Crowdsourcing, Transparency and Results Based Charity Ratings – The

Next Generation of Nonprofit Evaluation

Presented by Ken Berger, President & CEO

NextGen:CharityNew York, NY

November 19, 2010*Prototype for purpose of illustration only and in no way represents the final product.

Your Guide to Intelligent Giving

Where the Heart

Meets the Mind

America's premier

independent charity

evaluator providing timely, relevant,

unbiased information on the fiscal health

of nonprofit organizations.

Largest evaluator of charities: 5,500+

#1 Web Site for Rating Charities – “Your Guide to

Intelligent Giving”

The Data Proves Impact Estimated 3 million

distinct visitors per year

92% say evaluations affected their decision to support individual public charities

CN ratings influence decisions on billions in donations annually

(The Nonprofit Marketplace Hewlett Foundation, 2008)

*Includes Charity Navigator- evaluates nonprofits and provides meaningful information.** Includes individuals, foundations, corporations and government funders.

The Explosive Growth of Nonprofits in the US

The Problem

The Solution!: A 3-D View

QUALITIES OF A HIGH IMPACT ORGANIZATION

Accountability & Transparency

Financial Health

• Positive, sustainable change• Independently evaluatedHIGHER RISK

INVESTMENTLOWER RISK INVESTMENT

Financial Health

Accountability/Transparency

Results More Comprehensive Rating System

Introducing CN 2.0

THE EVOLUTION OF CHARITY NAVIGATOR2001 – FORMED WITH A MISSION TO BE A DONOR’S GUIDE TO INTELLIGENT GIVING.

2002 – 2007 - USED IRS DATA (990’S) BECAUSE MANY NONPROFITS DIDN’T LIKE US! IT WAS THE ONLY DATA AVAILABLE FOR META ANALYSIS.

2008 - ANNOUNCED PLANS TO REVAMP RATING SYSTEM TO MOVE TO 3-DIMENSIONAL

2009 - FORMED ADVISORY PANEL

2010 - RECEIVED HEWLETT GRANT TO LAUNCH VOLUNTEER STUDENT RATING PILOT PROJECT TO SCALE UP & FIDELITY CGF TRUSTEE’S PHILANTHROPY FUND FOR STRATEGIC PLANNING .

CN 2.0 - From One Dimensional to 3-Dimensional

20

40

60

80

100

120

2002

to 201

020

11

2012

& B

eyon

d

% W

eig

ht o

f Rat

ing

Effectiveness/ Results

Accountability/ Transparency

Financial

100%Financial

33.3% Account-Ability/Trans-

parency

+66.6%

Financial

50%Results

+17%

Accountability/Transparency

+33%

Financial

SCALING UP: 6 Steps to a 3-Dimensional Rating System

July 2010

Accountability &TransparencyMethodology

Launched (achieved)

Fall/Winter 2010

Financial Metrics

Revised (in process)

July 2011

Methodology to Measure Results

Launched (provided adequate funding is secured

to scale up)

Accountability & TransparencyNow Part of Star Rating

(in process)

July 2012

Results Dimension Now Part of Star Rating (assuming data has now been collected for all charities in CN’s database)

July 2013

Incorporation of reviews/data into Results Dimension (e.g.

beneficiary satisfaction, volunteer reviews,expert reviews and independent impact

evaluations.)

1

2

3

4

5

6

FINANCIAL

(33 Points)

ACCOUNTABILITY/

TRANSPARENCY

(17 Points)

RESULTS

(50 Points)

EFFICIENCY

(10)

SUSTAINABILITY

(23)

Overhead

(3 yr. moving average)

•Working Capital•Current Ratio Web Site & 990s

Keystone/NPC

7 Questions &

3rd Party Reviews

Low

Risk

27 – 33 15 – 17 38 – 50

Moderate

Risk

22 – 26 13 – 14 26 – 37

Intermediate Risk

18 – 21 11 – 12 12 – 25

Significant Risk

13 – 17 9 – 10 8 – 11

0 Stars High Risk < 13 < 9 < 8

FINANCIAL

0 – 4 STARS

33 Points Max

DCCK: 27 out of 33

ACCOUNTABILITY/

TRANSPARENCY

0 – 4 STARS

17 Points Max

DCCK: 14 out of 17

RESULTS

0 – 4 STARS

50 Points Max

DCCK: 41 out of 50

0VERALL SCORE: 0 – 4 STARS; 100 POINTS; RISK LEVELDCCK SCORECARD: 82/100 POINTS Low Risk

TRANSPARENCY & ACCOUNTABILITY

RESULTS7 Questions* - 50 Points Total Maximum

*For this prototype, we are using 7 questions devised by Keystone Accountability and New Philanthropy Capital.

QUESTION Max Points

1. What is the charity’s commitment to reporting results? 5

2. How does the charity demonstrate the demand for its services? 3

3. Does the charity report its activities (what it does)? 3

3. Does the charity report its outputs (short term results)? 3

RESULTS7 Questions - 50 Points Total Maximum

QUESTION Max Points

5. Does the charity report its outcomes (defined as the identifiable differences that it makes through its work)?

10

6. What is the quality of evidence for reported results? 14

7. Does the charity adjust and improve in light of its results? 12

*Prototype for purpose of illustration only and in no way represents the final product.

Sample Agency Dashboard

EFFECTIVENESS/RESULTS3rd Party Evaluations/Reviews

Weighted score based on quality and rigor of data:

1. Volunteer Reviews2. Primary Constituents Feedback3. Independent Expert Reviews4. Independent In-depth Research and

Analysis

Charity Navigator Soon to Launch Collaboration with GreatNonprofits

Charity Navigator users will now be able to write and read reviews by Donors, Clients Served, Volunteers, Former Staff, Board Members, General Public

Donors Can Expand for More Details

GNP REVIEWS TO REPLACE COMMENTS TAB

NO GOOD DEED GOES UNPUNISHED

The Battle for the Soul of the Nonprofit Sector

OUR BEST HOPE

• Educated and Engaged Stakeholders are our Best Hope!

More Information• Article: “The Battle for the Soul of the Nonprofit

Sector” Berger, Penna and Goldberg, Philadelphia Social Innovation Journal of

• Books:1. Billions of Drops in Millions of Buckets by Steve

Goldberg2. Money Well Spent by Paul Brest, et. al3. The Nonprofit Outcome Toolbox by Dr. Robert

Penna (March 2011)• Web Sites1. www.alleffective .org2. www.keystoneaccountability.org3. www.WhatWorks.org• Video: www.savingphilanthropy.org

Your Questions & Our Web Addresses

Website- www.charitynavigator.org

Blogs- www.kenscommentary.org

blog.charitynavigator.org

Twitter- kenscommentary