New ratings sites offer broader view of nonprofit performance

What should would-be donors know about your organization? Your overhead rate, or your core strategies? Your budget size, or the program capacity you’ve built?  How much money you raised, or what you’ve accomplished with it?

According to some nonprofit leaders, new ways of assessing nonprofit accountability are needed. Critics of nonprofit ratings sites like Charity Navigator say that the “metrics only” approach to judging a nonprofit sends the wrong message, and that other kinds of information should be widely available. Now, a handful of web-based ratings sites are trying to expand public information on nonprofits past the old “efficiency” indicators of overhead and budget numbers.

The Charting Impact is one such framework. Designed by Guidestar, Independent Sector, and the BBB Wise Giving Alliance to “encourage strategic thinking,” the site offers nonprofits a chance to create a report that summarizes their strategies, capacities, and measurement techniques. The report is then reviewed by the Board Chair and CEO, who can add comments, and by anonymous stakeholders. The reviews are intended to validate the report, which includes answers to five questions:

1. What is your organization aiming to accomplish?
2. What are your strategies for making this happen?
3. What are your organization’s capabilities for doing this?
4. How will your organization know if you are making progress?
5. What have and haven’t you accomplished so far?

Once an organization completes a Charting Impact Report, its responses produce a document with a unique URL that can be shared on the Charting Impact site, on GuideStar profiles, on BBB Wise Giving Alliance evaluations, and on their own websites. The idea, say the founders, is to allow current and potential donors a concise look at your plans and progress, and to judge your strategic thinking along with your overhead expense rate.

Charity Navigator has also shown a shift in its model, which now includes such indicators as having a conflict of interest policy in place and audited financials posted on the site. Eventually the service plans to include results reporting as well, including logic models and benchmarking documents. These will become part of the program’s star ratings for measuring nonprofit effectiveness.

Can the new direction help clear up myths about nonprofit effectiveness and reduce the tendency to focus on nothing but the numbers?  It depends on whether potential supporters know where to look. But nonprofits can link to their organizational reviews and reports on the scoring sites from their own websites, using the tools as a way to help donors do their research. The sites provide nonprofits the opportunity to craft online information that more accurately reflects “what’s going on” beyond financials, and to think critically about how it will be received. For instance, you can show donors that you distinguish between outputs, such as “number of trainings conducted” and outcomes, such as increased knowledge and skills. It never hurts to have a reason to concisely articulate your goals, strategies, and progress.

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