Your organization works hard and pays good money to follow the accounting rules – is it fair that Charity Navigator doesn’t? The charity evaluator uses metrics by which it analyzes and rates charities. These ratings are then viewed by thousands of potential donors.
In an under-the-radar move, Charity Navigator recently revised its financial performance efficiency metrics to be in direct conflict with Generally Accepted Accounting Principles (GAAP). Clearly believing that it “knows better” than the Financial Accounting Standards Board, it simply decided to disregard the rules and claim that charities can’t have multi-purpose donor outreach expenses (e.g., communications that are both for programs and fundraising). Instead, Charity Navigator reclassifies any money partially used for fundraising communications as fundraising expenses. This means that your organization may be losing thousands of donations just because Charity Navigator doesn’t follow the rules.
On its website, Charity Navigator claims that it made this decision as “an advisor and advocate for donors,” but it is blatantly ignoring a charity’s efforts to be efficient in its donor communications.
How will this affect your nonprofit’s rating on Charity Navigator?