Factoring COVID-19 into Charity Ratings

In our commitment to make impactful philanthropy easier for all, Charity Navigator provides our objective, user-friendly rating service free of charge. Our ratings traditionally covered a charity’s financial health as well as its accountability and transparency practices.  Over the years, we have seen many changes and have worked to adjust our system to appropriately account for them.  We constantly monitor charity performance across the industry and make adjustments to our ratings tables when needed.  We use real data from the IRS Form 990 to inform where we set benchmarks for charity performance when it comes to financial ratios.

The Impact of COVID-19 on Charities

It probably goes without saying that in all our 20 years of evaluating charities, we have never seen anything so disruptive on such a large scale as the COVID-19 pandemic.  Some nonprofits could not staff their operations or even open their doors, some had to cease core programs entirely, and others saw the need for their services increase exponentially like never before. In our work to be fair and accountable, we realized early in the pandemic that we would need to adjust how we evaluate charities based on its effects.  To that end, we created an internal working group to compile a plan for dealing with this unprecedented event.  After a few months of review, analysis, and discussion, we came up with a way to continue providing donors with key data about the nonprofits they look to support, while ensuring that we do not unfairly penalize charities within our rating system for something that they had no control over.  

COVID-19 Pandemic Response Project

Rating updates are primarily triggered by the filing of a new IRS Form 990.  Because Forms 990 for the COVID timeframe are trickling into us over a few years, we are not able to complete a full analysis and alter our methodology and rating tables accordingly.  We will eventually be able to do this, but we needed to do something until that was possible. We determined that in lieu of posting a new rating when a Form 990 came into us that covered the time of the pandemic (FYE 3/31/2020 or after), we would request that charities respond to a questionnaire focused on how they adapted and delivered on their mission during COVID. These responses would, ultimately, be shared publicly and without edit on their Charity Navigator profile pages, providing donors with stories of resiliency and determination.  Ultimately, we believe that this inclusion benefits both the nonprofit and their donors as it provides their supporters with an opportunity to leverage this and other data to make more informed decisions about their giving.

Once we process a COVID-affected 990 and realize that the overall score would decrease in any way, we notify the charity and give them 30 days to answer the Covid Pandemic Response questionnaire.  If the nonprofit responds, we will post their submission and allow the organization’s rating to remain unchanged from its current rating. Our site will then contain a message stating that a new rating was postponed due to COVID-19, along with a link to the organization’s response. 

Continuous Evolution

In the future, we will be collecting data to consider more permanent changes to our methodology, which will then allow us to post updated ratings as we would normally have done.