Checking it Out: Charity Ratings and the Big Picture

If you are one of the more than 225 million Americans who made a gift or a number of gifts to charity last year, you might be more than a little curious about where your money goes and whether or not your generosity is making a difference.

Whether you are a modest donor who gives a number of smaller gifts ($50-$100) on an annual basis, or you are a major donor who regularly makes larger gifts ($500 or more)—it is wise to do a little detective work regarding your favorite cause. Remember, when looking at a charitable organization’s ratings, you are looking at a number of performance issues including:

• Financial stability: is the charity operating in the red or is the budget balanced?
• What are the programs or services the charity performs?
• What is the ratio of income (including service revenue, grants, cash and stock gifts, endowment income) to expenses?
• How much does it cost the charity to raise a dollar? Fund raising costs should not generally exceed between 10-25% of the total dollars raised?
• Is their stability on the staff, administration and board or is it a revolving door?
• What kind of media attention does the charity receive? Are there stories rating the charitable organization relationship to winning grants, impacting children and families, improving the community; or is there controversy?
• Is the charity the sole provider of a particular program or service or do numerous agencies do the same thing?

Rating charitable organizations is not limited to financial performance! While good stewardship of finances is a critical factor, take the holistic perspective when making decisions decisions about the destination of your generosity!