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Financial Score Conversions and Tables

 
 
 

(Note: This page describes our current methodology, CN 2.1. This methodology went into effect on June 1st, 2016. To see our previous methodology, please click here.)

Table of Contents 

 

Rationale for Conversions and Tables

At Charity Navigator, we recognize that different types of organizations work differently. This variation isn't a bad thing; rather, different types of charities have different resource and spending requirements. For example, our research shows that museums exhibit above-average administration costs as compared to other types of charities. We can account for this variation in the financial data because we know how costly it is for museums to maintain their facilities and collections. To ensure that we are taking these types of differences into account, we've developed the following ratings tables. We review these adjustments periodically, as we continue to collect and monitor data from the organizations we rate.
 

How to Read These Tables

Fundraising Organizations:

Organizations that operate primarily as fundraisers are identified with this image on their ratings page. Throughout this Methodology page, this image () also denotes which adjustments are appropriate for fundraising organizations.
 

All Other Organizations:

Organizations within uniquely-functioning Cause areas are listed on each table, and their scores are adjusted based on the Cause-area adjustment. If a Cause area is not listed on a table, then that Cause uses the General table for that metric.

Financial Efficiency Performance Metrics

Performance Metric One: Program Expense Percentage

Percent of total functional expenses spent on programs and services (higher is better)

Program Expenses less than 33.3%:

Our data shows that 7 out of 10 charities we've evaluated spend at least 75% of their budget on the programs and services they exist to provide. And 9 out of 10 spend at least 65%. We believe that those spending less than a third of their budget on program expenses are simply not living up to their missions. Charities demonstrating such gross inefficiency receive 0 points and a 0-star rating for their Financial Health.

Program Expenses from 33.3% - 50.0%:

Charities spending more than a third but less than half of their budget on program expenses will receive 0 points for this metric.

General and Fundraising:

Raw Score

Converted Score

50% - 85%

10*(Raw Score -0.5)/0.35

85%+

10

 

Community Foundations; Food Banks, Food Pantries & Food Distribution; Humanitarian Relief Supplies:

Raw Score

Converted Score

50% - 92%

10*(Raw Score -0.5)/0.42

92%+

10

 

Museums:

Raw Score

Converted Score

50% - 83%

10*(Raw Score -0.5)/0.33

82%+

10

 

Public Broadcasting and Media:

Raw Score

Converted Score

50% - 82%

10*(Raw Score -0.5)/0.32

83%+

10

 

Food Banks, Food Pantries, and Food Distribution; Humanitarian Relief Supplies:

As primarily non-cash operations, these charities demonstrate very little need for spending on overhead. Their median program expense percentage is higher than the median for all of the charities we rate.

Museums:

With expensive collections and property to maintain and expand, these charities encounter significantly above-average administration costs, and subsequently lower program expenses. Their median program expense percentage is lower than the median among all of the charities we rate.

Community Foundations:

These charities serve as fundraising vehicles, and must as a result limit overhead spending. The median program expense percentage for community foundations is higher than the median for all of the charities we rate.

Public Broadcasting and Media:

These charities use expensive air time to raise money, requiring a higher investment in their fundraising efforts and thus raising fundraising costs, which leads to a subsequently lower program expense ratio. Among these charities, the median program expense percentage is lower than the median of all of the charities we rate.

 

Performance Metric Two: Administrative Expense Percentage

Percent of total functional expenses spent on management/general (lower is better)

Converted Score:

10

7.5

5

2.5

0

  • General

0% - 15%

15% - 20%

20% - 25%

25% - 30%

> 30%

  • Food Banks, Food Pantries & Food Distribution

  • Humanitarian Relief Supplies

0% - 3%

3% - 5%

5% - 10%

10% - 15%

> 15%

  • Fundraising

0% - 7.5%

7.5% - 12.5%

12.5% - 20%

20% - 25%

> 25%

  • Community Foundations

0% - 10%

10% - 15%

15% - 20%

20% - 25%

> 25%

  • Museums

0% - 17.5%

17.5% - 25%

25% - 30%

30% - 45%

> 45%

Food Banks, Food Pantries, and Food Distribution; Humanitarian Relief Supplies:

As primarily non-cash operations, these charities demonstrate very little need for spending on overhead. Their median administrative expenses fall below the median for all of the charities we rate.

