After two years of conceptual work, followed by over a year of data gathering and months of analysis, in September of 2011, Charity Navigator moved from a one dimensional to a two dimensional rating system (CN 2.0). In designing the new system, our goal was to both be fair to the charities we rate while also creating a tool that was the most effective at helping donors identify charities that are more or less risky social investments. We believed it was important to establish a system of scoring that would reflect our conviction that the highest performing charities are those that excel in all areas, not just one. In other words, we sought out a revised rating system that would ensure that charities that score very poorly in one dimension, but well in the other, could not score high overall.
A one dimensional rating system, like the one Charity Navigator launched in 2002 to rate the Financial Health of charities, can be done with a simple addition of scores. But rating charities on two distinct components – (1) Financial Health + (2) Accountability and Transparency – in such a way that charities must excel in both areas in order to score well overall, requires a more complex calculation. In the CN 2.0 system the overall score is not a sum, but rather a measurement of the distance of two component scores from the theoretically perfect score of 100 and 100. The smaller the distance to the perfect score, the better the overall score. Mathematically, the formula we use to calculate the overall score is:
Although the calculation used to determine the overall score is complex, the rating table used for Financial Health, Accountability & Transparency and the Overall Rating is the same as illustrated below.
|Overall Rating:||0 Stars||Donor Advisory|
|Overall Score:||≥ 90||80 - 90||70 - 80||55 - 70||< 55||N/A|
Help in Understanding the Math
To help understand the calculation for determining a charity’s overall score, we provide a visual tool on each charity’s rating page to help you understand it. The following graph is an example of what is shown on the ratings pages. In this example, the charity has a score of 88 in Financial Health (3-stars) and 77 in Accountability and Transparency (2-stars). Following the 88 score on the vertical scale and the 77 on the horizontal scale to where they meet, it is easy to see that the charity earns a 3-star overall rating.
You can also plug the charity’s two individual component scores – (1) Financial Health and (2) Accountability and Transparency – into the boxes below. This tool will perform the complex distance formula calculation for you so that you can easily obtain the charity’s overall score.
|1 - Financial Score||2 - A&T Score||Overall Score|