Charity Navigator Revamps Rating System

Charity Navigator has altered its rating system. Charity Navigator has not changed the way it grades organization’s accountability and transparency, but it has made changes to the financial metrics that it uses to determine an organization’s financial health. The financial metrics it uses are program expenses, fundraising expenses, fundraising efficiency, working capital ratio, program expense growth, and liabilities to asset ratio.

The first four of these metrics had previously been calculated off of the previously reported fiscal year, but these metrics have been changed so that they now look at the average over the last three fiscal years. Liability to asset ratio is a new metric which Charity Navigator has introduced and which replaces primary revenue growth, which will no longer be used in their calculations. One other change to Charity Navigator’s ratings is that organizations can now receive a perfect score even if they have administrative expenses. This had not been the case previously.