Tuesday, January 11, 2011

Where We Are Headed

Charity Navigator is America’s largest and most influential charity rater. We serve over 3.3 million unique visitors and impact approximately $10 billion of charitable donations each year. This makes Charity Navigator far and away the largest and most utilized charity rating service that exists anywhere.

Up until recently, our rating system was solely focused on a financial analysis of charity’s performance. However, we are now revamping the rating system methodology (the new system is called CN 2.0) from a one to a three dimensional rating system. We recently expanded our rating criteria from our traditional one dimension - financial health, to a second dimension - accountability & transparency. We are now testing a third dimension - results. The results dimension will count for the largest portion of the total rating score once it goes live.

There are two significant features to this enhancement of our rating methodology. First, in order to deepen our methodology and break out of the trap of self-reporting that has constrained the nonprofit sector; we are embedding “constituency voice” as a core part of the three-dimensional rating criteria. Initially, this will mean that charities that publish rigorously collected feedback from their beneficiaries will earn a significant number of rating points. Second, in order to expand our ratings beyond the 5,500 charities currently covered, we are creating a web platform through which we can train, certify, and guide an army of volunteer Charity Navigator raters. Our goal is to be able to annually evaluate the roughly 20,000 charities that garner ~85% of the revenue that comes into the nonprofit sector each year. With seed support from the Hewlett Foundation, we are piloting both of these features now with graduate students in seven universities. Provided we can secure additional funding, we plan to expand the pilot group to other volunteer pools in early 2011 and continue the development of CN 2.0. Ultimately, we intend to train individuals throughout the country to conduct the ratings and CN central staff will focus on quality control.

In addition to strengthening Charity Navigator’s existing rating method of applying a single set of rating questions, CN 2.0 is integrating the evaluative insights of other providers. Our two current partners are the bookends on the constituency voice spectrum – Great Nonprofits and Keystone Accountability. Great Nonprofits channels feedback on nonprofits performance through an open system. Keystone proactively builds benchmarked feedback data sets through systematic data collection. As these and other providers of evaluative data prove the value of their data (such as Philanthropedia and Give Well), they will be factored into the overall Charity Navigator ratings. In addition, CN is also working right now with GreatNonprofits to convert the comment section of our web site to a user review section, powered by GreatNonprofits. We hope to add this feature on the site by February of 2011.

How quickly CN can fully implement CN 2.0 will be determined by the resources available to us. Charity Navigator is itself a charity and we do not charge a fee for our services to users, nor do we charge the charities to be rated or to use our analysis in their fundraising and marketing endeavors. Instead, CN relies on the voluntary donations of our Board members and our users, as well as advertising revenue, data sales and grants.

In conclusion, we believe that our revised rating system has the potential to completely transform the landscape of charitable giving. We foresee that, through this effort, there will be an increase in the number of social investors that use our services which will lead to a sizable increase in giving to higher performing nonprofits. Ultimately we believe this will lead to a measurable improvement in human welfare and acceleration in solutions to our world’s most persistent problems.

2 comments:

johnrougeux.com said...

Ken, so glad to hear about this move forward with Charity Navigator. Can you share some more of your thoughts on how the constituents, specifically the recipients of aid, will be incorporated into the new model?

Ken Berger said...

John,

The best place to get information about constituency or beneficiary feedback is to check out the web site of our partner - Keystone Accountability. Go to www.keystoneaccountability.org.

Best,
Ken