How Your Charity Measures Up

Donors now have more tools to ensure their money is well spent.

A new rating system makes it easier to verify that your donations are going to a worthy charity. Charity Navigator (opens in new tab) has long been the arbiter of charities’ bona fides. Its new 2.0 rating system now measures accountability and transparency as well as financial health.

Seventeen new gauges were added, such as whether a charity has independent board members, a conflict-of-interest policy or a board audit committee. CEO Ken Berger says the ratings help people assess the risk of donating to a particular charity. “If an organization doesn’t have these policies and practices, then even if it’s financially healthy there’s a higher risk that your contribution may not be spent as you desire.”

When Charity Navigator applied its new system to the nearly 5,500 charities it evaluates, results were mixed. Scores changed for half of the organizations. For 60% of those, the change was positive, and there was an 8% increase in the number of charities with a three-star (out of four) or better rating. But 40% of the 1,200 top-rated charities saw their ratings drop.

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Senior Reporter, Kiplinger's Personal Finance