Episode 29: Charity Navigator Encompass Rating System

Charity Navigator this month unveiled the first pillar of its new rating system. Years in the making, the Encompass Rating System (ERS) expands the number of charities rated from 9,000 to almost 160,000.

President and CEO Michael Thatcher joins the Fresh Research podcast to explain the four “beacons” that will comprise the 100-point rating system:

  • Finance and accountability
  • Impact and results
  • Leadership and adaptability
  • Culture and community

Program expense ratios are still incorporated within the finance and accountability beacon but the goal is to eventually measure impact and results. Finance and accountability was the first pillar released, with the next three expected to come out every six months for the next two years.

In the next phase we’re going to start looking at that data and coming up with a way of actually scoring it,” Thatcher said. “The way we’re doing the Encompass Rating System is to do it with a lot of collaboration and input from nonprofits, from stakeholders in the community, others who are actually working in the area of measurement and evaluation. We have various groups that we consult with that give us input on the evolution of the rating. This isn’t getting cooked up in our own kitchen, it’s actually being worked on with significant inputs from outside and very credible resources,” he said.

As part of an “impact experiment” with partners — including Candid, Classy and Impact Matters, among others — Charity Navigator collected performance and results that those nonprofits had submitted and started add them to its nonprofit profile pages. “So today on Charity Navigator’s website there’s about 30,000 nonprofit profiles that have some form of results or impact information listed. It’s not part of any rating today but it’s there in an effort to get donors to focus on the actual results as well as to encourage nonprofits to report on their outcomes.”