Tip 2 – It’s up to donors to evaluate charities

All charities are not above average (unlike all the children at Lake Wobegon1). While many charities do strong work with the moneys entrusted to them, others (“wasters”) lack focus or management and produce little impact.

To boost the impact of your giving, find and support excellent charities that work on the causes you care most about.

Who evaluates and monitors charities?

Private businesses and their activities, finances and impact are evaluated and monitored by customers and investors.

This is not the case with charities. Although most charities must register with the IRS and file annual information returns on Form 990, the IRS is not set up to evaluate or monitor charities.

Evaluation

 

A sampling of charity evaluation

CharityNavigator.org is the best-known charity evaluation website. It evaluates charities and assigns “star” ratings to 8,971 of them. That’s less than 1% of the 1.7 million+ nonprofits listed by the IRS.

The star ratings categories go from Exceptionally Poor to Exceptional.

  • 41.6% of rated charities received 4-star ratings (Exceptional: Exceeds industry standards . . . )2. You can say that they’re exceptional or excellent. 

Conclusion: Not all charities are excellent — they vary greatly.

Evaluating and monitoring – it’s up to us

What about the other 99%+ of nonprofits not rated by CharityNavigator.org or another agency? It’s up to us. CharityNavigator.org urges us donors to do our own due diligence on the charities we seek to support, and look at the financial health of the organization, its accountability and transparency and its results.

It’s up to donors to do the evaluation and monitoring, to find and support excellent charities doing solid work, and to avoid waster charities.

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  1. See Garrison Keillor monologues about Lake Wobegon, “where all the women are strong, all the men are good-looking, and all the children are above average.”
  2. CharityNavigator.org data as of November 8, 2021.

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