Charity Navigator’s New Transparency and Accountability Metrics
Malini Sekhar, Associate
August 2010

“…if an organization is not ‘donor friendly’ and highly open about its activities and internal practices, it does not warrant your support.”
- Ken Berger, CEO, Charity Navigator

With this principle as motivation, Charity Navigator (CN) recently expanded its rating system of charities to include criteria to measure transparency and accountability. With current and potential donors in mind, nonprofits must now think more seriously about their commitment to openness.

CN went live with their new accountability and transparency methodology, which you can find here, last month. In addition, CN has already started to showcase charities where accountability and transparency data have been gathered (click here to see the list).

In particular, CN will focus on the public availability – via each nonprofit’s IRS Form 990 and website – and accessibility of: financial information, governance practices, ethical practices, effectiveness and results. An “accountability” tab will be added to the entries for those charities that have been evaluated by CN.

While Charity Navigator is not yet in a position to analyze the contents of the documents made available by charities, they believe that the first step is to see whether public information is made available at all.

Although the new, expanded IRS Form 990 requires more comprehensive information from nonprofits than before, CN observes that even minimal reporting requirements are still not met by many charities, and keeping information behind closed doors remains a problem for the sector.

Transparency and accountability measures will not impact CN’s four-star rating system until all 5,500 charities in their database have been reviewed. CN anticipates that this process will take several months.

In the meantime, if this is a new trend that has the potential to affect future philanthropic investments, it would be well worth it for all nonprofits to consider ramping up their efforts to improve transparency and accountability within and outside their organizations.

You can view Charity Navigator’s full announcement here.

Schultz & Williams is a national consulting firm based in Philadelphia; providing management, fundraising and marketing consulting for nonprofit organizations, along with full-service direct marketing, database and creative/production services.