Ratings of charitable organizations exist to provide the general public with knowledge about the finances of particular charities, including identifying their incomes, business expenses, and the amount of money it takes for them to acquire donations.
Information from charity rating organizations also tells donors how much of their donations will be used to support charitable causes, and what portion of them will be dedicated to the charities’ operating expenses. Additionally, it lets donors know how financially stable and self-sustainable charities are. In the case of charities that do not appear to be self-sustainable, because donations may not actually reach their intended recipients, donors’ money might be better spent with other organizations.
How are charities rated?
Most often, charities are rated by evaluating their financial health, accountability, and transparency. This way, donors can see how efficiently charities will use their support, how well they have sustained their programs and services over time, and their level of commitment to accountability and transparency.
Information from charity rating organizations also tells donors how much of their donations will be used to support charitable causes, and what portion of them will be dedicated to the charities’ operating expenses.
The financial health of organizations is based on the financial information they provide in their informational tax returns, the Internal Revenue Service (IRS) Forms 990. Accountability and transparency are also determined from the same forms, as well as from information that organizations present on their websites involving best practices of governance and ethics, and whether or not charities make it easy for donors to find critical information about them, such as their bylaws.
Top rating agencies and their methodologies
There are a few very reputable charity watchdog agencies: Charity Navigator, Charity Watch, the Better Business Bureau’s Wise Giving Alliance, and GuideStar are at the top. Though each of these agencies uses a different methodology for rating charities, they all utilize charities’ financial documents, particularly their Forms 990, as their primary sources of information.
Charity Navigator is an independent American charity watchdog organization that evaluates charitable organizations in the United States. Its stated goal is “to advance a more efficient and responsive philanthropic marketplace in which givers and the charities they support work in tandem to overcome the nation’s and the world’s most persistent challenges”. Children Incorporated has a four-star charity rating with Charity Navigator – the highest rating that an organization can obtain.
Charity Watch exposes nonprofit abuses and advocates for the interests of donors. Their ratings include the percentages of charities’ budgets that are spent on program services, how much it costs charities to raise $100, an accountability measure, and the salaries of the charities’ highest-paid employees. Children Incorporated is a top-rated charity with Charity Watch, with an “A” grade.
Better Business Bureau Wise Giving Alliance
The Better Business Bureau (BBB) Wise Giving Alliance implements a rating system in which 501(c)(3) organizations are required to meet a minimum of twenty standards before receiving a “BBB Accredited Charity” designation. The Alliance’s standards include spending at least 65 percent of total expenses on program activities, no more than 35 percent of donations on fundraising activities, and having no more than three years of financial resources in reserve. Children Incorporated is a BBB Wise Giving Alliance recipient.
Children Incorporated believes in full transparency of our financial management.
GuideStar specializes in reporting on nonprofit organizations in the United States. In 2016, its database provided information about 2.5 million charities. GuideStar was one of the first central sources of information about nonprofits in the United States, and it is the world’s largest source of information about nonprofit organizations. GuideStar serves to verify that organizations are established, and that donated funds are spent where donors intend them to be – for individuals hoping to give in the wake of disasters. Children Incorporated is a Gold Participant with GuideStar – the highest rating that a charity can receive.
Children Incorporated believes in full transparency of our financial management. This protects the trust that you place in us as stewards of your generosity. For more information about our financial status, accountability, and transparency, visit the Accountability page of our website to find our most recent Forms 990 and financial reports, as well as other administrative documents.
How do I sponsor a child with Children Incorporated?
You can sponsor a child with Children Incorporated in one of three ways: call our office at 1-800-538-5381 and speak with one of our staff members; email us at firstname.lastname@example.org; or go online to our donation portal, create an account, and search for a child that is available for sponsorship.