Charity Navigator Encompass Rating System™

Charity Navigator Encompass Rating System™ Header Image

In order to better serve both donors and nonprofits, we've expanded the number of charities we rate from 9,000 to 170,000

To accomplish this goal, we built the Encompass Rating System, providing donors with a powerful tool to access comprehensive evaluations of the total impact of more than 160,000 nonprofits (and counting!). This is substantially more than Charity Navigator has historically rated.

Donors are afforded peace of mind when considering supporting smaller and more recently established nonprofits, and these organizations are given a platform to promote their effectiveness to current and potential donors across multiple metrics, enhancing their ability to raise the funds they need to advance their mission. Star rated charities are not affected by this new system.

Encompass ratings are scored from 0-100 based on available data. A score of 75 or above indicates that a nonprofit is effective and transparent in the areas being assessed, based on Charity Navigator's criteria. These organizations will receive the "Give with Confidence" designation on their Charity Navigator pages.

Providing guidance through beacons

The Encompass Rating System uses a combination of automated methods and technology-supported manual research and analysis to provide donors and nonprofits with four clearly-visualized indicators of total impact — we refer to these as beacons.

All four beacons are now live and accessible: Finance & Accountability, Impact & Results (learn more), Culture & Community (learn more), and Leadership & Adaptability (learn more). We issue Encompass ratings to nonprofits if they have been scored on the Finance & Accountability or the Impact & Results beacons (an Encompass rating cannot currently be earned for a Culture & Community beacon or a Leadership & Adaptability beacon alone). We will continue to make iterative changes to the currently released beacons, with three releases each year in the fall, spring, and summer.

finance and accountability

Finance & Accountability

This beacon evaluates a nonprofit organization's financial health, including measures of stability, efficiency, and sustainability. We also include accountability and transparency practices to ensure integrity.

impact and results

Impact & Results

This beacon assesses how well a nonprofit delivers on its mission. To issue an Impact & Results score, we estimate the actual impact a nonprofit has on the lives of those it serves, and determine whether it is making good use of donor resources to achieve that impact. Please see here for details on how and why we rate impact.

leadership and adaptability

Leadership & Adaptability

This beacon provides an assessment of the organization's leadership capacity, strategic planning, and the ability to readily innovate or respond to changes in constituent demand/ need to achieve the organization's mission.Please see here for details on how and why we rate leadership, strategy, and ability to adapt.

culture and community

Culture & Community

This beacon assesses whether nonprofit organizations engage in constituent feedback practices with their program beneficiaries and other stakeholders. Please see here for details on how and why we rate Culture & Community

Criteria and Methodology

While eligibility requirements for an evaluation through the Star Rating System disqualify less established and smaller nonprofits, the Encompass Rating System uses technology-supported automation to analyze the tax forms of 501(c)(3) organizations that have e-filed the IRS Form 990 (990PF, 990EZ or 990N is not sufficient) for three consecutive years. Nonprofits can also be rated on their delivery on stated missions via the Impact & Results beacon. The Encompass Rating System is based on a numerical score out of 100 and lives alongside the current Star Rating System.

  1. Program Expense (25 or 13 points)
    The Program Expense Ratio is determined by the amount an organization spends on program expenses as a percentage of its total expenses. We calculate the average program percentage over the three most recent fiscal years. A charity with a reported percentage of 70% or higher will receive the 25 points for this metric. Charities with a percentage between 60%-69.9% will receive 13 points.
  2. Independent Audit or Financial Review (20 points)
    Organizations with a total revenue above $1 million are expected to have completed an independent audit. Charities with a revenue between $250K and $1 million are expected to have completed a formal audit, review, or compilation. Charities that have completed the expected financial documentation will receive the 20 points for this metric. This metric is not applicable to organizations with less than $250K in revenue*.
  3. Board Composition (25 points)
    An organization must have at least three board members. In addition, more than 50 percent of those members must be identified on the Form 990 as independent (i.e. not compensated as an officer or other employee of the organization). A charity with an independent board that meets this criteria will receive the 25 points.
  4. Liabilities to Assets (15 or 8 points)
    The Liabilities to Assets percentage is determined by total liabilities as a percentage of total assets. We calculate this percentage per the most recent fiscal year end. A charity with a reported percentage of less than 50% will receive the 15 points for this metric. Charities with a percentage between 50% and 59.9% will receive 8 points.
  5. Website listed (3 points)
    The organization must have a website listed on its 990. This is an accountability and transparency measure; nonprofits act in the public trust and reporting publicly on activities is an important component of our rating. A charity that lists their website address on page one of the 990 will receive the 10 points.
  6. Documents board meeting minutes (3 points)
    The organization must confirm on its 990 that they adhere to this process. An official record of the board meeting events that took place ensures that a contemporaneous document exists for future reference. Charities that have this process in place will receive 3 points.
  7. Whistleblower policy (3 points)
    The organization must confirm on its 990 that they have a whistleblower policy. This policy outlines procedures for handling employee complaints, as well as a confidential way for employees to report mismanagement. Charities that have this policy in place will receive 3 points.
  8. Conflict of interest policy (3 points)
    The organization must confirm on its 990 that they have a conflict of interest policy in place. This policy protects the organization and by extension those it serves, when it is considering entering into a transaction that may benefit the private interest of an officer, director and/or key employee of the organization. Charities that have this policy in place will receive 3 points.
  9. Records retention and destruction policy (3 points)
    The organization must confirm on its 990 that they have a records retention and destruction policy in place for handling, backing up, archiving and destructing documents. Charities that have this policy in place will receive 3 points.

