What Do Our Ratings Mean?
As we developed our rating scales, we began with what industry experts said about the way charities should function financially and aligned our rating scales to these industry standards. Then, after examining the financial data of thousands of charities, we adjusted these rating scales to better reflect how charities actually function. We continue to adjust our rating scales whenever our ongoing research gives us a compelling reason to do so. In all cases, our 4-star rating scales correspond to the following rubric.
| No. of Stars | Qualitative Rating | Description |
 | Exceptional | Exceeds industry standards and outperforms most charities in its Cause. |
 | Good | Exceeds or meets industry standards and performs as well as or better than most charities in its Cause. |
 | Needs Improvement | Meets or nearly meets industry standards but underperforms most charities in its Cause. |
 | Poor | Fails to meet industry standards and performs well below most charities in its Cause. |
| NONE | Exceptionally Poor | Performs far below industry standards and below nearly all charities in its Cause. |
We believe our ratings dramatically improve the quantity and quality of information available to givers. Our ratings provide clear, objective, and reliable assessments of the financial health of charities. By utilizing our ratings, givers can truly know how a charity's financial health compares with other charities throughout the country. Givers can be confident that in supporting those charities rated highly by Charity Navigator, they will be supporting organizations that are fiscally responsible and financially healthy.
That said, we do not recommend using our ratings as the only factor in deciding whether to support a particular organization. Givers should also seek out additional information from charities directly and through other private and public sources. Intelligent giving depends upon reliable information. Charity Navigator provides an important piece of this information, and we encourage givers to learn as much as they can about a charity before deciding to support it. For more guidance on making giving decisions, please visit our giving Tips & Resources.
Givers should also recognize that there are a few limitations to our ratings. Most of these limitations result from the fact that the financial information on which we base our ratings is derived entirely from the Forms 990 each charity files with the IRS. That information itself is limited in several ways.
First, although we provide the most up-to-date public information available on each charity, charities are given 135 days following the end of their fiscal year to prepare and file their Form 990, the basis for our evaluation. Beyond that time limit, many charities request extensions, including an additional four-month time limit, which are automatically approved by the IRS. As a result, organizations often file their 990 eight to ten months after their fiscal year ends. As such, givers should be aware that our ratings are based on information that may no longer accurately describe the current conditions of a charity.
Second, the Form 990 requires accounting practices that differ in certain fundamental ways from those standards known as Generally Accepted Accounting Principles (GAAP). We rate charities based on financial information derived using standards that may be at variance with GAAP.
Third, some well-known charities are actually legally considered a group of separately incorporated organizations. Each of those organizations files a separate Form 990, and we evaluate each of them separately, rather than evaluating them as if they were a single organization. When such groups of affiliates make them available, we use pro-forma consolidated Forms 990, which combine the financial data of the various affiliates into a single filing and which are still based on the accounting standards required by the IRS. When such consolidated pro-forma filings are not available, we do not alternatively use consolidated financial statements. Such statements are based on GAAP standards, which again differ in certain fundamental ways from those standards required by the IRS. Using consolidated financial statements would be tantamount to applying different standards to different organizations. We refuse to do so.
Fourth, the information provided on the Forms 990 is provided by the charities themselves. Insofar as the Form 990 has been filed with the IRS, the federal agency responsible for overseeing the activity of charities, we do not attempt to discern where charities have presented inaccurate or misleading information. Instead, we take charities at their word and assume that the information filed in the 990 is true, correct, and complete, to the best of their knowledge and belief, affirmed by the signature of an officer of the organization. We do not accept responsibility for any case where a charity misrepresents its financial conditions in the information provided in its Forms 990.
The final limitation to our ratings is that we do not currently evaluate the quality of the programs and services a charity provides. As soon as we develop a methodology for doing so, we will. For now, however, we limit our ratings to an analysis of a charity's financial health, and we encourage givers to research a charity's programs and to make their own assessments as to their quality. Again, for more information on making giving decisions, please visit our giving Tips & Resources.
