The Most Mismanaged Non-Profits

[Donnachaidh]

http://247wallst.com/2010/11/19/the-most-mismanaged-non-profits/

Rating the non-profit sector is tricky. The main ratings services Charity Navigator and BBB Wise Giving Alliance are both flawed. Moreover, some in the non-profit world object to the idea of assigning grades to the sector because the organizations vary so much in size and scope. That’s nonsense.

There clearly are some non-profits that are superior to others. The question is how to do it in the fairest way possible. Charity Navigator, which bills itself as the largest rating service, analyzes a number of factors related to a charity’s financial health including how efficiently it raises funds and the amount it spends on administrative expenses. Charities interested in receiving the BBB Wise Giving Alliance certification must pass the organization’s standards for financial accountability and transparency. In addition, they pay an annual fee of as much as $15,000. Guidestar, another service, provides access to charity financial documents but does not offer any qualitative analysis. For donors, though, there is a fourth alternative, The American Institute of Philanthropy (AIP), which we found to be superior.

AIP rates more than 550 charities, and boasts that its reviews are the toughest in the industry. The watchdog’s reports are more in-depth than its rivals and go beyond the information the group’s report to the IRS through its Form 990 because charity accounting rules give organizations lots of leeway. As AIP notes on its website, ” … (we) make adjustments to better reflect the goals of most donors who want their cash donations to be used efficiently. We do not allow charities to count the funds they spend on direct mail or telemarketing in their program spending, or to include large amounts of undisclosed and often overvalued donated goods in their expenses, even if their accountants allow them to do so.”


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