Charity Rating Services to Know About
From upsplash “rating” Photo by Towfiqu barbhuiya on Unsplash
In the US, a tremendous amount of money moves from people, companies, foundations, and nonprofits to other nonprofit entities.
Many charity watchdog and/or rating services have popped up to help these donors and grant-making organizations stay informed about the quality, transparency, ethics, and performance of nonprofits.
For nonprofit leaders, it’s worth understanding what these organizations are, how they work, and how to prioritize your nonprofit’s efforts to update your “ratings.”
Note that this article does NOT endorse these nonprofit rating services or their methodology.
In fact, I sometimes feel rating a charity on criteria like overhead or transparency has little to do with the quality of work or success rates at achieving their mission.
But these charity rating services are out there and donors are looking at them!
What Are Charity Watchdog and/or Rating Services?
Some companies and nonprofits have created services to rate, recommend, and review nonprofits. The idea is to help donors make more informed decisions about charitable contributions. Research shows that at least 21% of donors use these nonprofit rating services.
The downsides of nonprofit rating systems
To be cynical, charity watchdog and/or rating organizations are not solely altruistic. These products are income-generating services. There is nothing inherently wrong about this since it does take money to rank nonprofits. But it’s also important to understand how these services make their money.
Some nonprofit rating services draw revenue by asking donors, charities or third parties to pay for their service or access to their list. The sites also become hubs of online traffic, which can be monetized to generate sponsorships, ads, or funding.
I am especially cautious of services that charge nonprofits for better rankings, placement, or designations (like decals or badges).
Plus, there are gaps in what these organizations can truly measure. Just because a charity is listed or ranked highly on a rating website does NOT mean they do better work or are more effective and efficient. The rating systems largely work on data, and data is limited, sometimes inaccurate or old, and doesn’t tell the whole story.
Charity rating services also don’t usually review very small organizations or non-incorporated entities. Many good causes need funding but don’t have IRS designation. Facebook stopped allowing individuals to fundraise for themselves in 2023, but GoFundMe still allows it.
If you’re interested in launching a charity, learn how with my free checklist for starting a nonprofit!
Why You Should Care About Nonprofit Rating Systems
Data suggests that having a charity rating badge on your site is more likely to result in donations or higher donations. There is a sense of “authority” and “social proof” that comes with these badges. They are signals of quality, whether true or just symbolic.
Some organizations may want to pursue positive rankings from these organizations, and if it has benefited your organization, let me know at info@nonprofitfixer.com.
To help you assess the many nonprofit rating services out there, I’ve compiled a list of portals where individuals and employees can choose charities to donate to. These lists are generally curated by software, usually using IRS data, and data and information uploaded by charities directly.
Looking beyond charity watchdog and/or rating services
Charity watchdogs and/or rating organizations might be the most visible face of nonprofit transparency and accountability, but they are not the only way to demonstrate your nonprofit’s credibility.
Independent Sector lists standards organizations can pursue independently of seeking charity rating badges or approval. This is just one of many lists of nonprofit ethics within our industry.
If you feel like your organization does quality work, uses high standards, and has great transparency or accomplishments, consider creating your own badge or icon that declares that you have these standards. Create a page on your website featuring clear metrics to demonstrate your impact.
To get started, check out this list of mission-focused metrics for nonprofits.
What About Rating Donors and Foundations?
Today, a lot of time, energy and money goes into rating nonprofits. But as many nonprofit leaders know, not every donor is worth pursuing. So, how can you know the difference?
While there are organizations that track and monitor donations and grants, few rank, review, or recommend funding sources.
However, you can find reviews about what it’s like to work at a specific foundation by reviewing sites like GlassDoor or Linkedin. You can also learn a lot about how foundations operate by reviewing their 990 tax forms or connecting with other nonprofit leaders, such as in my Fixer Fellowship Group Coaching Program.
Conclusion: Pros and Cons of Charity Watchdogs and/or Rating Services
Nonprofit leaders must be aware of charity rating services because some donors and stakeholders will ask about them and because they create a higher level of scrutiny and expectations for nonprofits. But that doesn’t mean every nonprofit actively participates in charity ratings. Many decide to focus their energy elsewhere.
If you do choose to use or engage with nonprofit rating services, I’ve created a list to help you find the most important ones.
Note that this list does not include portals for those donating during a disaster or contributing mutual aid (American Red Cross, the Salvation Army, UNICEF, etc.) or those donating food, blood, or clothing through established sites. These portals do their own vetting and their methodology is not visible.
If you have additional or better information than we do please send it along to info@nonprofitfixer.com.
