March 8, 2021
Today marks the end of what Charity Navigator has referred to as its “Impact Data Experiment” that was launched on GivingTuesday, November 17, 2017. The experiment added impact & results data to charity profile pages on CharityNavigator.org, such as impact statements and progress reports that charities had previously submitted to GuideStar (now Candid), Classy, and GlobalGiving.
This experiment had three goals:
Since launching in 2017, the number of nonprofits with impact data on their Charity Navigator profiles grew from 2,400 to 30,558 this past year and these pages were viewed more than 40 million times. Candid Executive Vice President Jacob Harold stated, “Nonprofit leaders know just how important it is to track progress. That’s how organizations learn and that’s how they get better. And when individual nonprofits are transparent about their work, it makes it easier for the entire field to get stronger.”
Thank you to our partners Candid, Classy, GlobalGiving, and ImpactMatters (who joined us in the second year), as well as a team of researchers led by Dean Karlan at Northwestern University to analyze the results of the effort over the years. Without all of these participants we would not have achieved the scale that we did.
Thank you to our users and donors, especially the Bill & Melinda Gates Foundation, which provided dedicated funding for the experiment on our platform and facilitated conveings between the partners.
We are particularly grateful to all the nonprofit leaders that took the time to report on their organizations’ impact and results on one of these platforms. Impact is by far donors’ most requested and sought after information, so taking the time to share results through our platforms really matters! “Communication between nonprofit leaders and donors about impact has so many benefits: it can build trust, educate donors, and be a part of a learning cycle that helps those leaders improve in their own practice.” said Alix Guerrier, GlobalGiving’s Chief Executive Officer.
Reflecting on the experiment, Dean Karlan shared, “When an individual is doing their due diligence and researching nonprofits, what they're primarily looking for is confirmation that their donation can make an impact. While historically the Charity Navigator ratings relied on financial information, the Impact Data Experiment explored equipping donors also with metrics more directly aligned with expected impact and then tested whether the donors responded favorably to such information by giving more.”
Due to a number of issues, including significant changes to the ratings pages between the years, data collection errors and more, we were unable to draw a clear correlation between having impact data and change in donation behavior. In year one, this appeared to favor increased donations and in year two it appeared to have the opposite effect. In January 2020, Charity Navigator surveyed its users who once again reported impact as the most important factor in deciding whether to make a charitable gift. Going forward, Charity Navigator will continue to examine donor behavior across all our metrics.
On July 29, 2020 Charity Navigator launched the new Encompass Rating System to provide donors and the charities they support with a more comprehensive view of nonprofit health and effectiveness. Encompass is a part of a larger organizational initiative to measure what matters and lessen the reliance on financial data from the IRS Form 990 to more comprehensive data demonstrating nonprofit health.
With the acquisition of ImpactMatters in September 2020 and launch of the Encompass Rating System’s Impact & Results beacon in October 2020, for the first time ever, donors are provided with an assessment that takes explicit account of how much good the nonprofit achieves per dollar of cost. “We are proud to have been a part of the Impact Data Experiment and to have brought the ImpactMatters’ methodology to Charity Navigator and together advance our shared goal of making high-impact philanthropy easier for all,” said Elijah Goldberg Vice-President of Impact Ratings at Charity Navigator and former co-founder and CEO ImpactMatters.
Given that impact is now factored into Charity Navigator ratings, the team decided to end the Impact Data Experiment for a better user experience where there will be one source of information on impact. Charity Navigator’s newly formed Impact Unit, made up of former ImpactMatters staff, is currently building new methodology to support other cause areas and ways to scale up the number of nonprofits evaluated.
Over the course of the next 18 months, the Encompass Rating System will begin to include additional measures of organizational effectiveness, including Culture & Community on March 1, 2021 and Leadership & Adaptability in summer 2021. These additional beacons will provide donors with more information to factor into their philanthropic decision-making, as well as provide nonprofits with opportunities to be rated on other important areas of their business.