Disable all preview features

FAQ About the Encompass Rating System

 
 

General Questions About the Encompass Rating System (V4)

  1. Why did Charity Navigator need to create a new rating system?Answer
    • Many individual and institutional donors rely on Charity Navigator to help inform their giving decisions, yet only a small fraction of the 1.6 million nonprofits operating across the United States are currently equipped with a rating from the organization. This is because eligibility requirements for our existing Star Rating System include a minimum number of years in operation and revenue amount, thereby excluding younger and smaller nonprofits. The new methodology utilized by the Encompass Rating System enables Charity Navigator to rate nonprofits at scale, bringing the impactful work of more than 170,000 newly-rated nonprofits to the attention of donors and providing the assurance that a rating from Charity Navigator bestows.
  2. How does the Encompass Rating System benefit donors? Answer
    • The Encompass Rating System assesses more than 170,000 nonprofits to help donors make informed giving decisions. The Encompass Rating System includes four indicators (called "beacons") to evaluate total impact: Finance & Accountability, Impact & Results, Culture & Community, and Leadership & Adaptability. We may make changes to existing beacons, as appropriate, adding more metrics and expanding methodologies that will allow nonprofits to provide a more holistic view of their organization.
  3. How does the Encompass Rating System benefit nonprofits? Answer
    • Our research tells us that nonprofits overwhelmingly want the visibility, credibility, and legitimacy that a Charity Navigator rating brings. It provides an unbiased, third-party review of an organization's impact and prospects for sustained impact into the future and gives donors confidence that their contributions will be used efficiently to help advance the cause they are supporting. The Encompass Rating System allows smaller and more recently established nonprofit organizations that were ineligible for a Star rating to promote themselves to current and potential donors across multiple metrics, enhancing their ability to raise the funds they need to advance their mission.
  4. How did you develop the Encompass Rating System and how will it grow over time? Answer
    • The Encompass Rating System uses a more nimble, iterative process akin to a software development that to allow the system to evolve. The system uses technology to streamline and automate our evaluation process so that we review and rate an exponentially larger number of nonprofits. We also engaged user-experience (UX) and design experts to help develop and deploy a modern, highly-visual and user-friendly digital display that makes the information easy to understand and use for nonprofits and donors. Our team continues to explore technology, collaboration, and partnerships to support the evolution of our process, including considering artificial intelligence and machine learning capabilities that would help us scale but also assure the highest quality of information to our users. We collect information for the additional beacons in collaboration with industry partners already in possession of relevant nonprofit data, as well as directly from nonprofits themselves.
  5. Is there a seal/badge that nonprofits can use to showcase their Encompass ratings? Answer
    • Yes, nonprofits with a rating of 75 or above can download a promotional toolkit that includes a seal, social graphics, a sample press release and email announcement. To access this, visit the Nonprofit Portal and look for the call to action to 'Download ratings toolkit'.

Questions About Future Versions of the Encompass Rating System (V4)

  1. If the Encompass Rating System is evolving frequently, what should we expect in the future? Answer
    • The Encompass Rating System will have three releases each year in the fall, spring, and summer. Some releases will only make minor adjustments while others will address whole new domains. More condensed release periods allow nonprofits to positively affect their rating on a more ongoing basis and provide donors with up to date. Beta V1 (released July 2020) included just the first version of the Finance & Accountability beacon. Beta V2 (released October 2020) included the launch of the Impact & Results beacon. Beta V3 (released March 2021) included the first version of the Culture & Community beacon focusing on Constituent Feedback practices and the second version of the Finance & Accountability beacon. V4 (released August 2021) launched the Leadership & Adaptability beacon.
  2. When will the next version be released? Answer
    • We are planning on releasing three times each year in the fall, spring, and summer. Our next release will be in October 2021. Each time we release a new version, we will be sure to share notifications in advance.
  3. Who is building the system and selecting measures? Answer
  4. Will the metrics for this first version change over time or just be added to? Answer
    • Each new release of the Encompass Rating System may both modify existing metrics and add new metrics.

