Charity Navigator evaluates far more charities every year than anyone else. Every day during the holiday season we are quoted by a number of media outlets somewhere in the country. Furthermore based on surveys we have conducted we can see that the outcome of our effort is to have tremendous influence on the giving behavior of donors to US based charities. That is a major part of our core mission.
We believe that our rating system gives a decent snap shot of the financial efficiency and capacity of charities in every sector from health care to animal welfare, from human services to the arts and humanities. However, this is not a time for us to rest on our laurels or to assume that we have got the whole picture in hand. I noted a while back that one of my core values is the belief in a continuous improvement process. That means we need to continually strive to make our services better. I believe that we are now at a point of opportunity to do just that by expanding our ratings into a whole new dimension.
We have advised donors that to make their giving decisions, our ratings are a "part of the puzzle". We specifically recommend in our 10 Best Practices of Savvy Donors that, in addition to reviewing our charity ratings, donors (among other things) should:
"1. Be Proactive In Your Giving - Smart givers ... are specific about the change they want to affect. For example, they don't just support generic cancer charities, but instead have targeted outcome goals for their giving, such as providing mammograms to at-risk women in their community....
8. Start A Dialogue To Investigate Its Programmatic Results - Although it takes some effort on their part to assess a charity's programmatic impact, donors who are committed to advancing real change believe that it is worth their time. Before they make a contribution, they talk with the charity to learn about its accomplishments, goals and challenges. These donors are prepared to walk away from any charity that is unable or unwilling to participate in this type of conversation."
"Programmatic impact", "accomplishments, goals and challenges" all relate to one degree or another to the outcomes of the work of the charity. What is an outcome? I believe a good definition is given in the book, Quicker, Better, Cheaper? (Edited by Dall W. Forsythe) "Outcomes are the events, occurrences or changes in conditions, behavior, or attitudes that indicate progress toward achievement of the mission and objectives of the program. Thus, outcomes are linked to the program's (and its agency's) overall mission - its reason for existing."
Over our six plus years, we have come to the conclusion that some donors are not taking the additional steps we recommend to assess outcomes and are relying almost entirely on our ratings. In addition, while we assume that financially strong organizations are far more likely to be effective in their outcomes, it may not always be the case. Alternatively, charities with mediocre financial strength may not necessarily have mediocre outcomes. Therefore, to help donors know with greater certainty which charities are achieving program results, we are exploring integrating outcome measurement into our rating system.
As a first step, we have begun conversations with a variety of experts in the field to see the current state of such measurement tools. In large measure, from what I have seen so far, it appears that the field is in its infancy and we will have to do some heavy lifting to get a meaningful tool that can be broad enough to evaluate all categories of charities, while not becoming overwhelmingly cumbersome and complicated. In other words, this is going to take us some time to develop. It could be years rather than months. In the meanwhile, we have a number of other efforts we will be making along the way to get the ball rolling. I will give you the details of these efforts in future blog entries.
Another challenge that leads us to the conclusion that developing this tool will take time is the fact that there is no standardized data source from a third party to get the information (like the IRS 990 that we use for financial analysis). Therefore, we will probably need to gather the information directly from the charities we evaluate. To say that many of them will not be thrilled by such a prospect is an understatement! However, at the end of the day, I think that most will welcome this expansion of our rating system with the hopes that it will more comprehensively capture what they do and how they do it. It will also further our core mission of providing guidance to donors on making intelligent giving decisions.
The leadership of Charity Navigator believes it is well worth the challenges it entails and as a result we are setting a goal over time of offering an expanded rating system to more comprehensively evaluate nonprofits and separate great organizations from the rest. We look forward to collaborating with our colleagues who are working on this issue to improve the state of charitable giving. I am certain that we are up to the challenge and will get to the right outcome as soon as we can!