From the investigation of America's 50 worst charities, to allegations of Hurricane Sandy donation efforts fraught with scams, nonprofits are coming under scrutiny like never before. Now, one of the leading charity evaluators is taking a closer look at what nonprofit success looks like.
Charity Navigator, the organization that sets the standard in nonprofit efficacy, is evolving its assessment metrics to put a focus on impact. While in the past the nonprofit watchdog has measured success in terms of program investment and overhead, Charity Navigator will now add a "third dimension of intelligent giving" to focus on results and outcomes. This new process – to be implemented in 2016 – will be based on five key indicators, according to the organization's website:
- Alignment of Mission, Solicitations and Resources: Charity Navigator works to validate a nonprofit's fundraising and public financial records, to confirm they are in accordance to the nonprofit's Form 990.
- Results Logic and Measures: This section asks a number of questions to test results logic and measures, including, "Is the organization's statement on how their activities lead to pre-defined outputs and outcomes likely under normal circumstances?"
- Validators: In this category, nonprofits must be in good standing in general codes of conduct, standards and certification mechanisms in order to get credit.
- Constituent Voice: Charity Navigator looks to how well a nonprofit is collecting data from its primary constituents and also how that information is being reported to a broader audience.
- Published Evaluation Reports: In this last key indicator, Charity Navigator looks at whether a nonprofit is publishing regular assessment reports which focus on program results.
Charity Navigator executives hope the refined assessment system will allow donors to make more informed giving decisions. In a Morning Edition segment on NPR, Charity Navigator President and CEO Ken Berger says of the move, "If nonprofits are going to ask people for money… they should be able to show them their results."
Although some nonprofits believe the new system is unrealistic, Charity Navigator is taking a hard-stance that impact measurement is of the utmost importance. The organization's focus on return responds to growing demand for demonstrable impact. Just as companies should be transparent about CSR efforts, nonprofits, as critical social impact partners on the front lines of progress, should be ready and able to prove their purpose.