusations. A person could decide who they wanted to donate to.

  • retiredglobalguy

    For many months I gave a monthly donation to Wounded Warrior Project but had to cancel. However they will not return my emails about them continuing to charge my credit card after a number of attempts to have them cease. I have just filed another dispute with my credit card company. I have received the return of my money on two of the four disputes. I asked my credit card company to block them but they change their merchant number so a new charge is posted which I have to dispute. Apparently blocks placed by credit card companies are not undertaken by name but by merchant number. I am a disabled veteran but cannot comment on their services as I have never used them. What I can comment about is the fact they seem to know a way to continue charging my account in spite of disputes and requests to cancel by changing their merchant ID number. I had to cancel my credit card for a new number in an attempt to get Wounded Warrior to stop charging me. I will never give them another penny as a result of their continuing to charge me despite my emails cancelling, credit card disputes, and blocking them. In my personal experience they are very “slick” in charging me regardless of the numerous disputes placed and cancellation requests.

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