CHARITY RATINGS: DONATE TO A GOOD CHARITY, NOT JUST TO A GOOD CAUSE

by Michael Organ
Charity Ratings Watchdog

Not all charities are managed well.  Charity ratings from Charity Watchdog groups can help you tell the difference between good charities and bad charities.

For every dollar you donate, very good charities will use 80 cents or more towards their charitable purpose, while the rest of your donation pays for fundraising costs, administrative expenses, and management salaries.

On the other hand, for every dollar donated to a bad charity, as little as 40 cents (or worse) will go towards the charitable purpose.  The rest of your donation will pay for a poorly managed or inefficient bureaucracy, perhaps with the involvement of too many for-profit middlemen in the fundraising efforts.

To get the biggest bang for your charitable buck, be careful to donate to a good charity, not just to a good cause.

The American Institute of Philanthropy provides a watchdog service to help donors understand how well their money is being spent.

This watchdog service uses ratings criteria to evaluate nationally prominent charities. Based on its assessment, American Institute of Philanthropy assigns letter grades:

A = Excellent
B = Good
C = Satisfactory
D = Unsatisfactory
F = Poor
? = Insufficient Information

Generally, top-rated charities that receive a grade of at least B:

  • openly share audited financial statements and income tax forms
  • spend less than $25 to raise $100
  • allocate at least 75% of money raised towards charitable programs (not fundraising and general administration)

American Institute of Philanthropy's Top-Rated Charities, by Category:

  • Health - General
  • Hispanic
  • Homelessness & Housing
  • Human Rights
  • Human Services
  • Hunger
  • International Relief & Development
  • Jewish & Israel
  • Literacy
  • Mental Health & Retardation
  • Peace & International Relations
  • Population Planning
  • Public Policy
  • Terminally Ill
  • Women's Rights
  • Youth Development
  • Youth – Residential Care

    • Additional details are provided in The American Institute of Philanthropy's Charity Rating Guide.

    Notes:

    • Only nationally prominent charities are rated.
    • Omission of a charity does not imply a negative evaluation or rating.
    • Because many factors determine a worthy charity, The American Institute of Philanthropy recommends that its financial evaluations be just one of the criteria used in choosing the charities you wish to support.

    Second Opinion

    The Better Business Bureau's Wise Giving Alliance provides ratings of over 600 charities, based on evaluation criteria that differ from those used by The American Institute of Philanthropy. 

    Due to the use of different evaluation criteria, assessments can vary. For instance, The Make-a-Wish Foundation is rated more favorably by National Charities Information Bureau, because that charity watchdog service takes into account the value of in-kind contributions, such as airline tickets, theme park tickets, and donated services. 

    Do-It-Yourself Research

    For information on charities not tracked by a watchdog service, consult GuideStar's directory of more than 640,000 nonprofit organizations. Data for each American charity is derived from IRS Form 990 or IRS Form 990EZ, an annual report filed by nonprofit organizations. Coverage of each organization includes: mission and programs, financials, and leaders.

    Charity Guide

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