Questions About Using the Encompass Ratings to Inform Giving

  1. How can donors compare nonprofits when one has been given a Star rating and another has an Encompass rating? Answer
    • Both the Star Rating System and the Encompass Rating System serve as important trust indicators for donors of all sizes. Charity Navigator recommends 3- and 4-star rated nonprofits, as well as organizations earning an Encompass score of 75 or higher (signified with a "Give with Confidence" designation). The Star Rating System's Financial Health and Accountability & Transparency scores have some parity with the Finance & Accountability beacon in the Encompass Rating System, sharing many of the same metrics. Star-rated organizations can earn Encompass beacons though they do not contribute to the overall star rating. All four beacons contribute to an overall Encompass rating. We encourage donors to look to consider the trustworthiness, impact, and sustainability of an organization to inform their philanthropic decisions across both rating systems.
  2. Are you recommending nonprofits with an Encompass score of 75 or above like you recommend 3- and 4-star nonprofits? Answer
    • Yes, organizations with an Encompass score of 75 or more are signified with a designation of "Give With Confidence."
  3. How could a nonprofit have an Advisory but also receive a passing score in the Encompass Rating System? Answer
    • We currently have three levels of Advisory (Low, Moderate, High). A nonprofit with a Low or Moderate Advisory can have a Star or Encompass rating, but a nonprofit with a High Advisory cannot. If a nonprofit with a Low or Moderate Advisory receives a passing score in the Encompass Rating System they will be displayed as such. However, we still suggest that donors review the Advisory and ultimately weigh the severity of the advisory per their own comfortability. A nonprofit can meet the requirements of one or more of the beacons resulting in a passing score in the Encompass Rating System, but still have an advisory due to another area of concern that is not captured in the Encompass Rating System metrics.
  4. Why does an organization's Impact & Results matter? Answer
    • The Impact & Results beacon's criteria and methodology draws on a wide array of data sources and follows essential social science principles for quantifying and understanding impact. This information will guide donors to high-impact nonprofits and increase the accountability and transparency of nonprofit impact. When a donor supports a more impactful nonprofit, more progress is made within the cause they care about. Currently, Impact & Results scores are determined by the cost effectiveness of an organization's programs.

      Take a simple thought exercise: A program has a limited budget of $100,000 to improve literacy in a community. It can choose between two approaches to do so: one that can boost literacy by a grade level for 100 students and a second that can also boost literacy by a grade level but for 200 students. All else equal, a sensible program administrator would choose the second, as of course it reaches twice as many students. This is a cost-effectiveness decision. We have limited resources and unlimited needs. Cost-effectiveness is a decision tool that makes those resources go further — helping more people in more ways.
  5. Why does an organization's Culture & Community matter? Answer
    • The initial version of the Culture & Community beacon is focused on determining whether nonprofit organizations engage in constituent feedback practices with their program beneficiaries and other stakeholders. All else equal, research shows that a nonprofit that practices collecting and utilizing constituent feedback is likely to have higher mission impact and community benefit, two effects that our rating system seeks to reward.
      • Mission impact: Nonprofits exist to further a mission they set for themselves. Nonprofits that practice constituent feedback are more likely to achieve their stated mission. This effect could occur through channels such as the establishment of stronger relationships with the people they serve or the empowerment of those people. These, while valuable in and of themselves (see Community Benefit below), can also in turn cause better outcomes, including long-term outcomes.
      • Community benefit: Beyond their stated mission, nonprofits have an impact on the broader lives of their beneficiaries, employees and people in the communities they work in. These impacts, positive and negative, can be substantial and various. Positive examples include: empowering beneficiaries; operating a diverse, equitable and inclusive organization; and promoting equity within a program or more broadly within a community. Nonprofits that practice constituent feedback are more likely to achieve positive community impacts. As with mission impact, these effects could arise through multiple channels.
  6. Why does an organization's Leadership & Adaptability matter? Answer
    • The initial version of the Leadership & Adaptability beacon focuses on the leadership, strategy, and adaptability of the organization. Donors can use the nonprofit provides to discern the following:
      • Strategy - The nonprofit organization presents evidence of strategic thinking and goal setting.
      • Leadership - The nonprofit provides evidence of investment in leadership development and mobilizing resources for mission.
      • Adaptability - The nonprofit has an opportunity to tell the story of how the organization adapted to tremendous external changes in the last year.

