Everything You Need To Know About the 4 Major Charity Watchdogs

Nonprofit organizations exist to meet very real needs, but they can’t meet those needs without money.

And, like it or not, the competition for donor dollars keeps increasing.

In its 2016 Data Book the IRS reported that there are 1.8 million registered nonprofit organizations. And, that number just keeps growing. 86,915 were added in 2015; another 79,545 were added in 2016.

So, with the competitive landscape tightening, every nonprofit leader is doing everything they can to optimize their organization’s revenue by differentiating themselves from the competition.

Surprisingly, many miss an obvious and relatively easy way to attract and retain support: optimizing their Charity Watchdog profiles.

Before discussing why you should care about the Charity Watchdogs and how they could impact your fundraising, here is a quick description of what they are.

“Charity Watchdog” (CWD) is a generic term, applied to a class of nonprofit organizations that provide information, reviews and ratings for nonprofit organizations. While they are generally lumped together under the charity watchdog umbrella, they have different missions, function differently and affect your ability to raise needed funds differently.

Regardless of how you feel about CWDs, there is evidence that an optimized listing is something some donors do care about.

  • 52% of donors said the presence of a charity watchdog seal would greatly or moderately increase their likelihood of giving; 84% said the absence of a seal would decrease their giving (July 2014 The Able Altruist newsletter survey of 3,861 randomly selected donors)
  • A favorable rating by at least one charity rating agency positively impacts giving (September 2014 study of 16,000 NPOs by Daniel Neely of University of Wisconsin-Milwaukee,
    WI & Erica E. Harris of Rutgers University – Camden, NJ)

I suggest that clients and others objectively assess their Charity Watchdog Profile. What do I mean by this? Let’s take a brief Charity Watchdog IQ quiz to illustrate (see answers at the end):

1. Is your nonprofit registered and/or rated by any of the four major so-called CWD watchdogs?

2. Can you name them and what differentiates them?

3. Do GuideStar and Charity Navigator require rated organizations to measure the samekinds of results?

4. Do Charity Navigator and the BBB Wise Giving Alliance rate nonprofits the same way?

5. Where do the GreatNonprofits ratings come from?

6. How much does it cost a charity to be rated by one of the CWDs?

Why else do I think that optimizing your CWD profile is a great way to differentiate your organization from the pack? Consider this. Of the 1.8 million registered nonprofits, approximately 1.2 million are 501(c)(3) registered charities. Of these:

  • Only about 82,300 (6.9%) register and actively participate with GuideStar. Of these, only 2,192 have earned their top (Platinum) transparency seal.
  • Only about 30,000 (2.5%) have earned the GreatNonprofits badge.
  • Charity Navigator rates about 8,000 (6.7%). Of these 2,985 have earned their top (4 star) rating
  • The BBB Wise Giving Alliance and participating BBB affiliates, review approximately 11,000 (9.2%). About 4,400 meet all 20 charity seal standards.

So, hopefully you’ll agree that the benefits of earning a charity seal / badge from one or more of these organizations can differentiate your organization from other nonprofits and serve as an important addition to your fundraising toolbox.

Here are our CWD IQ quiz answers:

1. Is your nonprofit registered and/or rated by any of the four major so-called CWD watchdogs?

If you’re not sure, you can look your organization up on their websites (see #2).

2. Can you name four of the main CWDs and what differentiates them?

When we’re doing a watchdog review for a client, we always look at Charity Navigator, the Better Business Bureau, GuideStar and GreatNonprofits (and we test our client’s website as well). The first two conduct independent reviews and provide ratings. The latter two are informational agencies that provide nonprofits with the ability to impact their own “ratings”.

3. Do GuideStar and Charity Navigator require rated organizations to measure the same kinds of results?

OK; this is a trick question. Neither organization dictates if nor what NPOs ought to be measuring. GuideStar rewards NPOs that provide information about their outputs and results with its highest (platinum) seal. Charity Navigator experimented for a while with reporting information about whether rated charities measured and reported results. They withdrew this effort and are in the process of re-assessing it before re-introducing.

4. Do Charity Navigator and the BBB Wise Giving Alliance rate NPOs the same way?

No. The BBB tests 20 charity standards. NPOs that meet all 20 standards are deemed, “Standards Met”. Those that miss even one standard are deemed, “Standards Not Met” So, we always suggest that our clients allow us to conduct a preliminary BBB review before applying for a formal one. Charity Navigator reviews 24 Financial and Accountability & Transparency metrics to calculate a rated organization’s score and award 0 to 4 stars.

5. Where do the GreatNonprofits ratings come from?

GreatNonprofits describes their ratings as, “Yelp like”. Visitors to their website provide a 1 to 5 star rating and leave comments to describe their experience(s) with the NPO.

6. How much does it cost a charity to be rated by one of the CWDs?

Nothing. NPOs that earn 4 stars on Charity Navigator and those that earn the GreatNonprofits badge or a Guidestar transparency seal can display them for free. Charites that earn the BBB Charity Seal and wish to display it, pay an annual licensing fee based on their revenue.

Familiarizing yourself with each watchdog organization’s requirements and expectations will help you figure out how to optimize your own charity watchdog profile and improve the likelihood of retaining current supporters and attracting new ones.

As part of Bloomerang’s Content Donation Program, $100 was donated to Community of God’s Love.

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Peter Miragliotta
Pete Miragliotta is President of MASST Associates, LLC which provides expert strategic and tactical advice to nonprofits, including how to assess and optimize their charity watchdog profile to improve fundraising effectiveness.
Peter Miragliotta
Peter Miragliotta

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By |2018-01-03T09:53:19-05:00August 1st, 2017|Donor Communications, Nonprofit Marketing|

3 Comments

  1. Mitch Peterson August 1, 2017 at 11:15 am - Reply

    Thanks Peter! Great post.
    For faith-based organizations and churches, the Evangelical Council for Financial Accountability (ECFA0 is also a great “watchdog”. Having their seal can be a great comfort to supporters of those organizations.

  2. Pamela Odom April 19, 2018 at 8:56 am - Reply

    To be clear, Charity Navigator and Guide Star are NOT a good source for a rating of ANY charity. They simply rely on information provided by the IRS, and are interested ONLY in the financial interest of charities. They neither investigate nor care whether or not a charity is compliant with anything listed on the IRS 990s, nor do they concern themselves with corruption, no matter how massive, within an organization.

    • Tim July 19, 2018 at 11:31 pm - Reply

      Now, yours is information I can use!

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