5 Things Nonprofits Should Know About Charity Navigator

Here at CharityEngine, we spend most of every day helping nonprofits do great things to change the world.

Sometimes, we’re helping them by matching them with the technology that will most impact their operations.

Sometimes, we’re sharing ideas and strategies for success that we’ve learned working with some of the world’s most recognizable nonprofits.

And sometimes, like today, we’re offering advice that any nonprofit can use to advance their mission.

Let’s talk about Charity Navigator. If you don’t know what it is, we’ve got you. And if you know what it is, we’ve got some tips for optimizing your listing that you might not have considered. (Nope, we’re not connected to Charity Navigator in any way. We’re spotlighting it to help all nonprofits!)

1. What is Charity Navigator?

Charity Navigator is a website that helps donors align the causes they care about with the missions of charities. It’s an amazing and free resource for donors! The site ranks hundreds of thousands of nonprofits on a zero-to-four-star scale. They alert donors to reports of issues with different organizations, keeping donors safe from fraudulent or dishonest charities, and they also curate lists of the nonprofits responding to different crises so donors can support them confidently.

We love the fact that donors can split their gift, donating to multiple charities with one checkout, and that multiple donation types (such as in-kind gifts) are accepted.

For nonprofits, your Charity Navigator profile is an excellent opportunity to showcase your impact, build trust with donors, and reinforce your overall reputation. With more than 11 million unique visitors in 2022, donors are using this resource to choose where to place their support.

2. Your Charity Navigator Profile

The site has rated more than 225,000 charities, meaning your nonprofit is more than likely on the site. The criteria for being rated is that your organization is registered as a 501(c)(3) with the IRS, files a Form 990, and provides data points.

It’s important to check the website and claim your profile. This will ensure you have control over the information and can contact the company to update or correct what’s on the website.

The site offers a nonprofit portal to sign up or log in. Once you have access to your profile, it’s recommended that you update it regularly so that donors can see the most current information on your programs and impact. You can also assign multiple team members to your account, meaning the responsibility for updating it can be shared.

3. Charity Navigator Rating System

Using a combination of research, analysis, and constituent feedback, the site rates nonprofits on a star scale. The stars are determined by the weighted sum of an organization’s beacon scores, which range from 0 to 100.

There are four assessment areas in which nonprofits are rated—four beacons. They are:

• Accountability & Finance demonstrates whether or not the nonprofit is transparent and fiscally capable
• Impact & Results explains what the nonprofit has accomplished
• Leadership & Adaptability shows whether a charity has clarity of purpose
• Culture & Community refers to who they are and how they engage with their constituents

Donors prefer charities that have earned all four beacons, to the tune of 79.8% of donors choosing four-beacon organizations.

The beacons are scored and weighted to come up with an easy-to-understand star scale.

If your nonprofit earns a three- or four-star rating, you can access a toolkit. This is a resource for promoting your Charity Navigator rating and can be used to establish trust with your donors.

4. Improving Your Charity Navigator Score

Whether your score is what you expected or not, many nonprofits want a checklist of things that can be done to improve their score. Here are some best-practices tips for ensuring your score reflects favorably on all your hard work:

• Stay on top of your profile to make sure it has the latest information on your nonprofit. Report metrics to improve your accountability & finance score.
• Check your NTEE (National Taxonomy of Exempt Entities) code and confirm it reflects your mission. Donors can search NTEE codes to find organizations that align with what they’re seeking to support, so you want to be found.
• Because the data comes straight from your IRS Form 990, review the narratives on your form. A NonprofitPro article suggests you make sure your website is listed on page one of the 990 and that governance policies (conflicts of interest, whistleblower protocols, document retention) are disclosed.
• On your nonprofit’s website, link to your Charity Navigator profile and provide your 990.
• Stay informed about trends in nonprofit transparency and reporting. Following social media accounts can keep you updated.
• Note which beacon is lagging and enter new information in the portal to shore it up.
• Diversifying the sources of your funds (planned giving vs. major gifts vs. direct marketing vs. sustainers vs. grants) can help to bump up your score.
• Accurately tracking your data is critical before you approach transparency. Good fundraising software collects all your data and displays it on dashboards, making transparency with any rating system easy.
• Make sure at least 70% of your expenses are directed to programs and services. This will demonstrate efficient use of funds; spending a disproportionate amount on overhead or marketing costs will knock your ratings down.

For the most part, just relying on good business practices will go a long way toward bumping up your ratings. You’re stewarding your donor’s money and information and must treat it with care.

5. How Often are Ratings Updated?

You’re submitting new information like crazy, and yet your score remains unchanged. That’s because Charity Navigator releases new ratings just five times a year. This is the current release schedule:

This means you have time to improve any metrics hurting your score and get the data into CharityNavigator.

Get Ready…Get Set…Get Rated!

Charity Navigator is a big industry player and the first stop for millions of donors doing their research. But once you have all your data in that application, are there any others you should also examine?

Here are four additional sites that help donors make informed decisions:

GuideStar lists more than 1.8 million IRS-recognized tax-exempt organizations and thousands of faith-based nonprofits. It highlights information on financials, leadership, mission, and more. Like all systems, nonprofits can self-report data that is then verified.

CharityWatch bills itself as “America’s most independent, assertive charity watchdog” and keeps an eye out for abuses. Their rating system includes complex financial audits and calculates the percentage of total expenses a charity spends on programs and the cost it takes the charity to bring in $100 (a cost per donation).

The Better Business Bureau’s Wise Giving Alliance – Give.org – addresses charity governance, finance, results, transparency, and appeal accuracy. It evaluates 20 standards and rates each organization as to whether the standard is met, the standard is not met, or it can’t be verified.

GreatNonprofits is a little different. It’s a platform that collects community-sourced stories about nonprofits and rates them. Charities can claim their listing, invite or showcase reviews, and use the site to get donations.

Each of these sites helps educate donors so they can make informed decisions about where they’re putting their money. It’s worth seeing how your organization is listed.

Using the Data to Do More Good

Understanding how Charity Navigator and other rating sites work benefits your nonprofit. Of course, it’s yet another thing to do, but staying informed about your ratings and profiles is essential for maintaining credibility and attracting donors.

Each rating system will offer donors different insights. Consistently following best practices, keeping your data clean and easily reportable, and monitoring your scores are the easiest way to passively attract donors. And it won’t cost you a penny!

If you find that getting your data wrangled so you can report on it easily and in real time, give us a call. We’ve got the best fundraising software available for nonprofits, and we’d love to share what it can do for you.