Fundraising Organizations:

These charities serve as fundraising vehicles for other community-based charities, and appropriately demonstrate smaller overhead spending. The median administrative expenses percentage among fundraising organizations is lower than that of all the charities we rate.

Community Foundations:

Much like fundraising organizations, these charities serve as fundraising vehicles, and must as a result limit overhead spending. The median administrative expenses ratio for community foundations is less than the median for all of the charities we rate. 

Museums:

With expensive collections and property to maintain and expand, these charities encounter significantly above-average administration costs. Their median administrative expenses percentage is higher than the median among all of the charities we rate.

 

Performance Metric Three: Fundraising Expense Percentage

Percent of total functional expenses spent on fundraising (lower is better)

Converted Score:

10

7.5

5

2.5

0

  • General

  • Fundraising

0% - 10%

10% - 15%

15% - 20%

20% - 25%

> 25%

  • Public Broadcasting and Media

0% - 20%

20% - 25%

25% - 30%

30% - 35%

> 35%

  • Community Foundations

  • Food Banks, Food Pantries & Food Distribution

  • Humanitarian Relief Supplies

0% - 5%

5% - 10%

10% - 15%

15% - 20%

>20%

Public Broadcasting and Media:

These charities use expensive air time to raise money, requiring a higher investment in their fundraising efforts and thus raising fundraising costs. Among these charities, the median fundraising expenses percentage is higher than the median of all of the charities we rate.

Community Foundations:

By managing long-term donor-advised funds, community foundations are able to raise large sums of money while spending relatively small amounts on fundraising.  The median fundraising expenses ratio for community foundations is less than the median for all of the charities we rate.

Food Banks, Food Pantries, and Food Distribution; Humanitarian Relief Supplies:

As primarily non-cash operations, these charities demonstrate very little need for spending on overhead. Their median fundraising expenses fall below the median for all of the charities we rate.

 

Performance Metric Four: Fundraising Efficiency

Amount a charity spends to raise $1 (lower is generally better)

Converted Score:

10

7.5

5

2.5

0

  • General
  • Fundraising

$0.00 - $0.10

$0.10 - $0.20

$0.20 - $0.35

$0.35 - $0.50

> $0.50

  • Community Foundations
  • Food Banks, Food Pantries & Food Distribution
  • Humanitarian Relief Supplies

$0.00 - $0.03

$0.03 - $0.10

$0.10 - $0.15

$0.15 - $0.20

> $0.20

  • Public Broadcasting and Media

$0.00 - $0.20

$0.20 - $0.30

$0.30 - $0.45

$0.45 - $1.00

> $1.00

Community Foundations; Food Banks, Food Pantries, and Food Distribution:

By managing long-term donor-advised funds, community foundations are able to raise large sums of money while spending relatively small amounts on fundraising. Because donated food is their primary revenue source, food banks also are able to devote far less of their resources to fundraising. As compared with a median fundraising efficiency among all of the charities we rate, the median fundraising efficiency for community foundations and for food banks is much lower.

Humanitarian Relief Supplies:

Because donated noncash goods are the primary source of revenue for these organizations, humanitarian relief supplies charities are able to devote far less of their resources to fundraising. As compared with a median fundraising efficiency among all of the charities we rate, the median fundraising efficiency for these charities is much lower.

Public Broadcasting and Media:

As mentioned above, by relying on the use of expensive air time to raise money, these charities require a higher investment in their fundraising efforts, thus lowering their fundraising efficiency. The median fundraising efficiency for these charities far exceeds the median for all of the charities we rate.

 

Financial Capacity Performance Metrics

Performance Metric Five: Program Expense Growth

Measures growth of program expenses over the past three to five fiscal years.