Questions About Criteria and Methodology of Encompass Ratings (V4)

  1. What eligibility criteria do nonprofits have to meet to be included in the Encompass Rating System V4? Answer
    • To be included in the Encompass Rating System V4, nonprofits must meet either the criteria to receive a score on one or more of the beacons.

      Finance & Accountability beacon eligibility criteria: Nonprofits can receive a Finance & Accountability score if they have e-filed their last three IRS Form 990s (the IRS tax form that tax-exempt organizations must file annually). The 990 EZ or 990N is not sufficient. In addition, we are using three-year averaging for the Program Expense Ratio, which is why we must have three.

      Impact & Results beacon eligibility criteria: Nonprofits that submit data to Charity Navigator that satisfy the criteria below are eligible to receive an Impact & Results score:
      • "Direct" criterion: At least two-thirds of the nonprofit's activities (as measured by percent of total program service expenses) are directly delivered to beneficiaries and reasonable to expect impact measurement for. Many nonprofits work one or more steps removed from beneficiaries, such as by conducting research, advocating for policy change or making grants to other organizations. We do not yet have a method for consistently estimating the impact of these nonprofits, and so have excluded them from the Impact & Results beacon at this time.
      • "Service" criterion: The nonprofit provides a service charitably, that is, at low or no cost to beneficiaries who are distinct from its donors. Specifically, the nonprofit's beneficiaries do not pay a majority of its costs (e.g., through tickets, membership dues, medical bills or donations), or, if they do, paying beneficiaries constitute a minority of total beneficiaries. The "service" criterion excludes many arts and culture institutions, religious organizations and fee-seeking health care providers in the U.S.
      • "Relevance to donors" criterion: The nonprofit receives private charitable contributions - of any amount - from individuals, corporations or foundations.
      • If a nonprofit is eligible, but has not yet received an Impact & Results score, this may be because we are still in the process of developing a methodology for analyzing its specific type of program. If you are an eligible nonprofit, you can share data to potentially receive an Impact & Results score.
      Culture & Community beacon eligibility criteria: Nonprofits can fill out the How We Listen (HWL) section of their Candid profile to receive a rating. To receive a score, respondents answer 'yes' to question 1 ("Does your organization collect feedback (i.e., perceptions, opinions, ideas, concerns) from the people you serve?") and have completed all questions 1-6 in HWL 1.0 or questions 1-8 in HWL 2.0.

      Participation is voluntary, however organizations that complete the survey will be rewarded with a full 100 point score for sharing their information publicly. Organizations that do not collect feedback or do not submit their data to Guidestar by Candid will not be penalized.

      Leadership & Adaptability beacon eligibility criteria: Nonprofit organizations that submit complete answers in the Charity Navigator nonprofit portal are eligible to receive a Leadership & Adaptability score.
  2. How often will ratings update? How often will new nonprofits be added? Answer
    • Encompass will update three times a year in the Spring, Summer, and Fall. Each beacon will update based on the cadence of the updates of the underlying data source:
      • Finance & Accountability beacon: As we acquire newly published e-filed full 990s, we will update nonprofits' Finance & Accountability scores continually and also issue scores for newly-eligible nonprofits that have fulfilled the requirement of three years of e-filed 990s (990 EZ and 990N are not sufficient). Nonprofits need not request a Finance & Accountability score; it will be issued automatically.
      • Impact & Results beacon: At this time, we have not yet established a fixed cadence for updating and adding new Impact & Results scores. In general, Impact & Results scores can be considered valid for several years, as long as there are no major changes to aspects of the nonprofit's program that affect its impact (e.g., general design of its program).
      • Culture & Community beacon: Candid will provide Charity Navigator with Constituent Feedback data before each beta and full release from the How We Listen section of Guidestar profiles. As this information becomes available to us, we will update the respective Charity Navigator profiles.
      • Leadership & Adaptability beacon: Nonprofits may submit their responses on the Charity Navigator Portal up until days days before the next release to be included in that upcoming release. Nonprofits may edit their responses at any time and likewise they will be published at the next ratings release date.
  3. What is the rating methodology of the Encompass Rating System V4? Answer
    • Each beacon of the Encompass Rating System has a different rating methodology. Please see the FAQs below for the methodologies of the Finance & Accountability, Impact & Results, Culture & Community, and Leadership & Adaptability beacons. As additional metrics are added to the beacons, we will update these FAQs with their respective methodologies.

