What is Your Organization’s Rating & Why Does It Matter?

Donors are making a concerted effort to research a nonprofit before making a donation. Recent stakeholder interviews as part of feasibility study show that donors who have been affected by the pandemic may have less money to give away. Most first-time donors take the time to research an organization. Researching a nonprofit through monitoring groups helps current donors decide who will receive an annual donation and who might be left out this year. If a donor can’t find information about a nonprofit readily through monitoring groups, they may not feel confident about making a contribution.    

A recent Chronicle of Philanthropy article by Margie Fleming Glennon discusses the three top charity monitoring groups – BBB Wise Giving Alliance, GuideStar, and Charity Navigator – and how they rate nonprofits. What to Know About 3 Charity Monitoring Groups summarizes a panel discussion by executives from these three monitoring groups.  BBB Wise Giving Alliance uses criteria to rate nonprofits including governance, finance, fundraising, and measuring effectiveness. GuideStar’s website is a “go to” for donors to gain knowledge on a nonprofit’s financial and programmatic information. Each nonprofit can create a profile and upload their most recent audited financial statements. Charity Navigator uses a star rating system to evaluate a nonprofit’s finances.

All three monitoring services are free to nonprofits and to donors. You will find an overview of BBB Ratings here: Overview of BBB Ratings | Better Business Bureau®; a sample of a GuideStar profile here: Habitat for Humanity International - GuideStar Profile; and a list of 100 nonprofits with perfect Charity Navigator scores here: Charities with Perfect Scores : Charity Navigator.

Monitoring groups should be considered a marketing tool for nonprofits that can be utilized to make it easy for donors to find the information they seek. Create complete profiles, upload your logo, and place a link to your profiles on your website’s donor page.

A donor’s ability to easily research a nonprofit to make an informed decision means that nonprofits need to keep accurate and up-to-date information available on all monitoring group websites. In addition to donors researching a nonprofit’s rating, donors will also be seeking information about how their donation’s impact will be measured. Donors want to know what their return on investment (ROI) is - even more important in today’s climate. Monitoring groups also provide donors with suggested questions one should ask before making a gift.  Most importantly, donors research to avoid charity scams. Charity Navigator suggests asking:

  1. What is your organization’s mission? If a charity struggles in explaining its mission and its programs, it will probably struggle in delivering those programs. Healthy organizations know exactly who they are, what they do, and why they are needed.
  2. What are your organization’s goals? Goals are a necessary tool to measure success. Without establishing clear goals, it’s challenging to measure success. If a charity cannot communicate its goals, both short- and long-term, it is difficult for a donor to know what the charity is working towards.  
  3. What progress is your organization making towards its goals? Ask your organization what it has done to make the issue it confronts better. Can the organization demonstrate how their actions have impacted their progress?
  4. What sources are available to increase my confidence in your work? Our research has shown that the majority of charities are responsible, honest, and well-managed. Healthy charities demonstrate transparency. Documents such as the organization’s Form 990 and audited financial statement should be readily available for donors to review.

Find out what your organization’s ratings are and update your profiles annually, if not quarterly. Ratings matter and higher ratings bring increased contributions from confident donors.

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