Wouldn’t it be nice, as we are sitting down to write our year-end checks to our chosen causes, to have a ratings system to help us make these difficult choices? Indeed, it has long been a dream of many involved with philanthropy and charitable giving to develop such an objective set of criteria to rationalize what is inevitably a highly competitive funding process. Well, several enterprising nonprofit organizations are trying to do just that. The result? Beware of what you wish for.
Case in point: the “Charity Navigator” (CN). CN is a nonprofit organization with the stated goal “to guide intelligent giving” and with the longer term aim “to revolutionize the entire charitable marketplace.” CN’s website trumpets a star rating system for nonprofits, including “Top Ten Lists” and “10 Slam Dunk Charities.” Given that the methodology is based purely on financial data (described below), one can only hope they do not succeed with their hoped-for revolution. Such ratings, in my view, can be wildly misleading because they ignore more important factors in the assessment of nonprofit work and they become downright dangerous if used as the primary criteria for judging nonprofit organizations. Is anyone else troubled by these ratings systems?