April 7, 2010; Civil Society | This country has seen a spirited debate over the years about the usefulness and the shortcomings of charity rating services such as the Better Business Bureau’s Wise Giving Alliance, the American Institute of Philanthropy, and especially the youngest and most visible Charity Navigator.

The debate typically covers whether the raters’ emphasis on certain financial metrics on fundraising, administrative overhead, and such is too narrow and unedifying for donors. Many charities suggest that the formulas of the raters don’t take into sufficient consideration the differences among types of nonprofits and that they fail to include more important measures of nonprofit effectiveness.

In the UK, the frequently attacked charity rating organization is, or was Intelligent Giving (IG), which was absorbed by New Philanthropy Capital (NPC) and, for the moment, put “on ice.” The head of the NPC criticized the previous incarnation of Intelligent Giving for its “acerbic” tone that made it feel at times “like they weren’t actually on the side of charities.” Responding to critics who think IG should be done away with entirely, NPC is playing with changing IG’s tone and analysis toward attracting new money to bring it back to life.

The new IG, if it is ever revived, will still be “a slightly spiky voice about the sector . . . but . . . more clearly a constructively critical friend of the sector” with an emphasis on “impact and effectiveness.” NPC’s guess is that it would take around £100,000 to operate IG reasonably well. So, for Charity Navigator in the U.S., which is working on a mechanism for including impact in its charity ratings, “the challenge now is,” according to the NPC spokesperson, “can we get that funded?”

Will donors pay for information on specific charities? Will foundations decide to ante up enough money to make the charity watchdog function, whether here in the U.S. or in the U.K., to make the groups indispensable and reliable partners for philanthropy and the entire nonprofit sector? That means raising enough money to develop robust measurement systems to address impacts and effective and analytical skills that will help the watchdogs use more accurate and revealing financial indicators as well.—Rick Cohen