by Mark Jones

In September 2011, many nonprofits experienced a drop in their ratings on Charity Navigator, the nation’s largest and most-utilized evaluator of charities. Charity Navigator’s significant shift in their rating system of nonprofits was the cause of this drop. Their new system, Charity Navigator 2.0, incorporates two new dimensions. In addition to examining financial health, they now examine accountability and transparency.

The new accountability and transparency component includes additional information from the IRS Form 990 as well a review of an organization’s website. The scope of the new rating includes analysis of the following areas:

  • Independent board
  • Material diversion of assets
  • Audited financials prepared by independent accountant with an audit oversight committee
  • Loan(s) to or from related parties
  • Board meeting minutes
  • Copy of IRS Form 990 provided to organization’s governing body in advance of filing
  • Conflict of interest policy
  • Whistleblower policy
  • Records retention policy
  • CEO listed with salary
  • Process for determining CEO compensation
  • Board compensation

Additionally, information reviewed on your organization’s website includes:

  • Board members listed
  • Key staff listed
  • Audited financials
  • IRS Form 990
  • Privacy policy

Churches are excluded because they are not required to file IRS Form 990, the fundamental source for these ratings. However, those evangelical nonprofits that are required to file Form 990 are included. Even if you ministry is not required to file Form 990, this is a good list of areas for your ministry to consider addressing.

What do you think about making this information available? How has your ministry’s rating changed?

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