Our Approach to Rating Charities
Charity Navigator works to guide intelligent giving. We strive to supply charitable givers with confidence in charities before those givers commit their financial support. We supply this confidence and information with a rating system that evaluates two broad areas of a charity's financial health: organizational efficiency and organizational capacity. Our ratings show givers how efficiently we believe a charity will use their support today, and how the organization is positioned to continue providing their programs and services in the future. We provide these ratings so that givers can make intelligent giving decisions, and so that the philanthropic community can more effectively monitor itself.
Organizational Efficiency:
We assess four key indicators to determine how efficiently and responsibly a charity functions day to day.
| 1. | Program Expenses: Percent of total functional expenses spent on programs and services. (higher is better) | |
| 2. | Administrative Expenses: Percent of total functional expenses spent on management and general. (lower is better) | |
| 3. | Fundraising expenses: Percent of total functional expenses spent on fundraising. (lower is better) | |
| 4. |
Fundraising efficiency: Amount a charity spends to raise $1. (lower is better) |
We combine the scores in these four categories to obtain an overall efficiency score. Based on the score, we assign a rating of between zero and four stars to each charity (four being the highest).
Organizational Capacity:
We assess three key indicators to determine how well a charity is positioned to sustain its programs over time.
| 5 & 6. | Primary Revenue Growth & Program Expenses Growth: Measures a charity's average annual growth of primary revenue or program expenses over its three to five most recent fiscal years. (higher is better) | |
| 7. | Working Capital Ratio: Determines how long a charity could sustain its level of spending using only its net liquid assets, as reported on its most recently filed Form 990. (higher is better) |
We combine the scores in these three categories to obtain an overall capacity score. We then assign a capacity rating of between zero and four stars (four being the highest).
Overall Rating:
We combine all seven categories to obtain an overall score. We use this rating to compare a charity to all charities in our sample, to charities pursuing similar missions, and to a small set of charities in its peer group. Please review Our Ratings Tables for more information on the scales we use to assign ratings and What Do Our Ratings Mean for a description of our star system.
