How Charities Are Rated

Rating

Curious about how charities are rated? You not only need to be able to trust the charity to utilize donations in the most effective way possible, but you should also be able to trust an agency that rates charities to tell you which organizations make the best use of donations.

Ratings Can Tell How Money Is Used

Not all charities utilize donated funds in the same way. Some charitable organizations strive to keep administrative costs as low as possible and to funnel donations through to the people who need the money the most. There are other organizations which are not quite so efficient in putting a large percentage of donated dollars directly to the cause.

Most people have a desire to give to charity because they want to help other people and organizations in need, but some donors want to make sure that their donations will be utilized as effectively as possible. In other words, they want their donations to directly impact the cause as opposed to lining the wallets of the people running the charity.

Ratings by Independent Organizations

There is not one single organization responsible for how charities are rated. Several organizations chronicle the spending and works of charities and report their findings to the general public. While some organizations offer these findings free of charge, others compile a comprehensive listing and sell reports to consumers for a fee.

Here is a list of organizations who rate charities based on the percentage of contributions put directly toward the cause in addition to other important factors:

  • Charity Navigator concentrates on the financial status of charities and presents this information to consumers free of charge. This organization only evaluates charities that are classified as tax-exempt through the Internal Revenue Service (IRS).
  • The American Institute of Philanthropy runs the CharityWatch website. This group does not charge a fee to charities in order to get listed on their website, which means that this organization can offer unbiased ratings which are not swayed by funds from charitable organizations. A copy of this group's Charity Rating Guide is available for a small fee. Membership to this group is also available for a fee.
  • Give Spot offers a list of the 100 highest rated charities based on the organization's standards and methodology. Like the other rating organizations, this group only rates charities that are classified as tax-exempt by the IRS. Give Spot does not charge a fee to view the list of highest rated charities and additionally allows site visitors to view the approximate percentage of funds used by charities for administrative costs.
  • The Better Business Bureau maintains a long list of charities and lists any past and pending complaints for the organizations. The Better Business Bureau also accredits certain charities and additionally offers a guide on charitable giving for consumers to review before making charitable organizations.

This is merely a brief listing of organizations and foundations that rate charities for consumers to review. Each organization has its own rating system, and there is not one single organization that is considered the sole authority on rating charities.

Media Reviewed and Rated

Occasionally, various publications, such as Forbes, present a listing of rated charities to readers. Many of these publications use the same information presented by some of the above listed organizations.

Printed publications such as these usually present very accurate information pertaining to the way various charities utilize the donations they receive. The publications also take other factors into consideration, such as the work done by the charities and the way the general public regards the charities.

Review the Ratings

It is relatively simple to find ratings for charities. It's a good idea to review ratings of charities, especially when considering a donation to a charity that you are not familiar with.

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How Charities Are Rated