*For the charities with less than $250K in revenue who are not subject to the Independent Audit, Review, Compilation metric; the scoring will be adjusted for these metrics as follows:

  • Board Composition (35 points)
  • Website Listed (5 points)
  • Documents board meeting minutes (5 points)
  • Whistleblower policy (5 points)
  • Conflict of interest policy (5 points)
  • Records retention and destruction policy (5 Points)
  1. A nonprofit receives a total of 0 out of 100 points if, after a thorough search of its public materials, we were unable to find sufficient information to estimate the impact of a substantial portion of its programs.
  2. A nonprofit receives a total of 50 out of 100 points if it has published sufficient information for us to estimate the impact of a substantial portion of its programs, but we found it was not cost-effective. We determine cost-effectiveness by comparing our estimate of the nonprofit's impact to a benchmark for performance.
  3. A nonprofit receives a total of 75 out of 100 points (a passing score) if it is cost-effective by our estimates.
  4. A nonprofit receives a total of 100 out of 100 points if it is highly cost-effective by our estimates.

Charity Navigator believes nonprofit organizations that engage in inclusive practices, such as collecting feedback from the people/communities they serve, may be more effective. We've partnered with GuideStar by Candid to survey organizations about their feedback practices. Nonprofit organizations are encouraged to fill out the How We Listen section of their Candid profile.

Charity Navigator awards every nonprofit that is eligible for an Encompass Rating that completes the survey full credit for this Beacon, in recognition of their willingness to publicly share this information with the nonprofit and philanthropic communities. Although the data is not evaluated for quality at this time, future iterations of this beacon will include third party or other data that will serve to validate the information provided by the nonprofit.

Nonprofit organizations that submit complete answers in the Charity Navigator Nonprofit Portal are eligible to receive a Leadership & Adaptability score.

  • Strategy (40%) - The nonprofit organization presents evidence of strategic thinking and goal setting.
    • Mission 
    • Vision
    • Strategic Goals
  • Leadership (30%) - The nonprofit organization provides evidence of leadership investment through focusing externally in mobilizing resources for the mission and internally through investing in leadership development.
    • Leadership Development
    • Mobilize Resources for Mission
  • Adaptability (30%) - The nonprofit organization has an opportunity to tell the story of how the organization adapted to tremendous external changes in the last year.

Nonprofits can also receive no score on the Finance & Accountability beacon, but a score on the Impact & Results beacon and vice versa. In that case, the nonprofit's is not penalized for not having a score on the other beacon. While both a Culture & Community score and a Leadership & Adaptability score affect a nonprofit's rating, an organization cannot earn an Encompass rating on either a Culture & Community or Leadership & Adaptability score alone.

Have questions?

Read our frequently asked questions (FAQs) to learn more about the Encompass Rating System, how ratings are determined, and more.

Adam Lowy Move For Hunger

As a result of the COVID-19 pandemic, demand for our services are at an all-time high. The assurance of organizational effectiveness that a rating from Charity Navigator provides will allow us to expand our support base and advance our mission to end food insecurity – we are enormously proud to have received the highest rating possible in the new Encompass Rating System.”

Adam Lowy
Executive Director/Founder
Move For Hunger
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