How can your nonprofit improve its Charity Navigator rating?
Charity Navigator is a nonprofit organization that evaluates the performance of U.S.-based 501(c)(3) public charities. Each charitable organization reviewed receives a rating from 0 to 4 stars. Earning a 4-star rating can significantly boost a charity’s ability to secure donations, grants, and public trust.
The star rating measures how efficiently a charity uses donor support, how well it sustains its programs and services over time, and the organization’s commitment to accountability and transparency. Although Charity Navigator primarily evaluates charities with at least $500,000 in public support and $1,000,000 in total revenue, their evaluation framework is a valuable tool for any nonprofit organization seeking to strengthen its operations and fundraising efforts.
How Charity Navigator Determines Ratings
As of 2022, Charity Navigator evaluates organizations across four key domains that they refer to as “beacons”:
Accountability and Finance
Impact and Measurement
Leadership and Adaptability
Culture and Community
However, not all organizations have data across all domains. To qualify for a star rating, nonprofits must have, at a minimum, an Accountability and Finance score or an Impact program evaluation.
Your overall rating is calculated using a weighted formula that aggregates points earned across these areas. You can read more about the rating methodology on Charity Navigator’s website.
Accountability and Finance
This domain (or beacon, as described by Charity Navigator) evaluates the financial health and governance practices of a nonprofit organization. Said more simply, this category assesses a nonprofit’s efficiency and effectiveness in using its resources to achieve its mission. It accounts for 32.5% of the total score.
Financial Metrics
According to Charity Navigator, nonprofits should be held to the highest financial stewardship standards, and they should be financially stable and efficient. This section measures the financial health and sustainability of the organization.
- Program expenses relative to total expenses*
- Fundraising efficiency (cost to raise $1)
- Working capital (sustainability)
- Total liabilities to total assets ratio
*When a nonprofit’s program expense ratio is under 50%, there are no points awarded to any financial metrics, regardless of the actual ratio.
Accountability Metrics
Charity Navigator believes that charities that are accountable and transparent are more likely to act with integrity and learn from their mistakes. It assumes that charities that follow best practices in governance, donor relations, and related areas are less likely to engage in unethical or irresponsible activities and are therefore a better investment for potential donors. While it might take years to improve your financial metrics, you can improve your accountability metrics fairly easily by adding information to your website or adopting certain policies.
For All Nonprofits:
- Information included on Form 990
- Audited financial statements prepared by an independent accountant*
- Audit oversight committee (for larger organizations)
- Independent board composition (≥3 or ≥5 independent members depending on size)
- No material diversion of assets
- Retention of board meeting minutes
- Website listed on Form 990
- Policies included on Form 990
Additional Metrics for Donor-Funded Nonprofits Over $2 Million:
- No loans to or from related parties
- Copy of Form 990 provided to governing body prior to filing
Additional Metrics for Donor-Funded Nonprofits Over $50 Million:
- Donor privacy policy is published on website
- Ideally the organization should state that it will not sell or share the donor’s information with other parties.
- Board members and key staff listed on website
- Charity Navigator does not compare this information to the Form 990 since different time periods may apply. Audited financials posted on website
- IRS Form 990 posted on website
- If you post the 990 on your website, make sure you are posting a copy of your 990 that does not include confidential information such as the name and addresses of your donors either on Schedule A or Schedule B.
- CEO compensation process disclosed
- CEO listed on Form 990 with salary
- Board members listed and not compensated on Form 990
*If your nonprofit is not required to have an audit, this should be disclosed on your website. Ensure you also include information on how governance chooses the appropriate audit/advisory services for accountability and continued improvement.
Impact and Measurement
This domain evaluates how effectively a nonprofit measures and communicates the results of its programs, and whether it delivers strong impact relative to cost. This is the most heavily weighted domain in Charity Navigator’s rating system, accounting for 50% of the score.
Measuring Outcomes
(Available to all nonprofits)
This assessment is the newest addition to Charity Navigator’s methodology, and it was created to improve accessibility for all organizations. This assessment focuses on a nonprofit’s ability to monitor, evaluate, and learn from its own work. It looks at whether the nonprofit:
- Sets clear goals for its programs
- Designs programs based on evidence and community needs
- Collects and analyzes data to understand its effectiveness
- Shares results with key audiences — including funders, participants, and the public
- Uses findings to improve services and decision-making over time
Organizations that score highly in this assessment show that they have built a culture of learning and accountability, and that they take impact measurement seriously, even if their results aren’t perfect.
Program-Level Impact Evaluation
(Available only to organizations with eligible programs)
This evaluation measures how cost-effectively a nonprofit delivers results in a specific program area. Charity Navigator reviews nonprofit-submitted data and calculates how much “good” the program creates per dollar spent. Programs are then scored based on how they compare to benchmarks for their sector.
Scores are assigned as follows:
- 100 points: Highly cost-effective
- 80 points: Cost-effective
- 65 points: Meets baseline requirements but falls short on cost-effectiveness
This evaluation is only available to programs that account for at least 15% of the organization’s total program spending and for which Charity Navigator has developed a scoring methodology.
Easy Ways to Improve Your Score
- Start tracking program results consistently, even if it’s just basic output data
- For example, number of people served or services delivered).
- Make your program goals and outcomes public
- Add them to your website or annual report so stakeholders can clearly see your mission in action
Leadership & Adaptability
This domain evaluates whether a nonprofit has the leadership strength, strategic direction, and flexibility to advance its mission, especially when faced with change. Your Leadership & Adaptability score accounts for 7.5% of your total score.
