Why Isn't the Nonprofit I'm Interested in Rated?
We rate a nonprofit when we have enough information to estimate the change it’s made in people’s lives. There are a few possible reasons we couldn’t do that for the nonprofit you’re interested in.
Does the nonprofit do work like research or advocacy?
Nonprofits that seek systems change through advocacy, research or similar activities may be highly effective, but they are much harder to measure. The link between the nonprofit’s work and the final outcome is longer, and often there are alternate explanations for why that particular piece of legislation passed or those minds changed. We do not (yet) have a good method for consistently estimating the impact of these programs, and so we do not issue ratings for them. We hope to add these in the future.
Are the donors the same people who use the nonprofit’s services?
For some nonprofits, the donor herself is a user of the nonprofit, e.g., religious organizations, community associations and most arts and cultural institutions like museums. We neither encourage nor discourage donating to such nonprofits; we just do not rate them. With these “donor use” nonprofits, the donor’s decision to donate is largely driven by her personal experience with the nonprofit. As such, we do not see the same value-added from applying our methods to such organizations.
If neither of these reasons apply, it may just be that we haven’t gotten to that nonprofit yet. If that’s the case, you can let us know to prioritize that nonprofit by searching for it on our website and clicking Request a rating.
The nonprofit didn’t report enough information
How would you estimate a nonprofit’s impact, given only this information:
The Community Clinic offers medical services at a reduced cost to low-income individuals. It does everything from regular checkups to diabetes treatment to mental health counseling.
On its website, the Community Clinic states, “We have 200 visitors a day.”
The Community Clinic spends $27 million a year. It doesn’t break down costs by type of service provided.
You could multiply 200 by the number of business days in a year, but that just tells you how many visits the Community Clinic had in a year. It doesn’t distinguish between the types of service provided or the number of repeat patients. It also doesn’t tell you how good the clinic is at helping people get healthy.
Saying something meaningful about the Community Clinic’s impact with this information is hard. And, in all likelihood, it would be completely wrong.
The quality of an impact estimate is limited by the quality of impact information provided by the nonprofit. As we’ve learned from our work, many nonprofits do not offer high-quality, or any, impact information. Part of this stems from the demands of different players in the industry. For years, charity raters have focused on the overhead ratio — the percent of total costs spent on administration and fundraising — as a measure of a nonprofit’s worth. Lacking any other evaluatory information, donors have responded to overhead. But overhead ratios can only tell you so much; they don’t convey the final benefit that beneficiaries actually receive. Few donors are asking nonprofits to report on that final benefit. So, nonprofits have little reason to.
Nonprofits report impact information when an external system demands it. The three types of nonprofits we identified with widespread impact reporting — food distribution, emergency shelter and scholarships — all have this. These reporting demands make it possible for us to know the impact of their work. Scholarship programs follow guidelines set by the U.S. tax system, which requires nonprofits to report the dollar value of grants they distribute. The U.S. Department of Housing and Urban Development asks that emergency shelters report the number of residents and total beds available on a single night each year. In the case of food distribution, Feeding America, the largest network of food banks in the country, encourages its member food banks to report the number of meals served.
If you’d like to be part of our movement to improve the nonprofit data environment, you can request an impact rating here or on the nonprofit’s report page. Our vision is that the ImpactMatters rating system, empowered through the request of donors, makes impact reporting the new norm.