Charity Navigator Responds to Misinformation About our Rating of Invisible Children
March 14, 2012
Early in March 2012, the charity, Invisible Children , released a video called Kony 2012 (see below). Invisible Children created the video in an effort to draw attention to Joseph Kony, the leader of the Lord's Resistance Army (LRA), and his terrorizing of Ugandans. The goal of the video is “not to celebrate him, but to raise support for his arrest and set a precedent for international justice.” The video became an Internet sensation. In just a few days, it garnered 75 million views on YouTube alone.
But the video’s tremendous popularity brought the charity a mixed bag of praise and scrutiny. Overnight the charity was hit with a string of criticisms that attacked everything from how it spends its money to the appropriateness of its mission. Like Larry Magid pointed out on the Huffington Post, we too believe in the importance of critical thinking. Heart wrenching appeals, like Kony 2012, are a powerful tool for inspiring altruism, but they are meaningless if we don’t take the time to ensure that the charity behind the cause is worth the investment. That’s what we’re all about at Charity Navigator – looking under the hood and doing the analysis to help you be an informed donor.
While it is fair to debate the appropriateness of this charity’s approach to solving a serious problem, some bloggers, donors and even reporters have mischaracterized the financial health of Invisible Children and even our evaluation of the charity. Rather than back away from the criticism, Invisible Children’s CEO, Ben Keesey, addressed many of the concerns raised about the charity via another video (see below). We commend the charity for this approach and what appears to be its commitment to transparency. And we’d also like to take a moment and set the record straight on a few items related to our rating of Invisible Children.
We give the charity 4 out of a possible 4 stars for its Financial Health. It spends upwards of 80% of its budget on its programs and services. As such, Invisible Children is actually outperforming most charities in our database in terms of how it allocations its expenses.
But some have mischaracterized the charity’s spending. They’ve pointed to the 37% the charity indicates it spent on “Central Africa Programs” (direct programs and services in Africa rather than awareness programs) saying that this is all the charity has spent on its mission. These same writers actually claim that we lowered their rating because of this 37% on direct services. That is not true at all! As described below, the area where we have concerns about the organization is in a number of areas of accountability measures.If you state that the charity only spent 37% on programs, then you are negating all of its awareness programs that are a core part of its mission. This is why it is so critical for donors to closely examine a charity’s programs to ensure its efforts truly match their philanthropic goals (see tip #3 from our 2011 Holiday Giving Tips).
We see donors make this mistake time and time again. For example, how often do you say yes to supporting a charity with ‘cancer / diabetes / autism/ fill-in-the blank health issue’ in its name thinking its primary efforts are to fund research to cure cancer / diabetes / autism/ and so on? But if you take a few minutes to look at the charity’s programs, then you might be surprised to see the group’s main efforts are awareness/ advocacy/ support for patients/ and so on. The moral of the story is that if you want your money to go to research, then you need to take just a few minutes to ensure that’s what your selected charity actually does.
Although awareness is a legitimate part of Invisible Children’s mission and should not be discounted, we recognize that awareness might not be something that you wish to support. You may care more about charities that provide direct aid in places like Africa – such as building wells or providing medical care to children - and that aren’t engaged in awareness campaigns. In that case, we offer an interactive world map on our site to help you identify highly-rated charities working in specific countries. Once you obtain a list of charities working in the particular country you wish to help, such as Uganda, then you can visit each of those charities’ websites (we link to each charity’s site from its ratings page) to learn more about its programs and to ensure it is doing the actual work that you wish to support.
The main reason Invisible Children earned just 2-stars in Accountability & Transparency is that it has less than 5 independent Board members (which we require to also be a majority of the Board). In our rating system, if a charity has less than 5 independent voting members of the Board or if the independent members do not constitute a voting majority, then 15 points are deducted from its A&T score. Only 5% of the >6,000 charities we rate fail to meet this standard.
Why do we give so much importance to this particular metric? A nonprofit’s Board is its first line of defense against unethical and unlawful behavior. The Board’s role is not just about fundraising or setting the vision for the institution. Its job is to ensure that the charity adheres to the law and fulfills is obligations to its stakeholders. The Board also exists to protect the charity’s assets and to make sure that the charity’s resources are used ethically and appropriately in fullfilling its charitable mission. Furthermore, the Board hires and oversees the charity’s CEO.
Having at least 5 independent Board members that are a clear majority of the Board allows for full deliberation and diversity of thinking on governance and other organizational matters. All too often, when charities are embroiled in scandal, we come to find out that they do not have an independent Board or their Board is asleep at the wheel (such as with Central Asian Institute which you can read about here and here).
Finally, we’re not alone in the belief that charities should have an independent Board of directors. The presence of an independent governing body is strongly recommended by many industry professionals including the IRS (as per the Form 990 disclosure requirements on the size and independence of the Board) and the Independent Sector (see the Principles for Good Governance and Ethical Practice).
Some have quickly looked at our rating for Invisible Children and mistakenly concluded that the charity did not complete an annual audit. That is not true. What we report is that the charity's audited financials were prepared by an independent accountant, but that it did not have an audit oversight committee. Just 6% of the thousands of charities we rate do not have an audit oversight committee.
Audited financial statements, which provide important information about financial accountability and accuracy, should be prepared by an independent accountant with oversight from an audit committee. The committee provides an important oversight layer between the management of the organization, which is responsible for the financial information reported, and the independent accountant, who reviews the financials and issues an opinion based on its findings. Seeing as Invisible Children doesn’t even have the minimum of 5 independent Board members, it isn’t surprising that it doesn’t have an audit committee on its Board. Hopefully, as the charity works on recruiting more independent Board members it will seek out candidates with financial backgrounds that would be qualified to serve on an audit committee.
An important note about our site: To find out more details about how we rate individual metrics, simply click on any of the metrics on any charity’s ratings page to view a pop up explanation. Here’s the link to view our explanation for this particular metric. You can also visit the Methodology section of our site to read in detail about how we rate charities.
Donors want to be honored, trusted, and respected. Having a charity sell, trade or share their name as a reward for giving them money is a short-sighted policy that violates the goodwill the donor brought to the sector. Sadly, we frequently hear from donors who are disheartened to learn that their contact information was sold, traded or shared by a charity they supported.
This situation also demonstrates the importance of building a rating system, like Charity Navigators’, that doesn’t allow for charities to opt-out as Invisible Children has done with other rating systems.
Invisible Children's CEO, Ben Keesey, Responds to the Criticisms