Charity Navigator Ratings System Explained | LoveToKnow (2024)

How Charity Navigator Rates Nonprofits

Charity Navigator rates nonprofit organizations on the basis of two key areas: (1) financial health and (2) accountability/transparency. They analyze the information that each rated charity publishes on its website and provides to the Internal Revenue Service (IRS).

• Financial health: Charity Navigator analyzes data from an organization's IRS Form 990 to rate its financial capacity and efficiency. They consider what percentage of expenses are allocated to programs, administrative expenses, and fundraising, as well as fundraising efficiency and increases in program expenses. They also look at key financial indicators, such as the organization's working capital ratio and its liabilities to assets ratio.

• Accountability and Transparency: Charity Navigator also uses information from Form 990 to rate accountability and transparency, along with information gathered by reviewing the organization's website. An organization is rated based on the extent to which it is willing to explain to stakeholders what it does (accountability), as well as how forthcoming it is with publishing key organizational information (transparency).

Rating System: Charity Navigator Stars

The nonprofits that Charity Navigator rates receive between zero and four stars, which correlates to how they score on the two key areas specified above.

Which Nonprofits Does Charity Navigator Rate?

Charity Navigator has data on all U.S. nonprofit organizations, but does not publish ratings on all of them. Instead, Charity Navigator focuses on organizations with significant funding that have existed long enough for data analysis to produce valid results. Charity Navigator rates only nonprofit organizations that meet the following criteria:

• Location: Based in the U.S.
• Duration: Have existed for at least seven years
• IRS status: Are registered with the IRS as a 501(c)(3) charitable organization
• 990 Filing: Files IRS Form 990 (not the EZ version)
• Revenue: Generates at least one million dollars in annual revenue for two years in a row
• Public support: The charity needs to have a minimum of $500,000 in public support which accounts for at least 40% of its total revenue (donations, gifts, dues, grants, etc.), for two years in a row
• Fundraising: Allocates at least one percent of its expenses to fundraising for three years in a row
• Administration: Allocates at least one percent of its expenses to administrative costs for three years in a row

There are a few types of organizations that Charity Navigator does not rate, even if they do meet all of the above criteria. For example, they do not rate land trusts, hospitals, schools, or sorority/fraternity foundations.

How to Find Charity Navigator Ratings

If you want to see how a particular organization is rated, simply visit the Charity Navigator website and type the name or employer identification number (EIN) of the charity you are curious about into the search box. Or, for a more general search, you can enter one or more keywords into the search box. This is a good option if you want to see a list of organizations that focus on a certain topic or cause. For example, a keyword search for "cancer" will bring up a list of cancer charities.

• Depending on how specific your search was, you may see only one organization or several.
  • For each organization, the number of filled-in gold stars indicates the Charity Navigator rating.
  • If an organization is listed as "not rated," that means it does not meet the criteria to be included.
  • If an entity has a CN Advisory, that indicates a rating cannot be issued due to allegations or significant concerns that have been raised.
• By default, the results are sorted by relevance, but you can use the on-screen filters to sort the results by organization name or rating.
• Click the name of any organization to get detailed information, including its precise rating score and the reasons it is rated the way it is.
• If you register for a free account with the site, you can use the "add to my charities" feature to group ones that interest you.

Donating Via Charity Navigator

You can donate to any of the rated charities directly from the Charity Navigator website if you wish. Charity Navigator does not keep any money from these donations. However, donations made via the site do incur a Network for Good processing fee. None of this processing fee goes to Charity Navigator. As with other donation processing platforms, you can opt to add the cost of the processing fee to your donation, or have it deducted from the donation amount.

How Is Charity Navigator Funded?

Like the organizations it rates, Charity Navigator is a 501 (c)(3) organization. There is no cost to individuals to use Charity Navigator, nor can charitable organizations pay a fee to be included or to increase their ratings. Charity Navigator relies on donations to fund its operations but does not accept donations, sponsorships, or any other funds from the organizations it rates. This is how the organization is able to maintain a truly objective approach to rating charities. Instead, Charity Navigator relies on donations from individuals, corporations, and foundations in order to cover its operating costs.

Make Informed Charitable Giving Decisions

Charity Navigator is a wonderful resource to help individuals and people who oversee charitable giving on behalf of businesses to make informed decisions about how to contribute to the causes they want to support. It's a good idea to get in the habit of checking out organizations that you're interested in supporting via Charity Navigator before deciding to donate.