"Which charity is doing the most for Syrian refugees?" The answers were anything but simple.
Revealed? Is there a fatal flaw in old-style charity rating systems? Are these systems one good reason giving to "the world's greatest refugee crisis since WW2" remains underwhelming?
Are "dumb as nails" rating systems undermining trust in the high-performance charity sector?
Charity Navigator counted the "Syrian Crisis" among its Hot Topics in January 2017.
And in an accompanying sidebar it eagerly advised the philanthropically-inclined, with a special list of 22 vetted charities active and doing good in the Syrian crisis.
The list struck me as odd right away.
I happened to know that USA for UNHCR is a heavy player in the Syrian refugee crisis. Yet USA for UNHCR was not on this list of worthy charities.
Why in the world not?
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Because it flunked some simple-minded math.
The list was highly exclusive: it included just those charities rated either 3-star or 4-star by Charity Navigator.
- For the last two years, USA for UNHCR has been rated a "mere" 2-star charity, thanks to its below-80 "overall" Charity Navigator score.
- USA for UNHCR wins plaudits for its TOP "100 out of 100" score, for "accountability and transparency."
- But a heavily-weighted "financial" (read: fundraising) score of 70.14 out of 100 drags USA for UNHCR's overall rating down into 2-star territory.
That financial score includes a damning "fundraising efficiency" rating of 24 cents to raise $1. If you're spending 24 cents to raise $1, then you're not particularly efficient, in Charity Navigator's view.
It has always liked parsimonious, Puritanical (to channel Dan Pallotta) "efficiency" ratings, sticking to its 2001 founding guns. We all recall the 20% ceiling rule beloved of fierce community watchdogs like the Better Business Bureau, right?
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What's undervalued in this "law and order" (certainly not marketing) formula is >>>>
... when USA for UNHCR last had a 4-star rating (2007), it raised about $6.5 million, spending $5.6 million of that on its program work in the field.
... whereas in 2017, USA for UNHCR, with its down-graded 2-star rating, raised more than $47 million -- spending over $31 million of that in the field, which represents a smashing 550% increase in impact over one very troubled decade.
Surely, in an age when algorithms refine, define and mine our lives, there has to be a more sophisticated way to judge whether an investment in fundraising -- one which has led to more mission year after year -- is worthy of a decent rating.
Is a rating system that cannot accurately factor in results ... just about where the science of medicine was ... when blood-letting was best practice and sworn by?
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In 2016, Charity Navigator tweaked its ratings system, after years of criticism. It was big news in the fundraising world.
In truth, though, not much changed. The old system -- the one that rewards charities spending zero on overhead while stigmatizing those that invest in their fundraising -- lumbers on, with some minor accounting adjustments.
Most important -- for validity's sake -- like the old system, Charity Navigator's new one continues to be utterly incapable of evaluating impact in the field, as it readily admits.
While Charity Navigator claims it is "Your guide to intelligent giving," it really is more "Your guide to giving ... assuming you're content to base your decisions on shallow and unsophisticated measures that account for nothing worthwhile in the real world."
Tweaks done, Michael Thatcher, CEO and president, dismissed further complaints. As he told the New York Times in May, 2016, "There's always going to be someone who's unhappy."
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Me. I'm unhappy.
We're measuring the wrong thing. We're measuring a shadow, not substance.
This is "numb nuts" proudly masquerading as "intelligent." This is a clumsy bull in the charity reputation china shop.
And it's hurting very good charities that have significantly INCREASED their impact in the field, as USA for UNHCR has.
Directly as a result of USA for UNHCR's well-placed and -rewarded investment in growth, Charity Navigator downgraded the charity's overall rating to 2 stars ... which in turn meant one of the region's most effective NGO's no longer qualified for Charity Navigator's list of recommended charities active in the Syrian refugee crisis.
You call that a "guide to intelligent giving"?
I'd call it dereliction of stated duty.
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It raised a question: Would Charity Navigator -- originally classed as a private foundation and now holding 501(c)(3) status -- pass its own tests and earn a 4-star rating?
It has no rating currently.
It has a policy of only rating those "nonprofits that have filed at least 7 years of the full Form 990 with the IRS. Charity Navigator has yet to file 7 years of full Form 990s with the IRS due to the fact that prior to being a 501(c)(3) public charity it functioned as a Private Foundation."
Still, there is data.
In its audited financials for the year ended Nov. 30, 2015, Charity Navigator reports $48,100 contributed by individuals other than founders and board members (there are 14 of those), while listing a "development and fundraising" expense of $303,016.
I'm sure I'm drawing the wrong conclusion.