To help donors identify high-impact charities, we've launched the Impact & Results beacon. This beacon provides an assessment that takes explicit account of how much good the nonprofit achieves per dollar of cost.
In July 2020, we launched the Encompass Rating System so that our ratings are more inclusive of nonprofits of all sizes and provide a more comprehensive assessment of nonprofit effectiveness. Impact & Results is the second beacon rolled out as part of Encompass.
The initial version of the Impact & Results beacon was made possible by the acquisition of ratings startup ImpactMatters. You can learn more about ImpactMatters and the acquisition in this press release.
Hundreds of service-delivery nonprofits on Charity Navigator now feature Impact & Results scores. Through our Encompass Rating System, you can identify these organizations by the numeric scores under fully-colored Impact & Results beacons. In response to user feedback showing impact as the most important factor in donating, Impact & Results accounts for 60% of the score for Encompass rated charities.
In addition to nonprofits rated through Encompass, hundreds of nonprofits assessed through our Star Rating System also have Impact & Results scores on rating pages. This score does not currently affect the overall Star rating.
Here are just a few organizations identified as being highly impactful on Charity Navigator:
$50 cures one person of blindness.
$0.50 provides clean water to a person for a year.
$2 provides a meal to a person in need.
To assign impact ratings, we use publicly available information to estimate the actual impact the nonprofit's program has on people's lives. We then compare those impact estimates to benchmarks to determine if the nonprofit is cost-effective.
Rating is a complex and inherently imperfect exercise and we urge you to read on for details of how and why we issue these ratings.
In our beta phase, nonprofits that satisfy the criteria below are eligible to receive an Impact & Results score:
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.
Note also that, as with the Star Rating System, we generally issue Encompass ratings to individual incorporated entities (each filing their own Form 990) as opposed to networks of affiliated entities. Learn more about our eligibility criteria on impactmatters.org.
Impact & Results scores are based on ImpactMatters' impact analysis methodology. Read the full methodology.
To issue Impact & Results scores, we use publicly available information 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.
For the Beta V2 release of the Encompass Rating System, a nonprofit's score on the Impact & Results beacon is determined as follows:
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.
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.
With the launch of the Encompass Rating System, we have exponentially increased the number of nonprofits rated by Charity Navigator. It is now our goal to increase the number of nonprofits with Impact & Results scores. Nonprofits interested in receiving an Impact & Results score can sign up here.
For the initial release of the 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.