Charity Navigator: Financial Measures and Beyond

Presentation atInsideNGO: Finance Grants and Contracts

Annual Meeting

Ken Berger, President & CEO

July 13, 2010

AGENDA

• What limitations exist with the current rating system?

• How should nonprofit impact be measured beyond simple metrics of financial ratios or program outputs?

• What is in store with the next generation of charity effectiveness rating systems?

• One smile and one fact

America's premier

independent charity

evaluator providing timely, relevant,

unbiased information on the fiscal health

of nonprofit organizations.

Largest evaluator of charities: 5,500+

#1 Web Site for Rating Charities – “Your Guide to

Intelligent Giving”

5

The Data Proves Impact

• 92% say evaluations affected their decision to support individual charities

• CN ratings influence billions in donations

• The majority of CN users are: Older, Higher Income, More Educated, Online Investors

Growth In Website Usage

18,259225,295

661,945

1,240,095

2,707,0182,835,167

3,102,308 3,011,423

3,316,587

2002 2003 2004 2005 2006 2007 2008 2009 2010

Years

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f Uni

que V

isito

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Mission1.

To help private contributors make intelligent decisions when selecting a charity to support, by providing information on our evaluation of the performance of charities.

Mission (continued)

2.

To educate private contributors and policymakers by providing information regarding what is of critical importance when making a social investment in a nonprofit.

Mission (continued)

3.

To drive more funding to high performing nonprofits by highlighting them and providing them with objective information to leverage with their supporters and prospective social investors.

Our Old Rating System – One Dimensional

The Problem?

The Solution!: A 3-D View

QUALITIES OF A HIGH IMPACT ORGANIZATION

Accountability & Transparency

Financial Health

• Positive, sustainable change• Independently evaluatedHIGHER RISK

INVESTMENTLOWER RISK INVESTMENT

Financial Health

Accountability/Transparency

Effectiveness/Results

More Comprehensive Rating System

Introducing CN 2.0: A 3-D View

Accountability & Transparency

Accountability & Transparency

Accountability & Transparency : IRS 990 Reporting Form Info.

Accountability & Transparency: Web Site Information

Accountability & Transparency: More on Web

Does the charity web site have readily accessible information about the following:

• Its goals and objectives?• Its strategies for achieving them?• Its capacity for achieving them?• How it measures progress in achieving them?• What its measurements indicate about progress to date?

Effectiveness & Results: The Holy

Grail

Effectiveness & Results: The Holy Grail

Effectiveness & Results: Collaboration

• Independent Sector/BBB – self report • GiveWell – deep data review• GreatNonprofits - everyone• Growth Philanthropy Network – “almosts”• Keystone Accountability - constituents• Philanthropedia – experts• New Philanthropy Capital – overall

analysis

The Battle for the Soul of the Nonprofit Sector

More Information• Articles: in Philadelphia Journal of Social Innovation1. “The End of Charity” by David Hunter 2. “The Battle for the Soul of the NP Sector” by Berger,

Penna and Goldberg• Book: Billions of Drops in Millions of Buckets: Why

Philanthropy Doesn’t Advance Social Progress by Steve Goldberg

• Web Sites1. www.alleffective .org2. Google: Nonprofit Effectiveness, Independent Sector• Video: www.savingphilanthropy.org

Your Questions & Our Web Addresses

Website- www.charitynavigator.org

Blogs- www.kenscommentary.org

blog.charitynavigator.org

Twitter- kenscommentary