Fundraising Organizations:

For this metric, fundraising organizations use the table of their Cause.

Converted Raw Score = Raw Score x 100

Example: Program Expense Growth of .03 would become a Converted Raw Score of 3.

Note: Any Converted Score exceeding 10 will receive 10 points for this metric. Likewise, any Converted Score lower than 0 will receive 0 points for this metric.

Cause Area Converted Score (out of 10 points)
Adult Education Programs and Services Converted Raw Score
Advocacy and Education Converted Raw Score +2
Animal Rights, Welfare, and Services Converted Raw Score +2
Botanical Gardens, Parks, and Nature Centers Converted Raw Score +1
Children's and Family Services Converted Raw Score +2
Community Foundations Converted Raw Score
Development and Relief Services Converted Raw Score +3
Diseases, Disorders, and Disciplines Converted Raw Score +3
Early Childhood Programs and Services Converted Raw Score
Education Policy and Reform Converted Raw Score
Environmental Protection and Conservation Converted Raw Score +4
Food Banks, Food Pantries, and Food Distribution Converted Raw Score
Homeless Services Converted Raw Score
Housing and Neighborhood Development Converted Raw Score
Humanitarian Relief Supplies Converted Raw Score +1
International Peace, Security, and Affairs Converted Raw Score +2
Jewish Federations Converted Raw Score +4
Libraries, Historical Societies and Landmark Preservation Converted Raw Score +2
Medical Research Converted Raw Score +3
Multipurpose Human Service Organizations Converted Raw Score +2
Museums Converted Raw Score +1
Non-Medical Science & Technology Research Converted Raw Score +2
Patient and Family Support Converted Raw Score
Performing Arts Converted Raw Score +3
Public Broadcasting and Media Converted Raw Score +4
Religious Activities Converted Raw Score +3
Religious Media and Broadcasting Converted Raw Score +3
Scholarship and Financial Support Converted Raw Score
Social and Public Policy Research Converted Raw Score +2
Social Services Converted Raw Score +2
Special Education Converted Raw Score
Treatment and Prevention Services Converted Raw Score +2
United Ways Converted Raw Score +4
Wildlife Conservation Converted Raw Score
Youth Development, Shelter, and Crisis Services Converted Raw Score +3
Youth Education Programs and Services Converted Raw Score
Zoos and Aquariums Converted Raw Score

Adjustments to this ratings table will be made after we have processed new financial data for at least 2/3 of the charities we rate. We believe this provides a more precise and timely analysis of each charity’s program expense growth. 

 

Performance Metric Six: Working Capital Ratio

Determines how long (in years) a charity could sustain its level of spending using only its net available assets, as reported on its most recently filed Form 990.

Converted Score:

10

7.5

5

2.5

0

  • General

  • Fundraising

> 1.0

1.0 - 0.5

0.5 - 0.25

0.25 - 0.0

< 0.0

  • Food Banks, Food Pantries, and Food Distribution

> 0.25

0.25 - 0.0833

0.0833 - 0.042

0.042 - 0.0

< 0.0

  • Development and Relief Services

  • Religious Activities

  • Religious Media and Broadcasting

> 1.0

1.0 - 0.5

0.5 - 0.0833

0.0833 - 0.0

< 0.0

  • Humanitarian Relief Supplies

> 0.10

0.10 - 0.06

0.06 - 0.02

0.02 - 0.0

< 0.0

  • Botanical Gardens, Parks, and Nature Centers

  • Museums

> 3.0

3.0 - 1.0

1.0 - 0.5

0.5 - 0.0

< 0.0

  • Libraries, Historical Societies, and Landmark Preservation

> 4.0

4.0 - 1.0

1.0 - 0.5

0.5 - 0.0

< 0.0

  • Community Foundations

> 5.0

5.0 - 2.0

2.0 - 1.0

1.0 - 0.0

< 0.0

Food Banks, Food Pantries, and Food Distribution:

Because the bulk of their expenses take the form of donated food and goods, these charities need only small amounts of working capital. Their median working capital ratio is far lower than the overall median for all of the charities that we rate.

