What to know about Charity Navigator’s updated methodology
Nonprofit evaluator Charity Navigator — which has rated nearly 210,000 organizations as of Fall 2023 — has made significant changes to how it calculates its scores. Its Accountability & Finance scores now are calculated based on defined nonprofit characteristics. Larger, donor-funded charities will undergo an in-depth evaluation, while organizations that are smaller or not funded by donors will be assessed with a more-focused set of metrics. Charity Navigator also is removing metrics such as administrative expense ratios, fundraising ratios and program expense growth metrics.
Notably, Charity Navigator is taking steps to account for anomalies caused by the COVID-19 pandemic. For example, if the pandemic significantly affected a nonprofit’s revenue in 2020 or 2021, that year’s IRS Form 990 will be removed from the Accountability & Finance score calculation — welcome news for many organizations.
Engaging donors as public trust in nonprofits continues to fall
Independent Sector’s fourth annual Trust in Civil Society report reveals that a decline in nonprofit trust accelerated in 2023. Just 52% of Americans surveyed indicated that they trust nonprofits to do what’s right— a drop of 4% from the previous year. As the CEO of Independent Sector noted, challenges confronting nonprofits and philanthropy become increasingly more difficult without trust.
According to the report, engagement with the public is more important than ever in this environment. As with past studies, the most recent survey found that familiarity is strongly correlated with trust, but personal engagement is critical. Those who regularly engage with nonprofits have greater trust in the sector. And nonprofit messaging that focuses on value statements and data (rather than data alone) is most effective at building trust.
DOE announces $45 million for energy-efficiency upgrades for nonprofits
The U.S. Department of Energy (DOE) has released details on its new Renew America’s Nonprofits grant. The grant will provide $45 million in awards to nine “Prime Selectees.” The selectees will collaborate with nearly 40 partners to deliver energy improvements in approximately 300 facilities across 28 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
According to the DOE, energy costs are among the highest operational expenses for nonprofits. So, reducing energy use can free up a meaningful percentage of funds. Prime Selectees will “subaward” grants of up to $200,000 per facility and provide expertise in energy and project management to help execute much-needed retrofit projects. At least 60% of subawards will go to nonprofits in disadvantaged communities.