      Nonprofits can receive an overall Encompass rating if they are rated on the Finance & Accountability beacon, the Impact & Results beacon, or both. Nonprofits that have only received a score for the Culture & Community or Leadership & Adaptability and no scores in either the Finance & Accountability or the Impact & Results beacons are ineligible for any overall Encompass rating.
  4. What is the rating methodology of the Finance & Accountability beacon? Answer
    • For the V3 release of the Encompass Rating System, a nonprofit's score on the Finance & Accountability Beacon is determined by nine metrics:
      1. Program Expense (25 points)
        The Program Expense Ratio is determined by the amount an organization spends on program expenses (page 10, line 25b) as a percentage of its total expenses. This data is an average of an organization's three most recent 990 forms. A ratio of 70 percent or higher earns an organization 25 points. A ratio of 60 - 69% earns an organization 13 points. Nonprofits that fall below 50 percent will receive zero points for all financial metrics (Program Expense and Liabilities to Assets) - donors expect that when they support an organization, most of their charitable gifts impact programs. The data we reviewed for all eligible nonprofits (including ones that passed and failed) included over 150,000 nonprofits of all types. This data showed that 85% of the organizations had a three year average program spend of 70% or higher. Per that data we deemed that setting the bar for this metric at 70% was appropriate.
      2. Independent Audit or Financial Review or Compilation (20 points)
        Organizations with a total revenue above $1 million (3 years) are expected to have completed an independent audit (page 12, line 2b). This indicator is not factored into the score given to organizations with less than $250K in total revenue and is removed from the scoring methodology. Nonprofits with a revenue between $250K and $1million are expected to have completed a formal audit, review, or compilation (page 12, line 2b or 2c).
      3. Board Composition (25/35 points)
        An organization must have at least three board members (page 1, line 3). 50 percent of those members must be identified as independent (i.e. not employed/receiving a salary from the organization)(page 1, line 4).
      4. Liabilities to Assets (15 points)
        The Liabilities to Assets percentage is determined by total liabilities (page 11, line 26b) as a percentage of total assets (page 11, line 16b). This information is secured from the organization's most recent 990 form. Organizations with a percentage of less than 50% will receive 15 points. Organizations with a percentage of 50 - 59% will receive 8 points.
      5. Website Listed (3/5 points)
        The organization must have a website listed on its 990 (page 1, line J). 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.
      6. Conflict of Interest Policy (3/5 points)
        Charity Navigator looks for the existence of a conflict of interest policy on the Form 990 (page 6, line 12a) as an accountability and transparency measure. 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.
      7. Documents Board Minutes (3/5 points)
        Charity Navigator looks to confirm on the Form 990 (page 6, line 8a) that the organization has this process in place as an accountability and transparency measure. An official record of the events that take place during a board meeting ensures that a contemporaneous document exists for future reference.
      8. Records Retention and Destruction Policy (3/5 points)
        Charity Navigator looks for the existence of a document retention and destruction policy per the Form 990 (page 6, line 14) as an accountability and transparency measure. This policy establishes guidelines for the handling, backing up, archiving and destruction of documents. These guidelines foster good record keeping procedures that promote data integrity.
      9. Whistleblower Policy (3/5 points)
        Charity Navigator looks for the existence of a whistleblower policy per the Form 990 (page 6, line 13) as an accountability and transparency measure. This policy outlines procedures for handling employee complaints, as well as a confidential way for employees to report financial or other types of mismanagement.
      Nonprofits can also receive no score on the Finance & Accountability beacon, but a score on the Impact & Results beacon. In that case, the nonprofit is not penalized for not having a score on the Finance & Accountability beacon.
  5. What is the rating methodology of the Impact & Results beacon? Answer
    • To issue Impact & Results scores, we use publicly available information and/or data directly submitted by the nonprofit organization to estimate the actual impact a nonprofit's program has on people's lives. We define impact as the change in mission-driven outcomes net of what would have happened in the absence of the program (the "counterfactual"), relative to the cost to achieve that change. We then compare the estimated impact of the nonprofit's program to a benchmark to determine if it is cost-effective — in other words, the benefits produced by the nonprofit's program outweighs its costs. A cost-effective program is making good use of resources to improve the lives of the people it serves. Please see here for details on how and why we rate impact.

