Charity Navigator has been evaluating nonprofits since 1999. They’ve helped grade nonprofits’ financials and helped donors get the information they need to make informed decisions about where they give.

You probably know that Charity Navigator is a nonprofit evaluator organization that helps donors find charities doing good work worldwide. But do you know how they evaluate your nonprofit?

If you want to increase your donations, you should ensure that Charity Navigator rates your nonprofit as highly as possible.

How does Charity Navigator grade my nonprofit?

Great question. Charity Navigator looks at your nonprofit from several perspectives called beacons.

Charity Navigator Beacons include:

• Leadership & Accountability
• Culture & Community
• Impact & Results
• Health & Transparency 

If you want to increase your donations, you should ensure that Charity Navigator rates your nonprofit as highly as possible.

Today, we are going to focus on their newest beacon, Impact & Results

You’re probably wondering what Charity Navigator is looking for. Overall, they want to see proof that you have successful programs.

Successful programs have clear goals and a plan for measuring success.

You should be able to answer the following questions:

• How will we define program success?
• What metrics do we use to track progress toward reaching our goals?
• How can we report on these metrics in a meaningful, easy to understand, and shared with others (e.g., individual donors or board members)?
• How cost-effective are our programs?

Why does Charity Navigator do this?

Donors and funders of all shapes and sizes want to know if their money is making a difference. With the advent of new technologies and software platforms, impact measurement has never been more accessible, and donors are eager to find out how impactful they are.

Funders Want To Know Your Impact

Here’s a pro tip. Donors view themselves as impact-makers and depend on your organization to deliver tremendous results. 

Organizations need to ask what impact their programs have had on the organization’s mission and track these metrics over time.

Accountability and Transparency

As a nonprofit leader, you should be prepared to answer the following questions:

• What is the impact we create on our target population?
• How are we measuring our impact?
• Do our donors, team members, and volunteers understand our impact?
• Are we transparent about our leadership compensation and benefits?
• Do I have mechanisms to monitor and report our impact?

If you are worried that you don’t know the answers to many of these questions, we strongly recommend you continue reading this blog or schedule a call with our nonprofit impact consulting team. 

How Charity Navigator is Grading Nonprofit Impact

As stated by Charity Navigator: “We define impact as the change in mission-driven outcomes net of what would have happened in the absence of the program (the “counterfactual”), relative to the cost to achieve that change. We then compare the estimated impact of the nonprofit’s program to a benchmark to determine if it is cost-effective. In other words, the benefits of the nonprofit’s program outweigh its costs.”

There’s a lot to unpack on Charity Navigator’s definition of impact. Still, we first need to address the fact that many organizations do not have adequate nonprofit impact measurement practices in place, let alone the ability to understand the cost-effectiveness of their program.

Remember, Charity Navigator exists to help donors and the public to evaluate nonprofits. They want to give everyone access to their data so everyone can see how effective charities are at helping people. Charity Navigator’s new nonprofit impact rating system will allow them to do just that by evaluating nonprofits based on their financial health and how much good they’re doing in the world per dollar spent.

What should nonprofit leaders do?

1.  Build a Theory of Change
   1. This is a simple tool that helps clarify and articulate the impact that you are making. 
2. Determine your program costs
   1. You need to know how much your programs cost on a per-unit basis. 
   2. Remember, this is how Charity Navigator evaluates your impact. 
3. Publish your impact report on your organization’s website. 
   1. Charity Navigator relies on publicly available data (your website) to evaluate your nonprofit. Make it easy for them to grade you appropriately!

Impact measurement can feel overwhelming. Frequently, nonprofit leaders can feel like they are drowning with responsibilities and don’t have time to take on one more. 

That’s why we created Social Impact Solutions. To make impact measurement and marketing easier so you can raise more funds, serve more people, and make a measurable impact on the world. 

If you have questions about where to start or what to do next, schedule a call with our team today!