What Factors Are Considered When Rating Charities?


Quick Answer

Factors to consider when rating a charity include its overall financial health, the percentage of budget it spends on services versus overhead, and the cost of fundraising as a percentage of total funds raised. Governance structure, outcome measures, and the organization's willingness to share information regarding its finances and outcomes are additional factors to consider. CharityWatch, CharityNavigator and Forbes regularly publish charity ratings.

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Full Answer

While it does not rate charities, the Wise Giving Alliance of the Better Business Bureau evaluates charities on 20 specific criteria, including governance, oversight, effectiveness and outcome reporting, as well as the charity's financial health and fundraising costs and practices. To assign efficiency ratings, CharityWatch looks at the percentage of a charity's total reported expenses spent on program delivery compared to overhead and how much it spends to raise $100 in donations. Forbes also looks at these indicators when identifying the most efficient charities.

GuideStar, a non-profit that maintains a national database of charity information, provides guidance to the public on how to evaluate charities. Before considering a charity's financial health, GuideStar recommends analyzing a charity's mission, the programs it mounts in service of the mission, and how it evaluates its work in terms of specific outcome measurements.

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