      A nonprofit's score on the Impact & Results beacon is determined as follows:
      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.
      Nonprofits can also receive no score on the Impact & Results beacon, but a score on the Finance & Accountability beacon. In that case, the nonprofit's Encompass score is based only on the Finance & Accountability beacon; it is not penalized for not having a score on the Impact & Results beacon.
  6. What is the rating methodology of the Culture & Community beacon? Answer
    • The methodology for the first version of the Culture & Community beacon, Constituent Feedback, is based on The Core Principles of Constituent Feedback, which describes what it means to listen and respond to feedback well. Charity Navigator participates in a consortium with other feedback experts and leading nonprofit infrastructure platforms to drive the advancement, promotion, and data collection of Constituent Feedback. Partnering organizations include Feedback Labs, Candid, GlobalGiving, Keystone Accountability, 60 Decibels, Bridges Fund Management, Development Gateway, Listen4Good/Fund for Shared Insight, Outsell Inc, Jessie Ball duPont Fund, and the BBB Wise Giving Alliance.

      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 full credit for this Beacon to every nonprofit that is eligible for an Encompass Rating that completes the survey, 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.
  7. What is the rating methodology of the Leadership & Adaptability beacon? Answer

    Charity Navigator awards full credit for every eligible nonprofit that completes the six questions. Although the data is not evaluated for quality at this time, we anticipate that future iterations of the beacon will include third party and/or peer review to validate and evaluate the quality of the responses.

    • The methodology for the first version of the Leadership & Adaptability focus on strategy, leadership, and adaptability.  The methodology breaks down as follows:
      • 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.
  8. Why are some types of organizations (e.g., advocacy) currently not provided an Impact & Results score? Answer
    • For the initial release of Encompass Rating System's Impact & Results beacon, we have leveraged the pre-existing ImpactMatters methodology. Currently, this methodology is not appropriate for some types of services that nonprofits provide, including advocacy. In future versions, our team will look at alternative methodologies to evaluate program results and impact of a wider array of the nonprofit sector. Charity Navigator does not penalize any organization for which we don't have an appropriate methodology or data to support an evaluation. Those organizations will continue to receive a rating through the other indicators in Encompass Rating System V4.
  9. How do you calculate a nonprofit's overall Encompass score based on its Finance & Accountability, Impact & Results, Culture & Community, and/or Leadership & Adaptability scores? Answer
    • All Four Beacons Evaluated
      Impact & Results 50%
      Finance & Accountability 35%
      Leadership & Adaptability 10%
      Culture & Community 5%


      Three Beacons Evaluated
      Impact & Results 55%
      Finance & Accountability 35%
      Leadership & Adaptability 10%
         
      Impact & Results 60%
      Finance & Accountability 35%
      Culture & Community 5%
         
      Impact & Results 85%
      Leadership & Adaptability 10%
      Culture & Community 5%
         
