Nonprofit Evaluations

A number of organizations are evaluating and rating nonprofits in response to donors’ desire for increased transparency and effectiveness.  These evaluation firms set comprehensive standards for strong governance, financial prudence and data transparency.  They are also increasing focus on quantifying the impact of each charity. 

Every year these evaluation firms analyze nonprofit’s Form 990 as starting point for all evaluations.   Many charities choose to add a logo displaying their charity ratings (with a link to the actual evaluation report) to the website to demonstrate their credibility to potential donors.

The largest evaluation services include:

  1. Charity Navigator (www.charitynavigator.org)
  2. Candid / Guidestar (www.guidestar.org)
  3. BBB (www.bbb.org)

Charities can take a number of steps to improve their ratings including:

  1. Review charity’s profile on each major rating agency’s website and ensure all data is accurate and up to date
    1. Add data quantifying impact and effectiveness, if possible
  2. Review rating criteria and adopt best practices
    1. For example, creating conflict of interest and donor privacy policies, listing website on Form 990, etc.
  3. Ensure Form 990 is properly reviewed, accurate, and posted on website after filing with IRS
    1. Particularly important to ensure all “Supplemental Information” text is well written and properly describes charity (ie, mission, KPIs, etc.)
      1. Worth benchmarking by reviewing text of similar charities’ Form 990’s
    1. Be sure to post only “public” version on website which removes names of major donors

Writing Policies

Nonprofit organizations can source free templates for key policies (conflict of interest, whistleblower, etc.) from the National Council of Nonprofits (“NCN”) as well as Blue Avocado.  Both organizations also have an extensive library of material for improving corporate governance and running a more effective nonprofit.

  1. National Council of Nonprofits (www.councilofnonprofits.org)
  2. Blue avocado (www.blueavocado.org)