Charity Navigator scores nonprofits based on how they respond to the Leadership & Adaptability questionnaire in the Nonprofit Portal. Organizations can earn up to 100 points, distributed across three categories:
Strategy (Up to 40 points)
Charity Navigator looks for evidence of strategic, long-term thinking and goal-setting. Nonprofits are asked to:
- Share their mission and vision
- Identify their three most important strategic goals
- Explain the types of strategies they’re implementing.
- For example, as scaling programs, investing in capacity, or expanding advocacy
Leadership (Up to 30 points)
This section focuses on internal leadership development and external mission mobilization and is organized as a checklist. Organizations are asked whether they:
- Invest in leadership development opportunities
- Including coaching, conferences, succession planning, DEI training
- Mobilize leaders externally through activities
- Including partnerships, public policy advocacy, thought leadership, and social promotion
Adaptability (Up to 30 points)
This section asks nonprofits to indicate how they’ve adapted in the past 12–18 months. Organizations can earn points by selecting whether they have adapted to changes in the past 12-18 months in the following areas:
- Strategic planning revisions
- Organizational restructuring
- Risk Management/planning
- Operational flexibility
- Digital transformation
- Capacity building
- Organizational culture adaptations
- Funding diversification
- Partnerships and collaborations
- Programmatic shifts
- Community engagement or policy work
High-scoring organizations show that they’re not just reacting to change, but they’re proactively learning and evolving to meet it.
Easy Ways to Improve Your Score
- If your nonprofit has an annual report, impact report, or other digital storytelling tool, you should upload it in addition to the checklist to ensure you get the best score possible in this section.
Culture and Community
This domain assesses how well a nonprofit fosters an inclusive internal culture and engages the people it serves, including staff, board members, beneficiaries, and the broader community, and it makes up 5- 10% of the total score depending on which questionnaires are completed.
Charity Navigator currently scores this category based on two assessments completed through a nonprofit’s Candid profile:
Constituent Feedback
This assessment evaluates whether and how a nonprofit collects and uses feedback from the people it serves. Based on the How We Listen questionnaire, it looks at practices like:
- Asking beneficiaries for input
- Sharing results with staff and stakeholders
- Using feedback to improve programs
You can earn points simply by being transparent about your feedback practices, even if they’re just getting started.
Equity Strategies
This assessment asks organizations to indicate which of 14 recommended equity strategies they’ve adopted in their operations and programs. Strategies may include:
- Conducting racial equity audits
- Publishing demographic data
- Setting goals around equity outcomes
- Aligning hiring and board practices with equity goals
These practices help organizations create more equitable structures and services, both internally and in their communities. This is not a full DEI (Diversity, Equity, and Inclusion) evaluation, but a focused look at equity-informed action.
When completed in conjunction with the constituent feedback assessment, the total Culture & Community score accounts for 10% of the total score, with the equity strategies accounting for 55% and constituent feedback accounting for 45%.
Easy Ways to Improve Your Score
- Complete the “How We Listen” survey in your Guidestar by Candid profile to share your feedback practices. This survey alone can account for 5% of your total score.
- Start with a few equity strategies (like sharing your board demographics or posting an equity commitment) and report your progress through the Equity Strategies Checklist.
Overall Star Rating
Once a nonprofit has been scored in one or more of the four domains, Charity Navigator uses a weighted formula to calculate its overall Encompass score, which determines the star rating:
- 90+ points: 4 Stars
- 80–89 points: 3 Stars
- 70–79 points: 2 Stars
- 55–69 points: 1 Star
- < 55 points: No Star Rating
Each domain contributes a specific percentage to the overall score only when it’s present. If a domain isn’t scored (for example, if a nonprofit hasn’t completed a certain questionnaire), its weight is redistributed among the others.
Where should nonprofits focus their efforts?
Improving a Charity Navigator rating can feel overwhelming, but you don’t need to tackle everything at once. Here’s how we recommend prioritizing:
Start with easy wins in Accountability & Finance
- Our main recommendation is that every organization should strive for a perfect score in accountability. This section alone is worth a substantial portion of your score and includes many checklist-style items that are quick wins, like board independence, public financials, implementing policies. And if you already have these governance measures in place, you can earn points simply by sharing this information publicly.
- Below are links to a few policy overviews that you can use as a reference to build your own organization’s policies.
Complete all the recommended checklists and assessments.
It seems simple, but it is an easy way to gain additional points. Across multiple beacons, Charity Navigator awards points based on forms and surveys submitted through the Nonprofit Portal or your Candid profile. These include:
- Leadership & Adaptability Questionnaire
- How We Listen survey (Constituent Feedback)
- Equity Strategies Checklist
- Candid profile fields used in Accountability & Finance
Make it a priority to complete and upload these checklists. Most nonprofits will earn additional points simply by reporting what they already do.
We’re here to help.
Implementing these best practices not only strengthens your Charity Navigator rating, it also strengthens donor confidence and organizational resilience. For a detailed breakdown on the methodology, scoring, and more, read the detailed methodology guide provided by Charity Navigator. Wegner CPAs nonprofit advisors have dedicated their careers to strengthening nonprofits’ financial resilience and operational integrity. Learn more about the services we provide by visiting our Nonprofit Industries page.