Development & Relief Services; Humanitarian Relief Supplies:

As with food banks, much of the expenses for these charities are in the form of donated food, goods, and supplies, and as a result they need only small amounts of working capital. The median working capital ratio for Development & Relief Services and Humanitarian Relief Supplies charities is lower than the median reported for all of the charities rated by Charity Navigator.

Religious Activities; Religious Media and Broadcasting:

Religious Activities organizations and Religious Media and Broadcasting organizations maintain relatively small amounts of working capital. The median working capital ratio for Religious Activities charities and Religious Media and Broadcasting charities is lower than the median working capital ratio found for all of the charities rated by Charity Navigator.

Botanical Gardens, Parks, and Nature Centers; Museums:

As part of their need to finance acquisitions and improvements to their collections and property, charities in these Causes maintain larger reserves of working capital. The median working capital ratio among Botanical Gardens, Parks, and Nature Centers, and Museums is far more than the median for all of the charities we rate.

Libraries, Historical Societies & Landmark Preservation:

These organizations demonstrate unusually large reserves of working capital. The median working capital ratio for Libraries, Historical Societies & Landmark Preservation is much greater than the median working capital for all charities we rate.

Community Foundations:

These charities exist to build and manage donor-advised funds and to distribute those funds over time. As a result, they maintain substantial investments in securities. The median working capital ratio among these charities is much, much greater than the median reported for among the rest of the charities rated by Charity Navigator.

Working Capital > $250 Million: 

Charity Navigator understands that after a certain point raising additional funds for the purpose of increasing working capital becomes counterproductive. As a result, we have adjusted the working capital score so that any organization with $250 million or more in working capital receives 10 points.

 

Performance Metric Seven: Liabilities to Assets Ratio

Measures the ratio (expressed as a percentage) of total liabilities compared to total assets (lower is better).

Converted Score:

10

7.5

5

2.5

0

  • General

0% - 5%

5% - 20%

20% - 40%

40% - 99.9%

100%+

  • Animal Rights, Welfare, and Services

  • Community Foundations

  • Food Banks, Food Pantries, and Food Distribution

  • Libraries, Historical Societies, and Landmark Preservation

0% - 5%

5% - 10%

10% - 20%

20% - 99.9%

100%+

  • Adult Education Programs and Services

  • Advocacy and Education

  • Diseases, Disorders, and Disciplines

  • Environmental Protection and Conservation

  • Medical Research

  • Public Broadcasting and Media

  • Religious Media and Broadcasting

  • Social & Public Policy Research

  • Treatment and Prevention Services

  • Zoos and Aquariums

0% - 10%

10% - 30%

30% - 40%

40% - 99.9%

100%+

  • Fundraising

  • Housing and Neighborhood Development

  • Multipurpose Human Service  Organizations

  • Performing Arts

  • Science and Technology Research

0% - 15%

15% - 40%

40% - 50%

50% - 99.9%

100%+

Note on Liabilities to Assets Adjustments:

As we have done with our other financial metrics, adjustments for these rating tables are based on the actual ratios for charities in each specific Cause area. Causes that have more stringent tables are a result of data indicating the median ratio for liabilities to assets of charities in those causes is below the median for all of the other charities rated by Charity Navigator. The missions and financial structures of these organizations lead to a lower liabilities to assets ratio. Causes that have more lenient tables are a result of data indicating charities in those Causes have median ratios that are above the median for all of the other charities rated by Charity Navigator. The missions and financial structures of these organizations lead to a higher liabilities to assets ratio.

Financial Health Scores

We add up the 7 scores and add 30 points (to convert the score to a 100 point scale) to come up with the charity's Financial Health score. These scores are then translated into star ratings as per the following:

Financial Health Rating: 4 Stars 3 Stars 2 Stars 1 Star 0 Stars Donor Advisory
Financial Health Score: ≥ 90 80 - 90 70 - 80 55 - 70 < 55 N/A

 

 

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