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Recession Prompts Changes to Scoring for Certain Types of Charities

November 24, 2010

 
 

From the start, Charity Navigator’s methodology was designed to be both objective and fair. As such, when the data has dictated, we have established different performance benchmarks for the different types of charities that we rate. For example, museums, with expensive collections and property to maintain, understandably have above-average administrative costs. We adjust for this within our rating system so that museums are not penalized for spending slightly more in this area than other charities. It is with this principle in mind – that the data will guide our decisions – that we announce additional changes to our methodology.

Our team of Analysts have evaluated the data from thousands of fiscal year ending 2009 Forms 990 and have come to some conclusions concerning the financial position of charities in 2009. This analysis reveals that 2009 is a year during which certain types of charities began to feel the impact of the recession more dramatically than others. In fact, our research shows that nine different causes of charities were impacted enough to warrant a change to the benchmarks by which we assign their scores.

The adjustments were needed to two metrics of the organizational capacity rating – primary revenue growth and program expense growth. The following causes received adjustments to both metrics:

  • Museums
  • Fundraising Organizations
  • Religious Activities

This cause received adjustments just to the way in which we score its primary revenue growth:

  • Community Foundations

And these causes were issued new benchmarks for their program expense growth:

  • Performing Arts
  • Libraries, Historical Societies and Landmark Preservation
  • Botanical Gardens, Parks, and Nature Centers
  • Diseases, Disorders, and Disciplines
  • Medical Research

Please note that these changes are just for ratings based on fiscal years starting with 2009. We did not go back and make any alterations to ratings based on fiscal years prior to 2009 – again because the data did not substantiate an earlier adjustment. As a result of these changes, 97 charities have improved star ratings and 362 charities have improved scores. No charities received lower scores or ratings. You can learn more about the specific changes by visiting the Ratings Tables page of our site.

   
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