      Finance & Accountability 85%
      Leadership & Adaptability 10%
      Culture & Community 5%


      Two Beacons Evaluated
      Impact & Results 60%
      Finance & Accountability 40%
         
      Impact & Results 95%
      Culture & Community 5%
         
      Finance & Accountability 95%
      Culture & Community 5%
         
      Impact & Results 90%
      Leadership & Adaptability 10%
         
      Finance & Accountability 90%
      Leadership & Adaptability 10%
         
      Leadership & Adaptability Will not receive an overall rating today.
      Culture & Community  


      One Beacon Evaluated
      Finance & Accountability 100%
      Impact & Results 100%
      Culture & Community Will not receive an overall rating today.
      Leadership & Adaptability Will not receive an overall rating today.
  10. Why are some metrics worth more points than others? Answer
    • We determined that certain metrics were more important than others in regard to the nonprofit's impact and its ability to sustain that impact into the future and weighted them accordingly. We also weight on the robustness of the underlying methodology in a beacon. As the methodology becomes more robust we may place additional weight on that beacon.
  11. What constitutes an overall passing score? Answer
    • 75 is the overall passing score. Charity Navigator believes that donors should feel confident in giving to organizations with a passing score. A score of 75 or above indicates that a nonprofit is impactful and is likely to sustain that impact into the future, based on Charity Navigator's criteria. These organizations will receive the "Give with Confidence" designation on their Charity Navigator pages. These organizations have also earned the right to display the badge on their website and share it with supporters. If a rated nonprofit has not earned the "Give with Confidence" designation due to an overall score of below 75, we recommend that donors examine the underlying data within each metric and other aspects of the organization to decide whether there is reason to support the organization despite a failing score.
  12. How did you develop your rating methodology for the Encompass Rating System? Answer
    • The methodology development process for each release is extensive, even more so with a domain that is new to Charity Navigator's ratings system like Leadership & Adaptability. Our process involves countless hours of interviews with experts in strategy and leadership development and amazing leaders from high performing nonprofit organizations. Our team also engaged the Consultative Council of Nonprofit Leaders and our Ratings Expert group to test ideas about what metrics to include in the methodology. We also survey donors and nonprofit leaders to understand their preferences in which metrics they value most. Charity Navigator performs this intensive engagement and listening process to yield the most informed methodology that we can produce. Some beacon specific notes:

      Finance & Accountability beacon: Most of the Finance & Accountability beacon metrics came from our Star Rating 2.1 methodology and research shows that these are basic vital indicators that can be applied to a great number of nonprofits.

      Impact & Results beacon: The methodology for the Beta V3 release of the Impact & Results beacon is an adaptation of the Impact Rating Standard, originally developed by ImpactMatters. The Impact Rating Standard builds on essential social science principles widely adopted in the field of impact evaluation. Charity Navigator acquired ImpactMatters in September 2020 to release the Impact & Results beacon.

      Culture & Community beacon: The methodology leveraged for the first version of the Culture & Community beacon, Constituent Feedback, is based on The Core Principles of Constituent Feedback, which describes what it means to listen and respond to feedback well. The feedback experts and leading nonprofit infrastructure platforms driving the advancement, promotion, and data collection of Constituent Feedback are collectively referred to as the Irritants — they include Charity Navigator, Feedback Labs, Candid, GlobalGiving, Keystone Accountability, 60 Decibels, Bridges Fund Management, Development Gateway, Listen4Good/Fund for Shared Insight, Outsell Inc, Jessie Ball duPont Fund, and the BBB Wise Giving Alliance.
  13. Why are there fewer metrics in the Finance & Accountability beacon of the Encompass Rating System compared to Star ratings? Answer
    • One of the goals of the Encompass Rating System is to scale Charity Navigator's ratings to a much larger set of nonprofit organizations. In order to scale, we had to ensure that the metrics accurately applied to a large number of nonprofits. Certain metrics that we considered had too many nuances and so they could not be applied broadly.
  14. Will you consider amending or adding to these metrics? Answer
    • We will collect feedback and make additions/alterations as we continue to experiment with new metrics. We will be guided by the feedback we receive from a variety of stakeholders including sector experts, nonprofit representatives, and donors via interviews and surveys.
  15. How will the effects of the COVID-19 pandemic and economic crisis be considered in ratings? Answer
    • An internal working group at Charity Navigator began researching this in 2020. Nonprofits that have been unduly affected by the pandemic and subsequent economic crisis to share with Charity Navigator how they were affected over the past year. Based on review, instead of penalizing the nonprofit with a lowered rating, Charity Navigator will hold the nonprofit's previous year's financial ratings. Nonprofits may submit their pandemic responses through the nonprofit portal.

