December 4, 2009, Newsletter Issue #154: Checking it Out: Charity Ratings and the Big Picture

Tip of the Week

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!

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