The National Trust for Historic Preservation’s Position on Charity Rating Services
Online Charity Rating Services have become prevalent with the rise of the Internet. From time to time, donors or prospective donors to the National Trust for Historic Preservation ask about our ranking on those services.
These rating services are well-intentioned, with the goal of providing donors with better information about the effectiveness of nonprofit organizations. We support that goal. However, the data upon which ratings are based is often limited and the criteria used by many of these services often do not reflect the true effectiveness of the organizations being reviewed.
Charity rating services are limited to publicly available data – generally the IRS Form 990 as well as a few other documents such as the application for tax exemption and the organizational bylaws. The 990 focus is on financial information (e.g., sources of income, accounting classifications of expenses). While this information, including an accounting of the percentage of funds spent on administration, are important, these figures only tell part of the story of an organization's effectiveness. What is missing in many of these online rating services is an analysis of the impact of an organization's programs, which in the end, is the truest measure of a donor's return on investment.
Furthermore, several well-known online rating services focus primarily on financial growth as an indicator of organizational effectiveness. Critics of these services charge that they give too much weight to charities that are experiencing growth or undertaking periodic fundraising campaigns that may inflate the sense of growth in one year, yet penalize the organization in the year following the completion of a successful campaign. This type of criteria puts established charities that have been engaged in their work for decades at a disadvantage. Because of these and other concerns with online rating systems, the National Trust for Historic Preservation does not promote its annual ranking in any online rating service.
We do believe there are rating services which use more comprehensive rating criteria and engage the organization in providing information for the evaluation process. The Better Business Bureau's Wise Giving Alliance is one such service. While the Bureau's process stops short of measuring impact of programs, it does provide a better insight into organizational governance, a critical component of a successful nonprofit. We have been evaluated by the Better Business Bureau's Wise Giving Alliance and their report is posted on their web site.
Several new rating services are being developed that attempt to measure a nonprofit's impact. This new method of evaluation is in its infancy and we are monitoring those services to determine which ones will emerge as an effective barometer of organizational stability and effectiveness.
Until such time as a truly comprehensive analysis exists, donors should consider a range of sources when determining where to invest their philanthropic dollars. An organization's web site is a good place to begin, and the National Trust for Historic Preservation's 990 Form is posted on our web site, along with other documents about our achievements, our Annual Report, and a report of the Governance Oversight Committee of the Board of Trustees. A graphic representation of how we spend the money of our donors to support preservation activities in included as well.
Prospective donors should also consider the breadth and nature of foundation and corporate support for an organization, as these entities often undertake their own extensive reviews of organizational effectiveness. A listing of the corporate and foundation supporters of the National Trust for Historic Preservation can be found in our Annual Report.
Finally, we have posted a Donors Bill of Rights, which outlines the rights we provide to every financial supporter of the National Trust for Historic Preservation. When considering philanthropic gifts, we encourage donors to use all of these tools to determine where to invest their support.