Detailed Questions About How Nonprofits Can Manage Their Ratings

  1. What steps can my organization take to be considered for an Encompass rating? Answer
    • Nonprofits can manage their rating in the Nonprofit Portal.

      Finance & Accountability beacon: To receive a Finance & Accountability score, organizations must have three years of e-filed IRS Forms 990. Please e-file the full IRS Form 990 every year (not the 990 EZ or N). Nonprofits need not request a new rating or rating update; this will be done automatically.

      Impact & Results beacon: We encourage nonprofits to express interest in receiving an Impact & Results score here. Unlike the Finance & Accountability beacon, eligible nonprofits will not automatically receive an Impact & Results score. To increase accuracy and comparability, and to maximize efficiency, we systematically rate batches of nonprofits that run the same type of program (e.g., soup kitchens). We currently cannot respond to ad hoc requests to rate nonprofits one at a time.

      Culture & Community beacon: Nonprofit organizations are encouraged to fill out the How We Listen section of their Candid profile. This data will provide the basis for the initial evaluation of Culture & Community.

      Leadership & Adaptability beacon: Nonprofit organizations can submit their responses for this rating directly to Charity Navigator through the Nonprofit Portal.
  2. My organization has an Encompass rating. How can I stay up to date on my rating? Answer
    • The best way to stay abreast of changes to your rating and the Encompass Rating System is to create an account in the Nonprofit Portal. There you will find more details about your organization's scoring and how you can improve your rating.
  3. How can my organization improve our Encompass rating? Answer
    • Finance & Accountability beacon: We strongly encourage you to review the rating criteria above and routinely (e.g., with each fiscal year) conduct a self-examination against the criteria.

      Impact & Results beacon: The best way to improve your score is to make information about your impact publicly available on places like your website, Form 990 (Part III) and GuideStar Seals of Transparency. If we believe, based on the type of work you do, that it is reasonable to expect your nonprofit to report impact but we were unable to locate impact information, then your overall Encompass score can be at most 50 points (a failing score). Let us know that you are interested in getting an Impact & Results score here.

      Culture & Community beacon: Nonprofits can receive a Culture & Community score if they have completed the How We Listen (HWL) section of their Guidestar by Candid profile and have responded 'yes' to question 1 ("Does your organization collect feedback (i.e., perceptions, opinions, ideas, concerns) from the people you serve?") and have completed all questions 1-6 in HWL 1.0 or questions 1-8 in HWL 2.0.

      Leadership & Adaptability beacon: Nonprofit organizations can submit their responses for this rating directly to Charity Navigator through the Nonprofit Portal.
  4. Can an organization with an Encompass score of 75 or above be eligible for a Hot Topic list? Answer
    • At this time, we're faced with technology limitations that prevent us from including nonprofits with Encompass ratings in our Hot Topics. Only organizations that receive a 3- or 4-star (CN 2.1) rating will be considered for Hot Topic lists. But this is something that we are considering in the future as we roll out future versions of the system and as we reduce technological limitations.
  5. How can my organization appeal our Encompass rating? Answer
    • Finance & Accountability beacon: Finance & Accountability scores are currently fully automated from IRS Form 990 data. Nonprofits are welcome to submit a question via our help center. As the data being analyzed is what was submitted to the IRS, organization's should not expect a change until a new 990 is submitted to and released publicly by the IRS.

