Why doesn’t Charity Navigator care about impacts?

A couple of months ago, we talked about inputs, activities, outputs, and outcomes, saying that the closer you can get to measuring whether you actually help people the better you are.  

Charity Navigator measures the amount spent on activities.  So according to them, you would be better off spending $20 to help 10 people than $10 to help 20 people.  As we talked about yesterday, this biases against the use of volunteers; because they are not paid, any services delivered by them don’t count.

To be fair, there’s usually a correlation between amount spent and outcomes (that’s why it’s so unfortunate that Charity Navigator biases against larger organizations, as we discussed on Monday).  However, when that goes off the rails, Charity Navigator is the last to know.

Take Cancer Fund of America.  Here’s Charity Navigator’s three-star rating of them as of 2013, which is buoyed by four stars in accountability and transparency and very strong growth in program expenses.  At the time, it was rated higher than the two stars given to a clear slouch in the fight against cancer: the American Cancer Society.

You may recognize Cancer Fund of America from their profile in America’s Worst Charities, a project of the Tampa Bay Times and Center for Investigative Reporting or from the 2013 CIR report.  Or the lawsuit from the FTC and all 50 states and DC against them as a sham.  Or them shutting their doors earlier this year.

Or you might recognize them from Charity Navigator’s blog, where they talk about Cancer Fund of America being a sham.  When giving donors advise on how to avoid a scam, they say

“Take the time to research the charity’s finances, governance practices and results. You’ll find much of this analysis, for free, at Charity Navigator.”

As a watchdog, it’s one thing to let the sheep get eaten.  It’s another to recommend the wolf to the sheep.  And when you both recommend the wolf to the sheep and use that recommendation as an example of sage sheep-protecting advice, congratulations — you’ve reached Charity Navigator level.

To be fair, a lot of people missed this for a lot of years.  But Charity Navigator continued to rate Cancer Fund of America highly well after it was seen to be a scam because it looked only at program expenses and it didn’t care at all what those program expenses were or if they were having an impact.

And, with the release of CN 2.1, it still doesn’t.

You might say that everyone makes mistakes.  That certainly is true.  But most responsible people admit their mistakes, apologize for them, and change to avoid them in the future.  Charity Navigator held themselves out as a paragon on the very charity they missed and made no changes.

But, you probably are saying, it’s really hard to measure impacts.  Like really, really hard.  Especially for an outside organization.  And I would agree with that.  Charity Navigator is trying to police the entire nonprofit world with six analysts — it’s not easy at all.

But that misses two important points.  First, it is one thing to give advice that is unhelpful; it’s another to give advice that is actively destructive.  Charity Navigator:

  • Suppresses organization size (and impact) by ignoring the costs of scale
  • Ignores the ways a nonprofit can have an impact beyond its initial online constituency by eschewing joint cost allocation
  • Rewards hoarding money
  • Advises against giving to nonprofits who need it most
  • Advises against giving to nonprofits who are more efficient with their program expenses

I can forgive challenges in trying to tackle the challenging nonprofit world.  But your motto can’t be “when in doubt, do harm” in a reverse Hippocratic oath.  At the point that Charity Navigator says “don’t give your money to the losers at the American Cancer Society — go with this scam instead,” then crows about it rather than apologizing to the people it deceived, it is an actively negative force.  Maybe that will change with new leadership, but as I mentioned on Monday, I’ve taken too many runs at Lucy’s football to easily trust in another.

And second, others are doing this far better.  Last month, GuideStar released its platinum ratings, which are the result of a concerted effort to look at the actual impacts of nonprofits.  Causes are able to talk about the impacts in ways that are relevant to them and their donors and compare their impacts to other organizations.

It’s still a work in progress, launching only last month, but it’s still far better than anything from CN, because it tries to quantify the change nonprofits make in the world.  Additionally, in the GuideStar profile, there’s everything that’s in a Charity Navigator profile from financials, but without the misleading guidance.

I urge all nonprofit leaders to take a look at what is required to get platinum here.  

There’s also Great Nonprofits, which allows constituents to review the impact of a nonprofit.  This might have sounded odd 25 years ago, but by now, all of us have bought something on Amazon or tried a Yelp restaurant based on the review.

These efforts are important because donors do deserve to know what impact they are having and to be protected from scams.  They are crawling through the desert looking for it.  And when they find the oasis is actually a mirage, they are trying to drink the sand that is Charity Navigator.

So let’s give out water, as clear and pure as we can make it.

Why doesn’t Charity Navigator care about impacts?

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