      Impact & Results beacon: If we have contact information for your nonprofit, you will have received an email about your Impact & Results rating. Please reply directly to this email; we would be happy to help you understand your rating and make corrections to your rating where needed. If you have not received an email from us, please get in touch via our help center.

      Culture & Community beacon: Candid will be periodically providing Charity Navigator with Constituent Feedback data from the How We Listen section of Guidestar profiles. As this information becomes available to us, we will update the respective Charity Navigator profiles.

      Leadership & Adaptability beacon: Submit complete responses to Charity Navigator via the Nonprofit Portal.
  6. Can my organization have an official representative to manage our page per this new rating? Answer
    • In June, Charity Navigator launched the new Nonprofit Portal that will, for now, live along with the Charity Rep portal that already existed, but was only for Star-rated nonprofits. The major difference is that the new portal is for all nonprofits whether Star-rated, Encompass-rated, or not rated.

      At this time, the new portal is limited and can only be used to submit data for our Leadership & Adaptability beacon and to answer our Pandemic Response questions. Submitting data in regards to the Leadership & Adaptability beacon will allow for a nonprofit to receive a score for that beacon and, depending on the status of their other beacons, possibly receive an overall Encompass score. Answering the Pandemic Response questions will allow for rated charities to temporarily not receive a downgraded Star rating or Finance & Accountability beacon (Encompass) score when we process a new rating using a Form 990 for FYE 3/31/2020 or after.

      In the future, we plan to merge the two portals and allow for all nonprofits to submit more data.

Detailed Questions for Nonprofits with Current Star Ratings

  1. Is my nonprofit's current Star rating affected by the Encompass Rating System? Answer
    • No. Encompass ratings are completely independent of Star ratings. The Encompass Rating System will have no impact on the Star rating of organizations currently rated in that system. For the foreseeable future, the Star ratings will remain in effect for the 9,000 organizations currently evaluated by this system.

      Important to note: Star-rated organizations can now earn Encompass beacons that will render on their profile pages.
  2. Are Encompass ratings more/less valuable than Star ratings? Answer
    • Both the Star ratings and Encompass ratings serve as important trust indicators for donors of all sizes. Charity Navigator recommends 3- and 4-star rated nonprofits, as well as organizations earning an Encompass score of 75 or higher (signified with a "Give with Confidence" wordmark).
  3. Can my nonprofit earn a Culture & Community beacon by being scored on our Constituent Feedback practices? Answer
    • Yes. If your organization has completed the How We Listen survey on Guidestar by Candid's site, the data you submit will appear on your Charity Navigator profile page. A score and the Culture & Community beacon will also appear on your Charity Navigator profile page, however this score does not affect your Star rating. Nevertheless, we encourage you to complete the survey as it may be factored into your organization's overall rating in the long-term.
  4. Can my nonprofit earn a Leadership & Adaptability beacon? Answer
    • Yes. If your organization completes the Leadership & Adaptability questionnaire in Charity Navigator's Nonprofit Portal, your organization can earn the Leadership & Adaptability beacon. The score will not affect your Star rating.
  5. What are the methodological differences between the Encompass Rating System and the Star Rating System? Answer
    • Encompass Rating System Star Rating System
      • Nonprofits receive scores out of 100 points
      • Finance & Accountability beacon:
        • Two finance metrics (described above)
        • Seven accountability metrics (described above)
      • Impact & Results beacon
      • Culture & Community beacon
      • Leadership & Adaptability beacon
      • Nonprofits receive ratings out of four stars
      • Financial Health rating based on 7 metrics described here
      • Accountability & Transparency rating based on 17 metrics described here
      • No measures of nonprofit impact

      Please Note: As we continue to receive questions and feedback on this new system we will add to this FAQ anything that is not currently covered.

Join Our Mailing List

Join over 400,000 other informed givers and get updates on charity ratings, new features, hot topics, and tips for donating.