Charity Ratings based on…
A charity is basically a non-profit organization which serves the humanity. They get financial help from kind hearted donors which they use provide necessary help for the needy. Governments of many countries provided tax deductions to the donations to encourage charity organizations.
But are all charity organizations genuine. This is a very important question that you need to answer before donating because if your money is not used for the welfare of the needy then there is no point in donating.
So how to identify whether a charity is genuine? This is important for the charity organization also to prove because they get the donations by building public trust and convincing them of the charity programs.
To make this easy, many charity evaluation services have come up to review the organizations and give ratings depending upon some standards. The charity organizations give their information to the evaluation service and get a rating. This is known as Charity rating
Charity Ratings and Evaluation Service
The evaluation service study the programs undertaken by the charity and even try to assess how much they can improve. They judge how far they are from achieving their goal because the organizations are given the ratings and not their goal. So even if their goal is great what steps the organization is taking to achieve this goal is more important to prove their integrity.
The donors depend on these ratings and believe that their money will be properly used by organizations with good ratings and hence the evaluation service should not mislead them.
Categories for Charity Ratings
The evaluation is mainly based on the financial information that the organizations disclose in their informational tax returns. Taking this information into account the organization is assessed in the following categories.
The main purpose of charities is to give services and conduct programs. So they will reach the expectations of the donors only if they spend most of their finances on these programs. So if this does not happen a charity is said to have failed.
Any organization functions successfully with the help of its staff. The administrative costs include the recruitment and retaining of talented staff and development of the organization. But they should also take care that these expenses do not go beyond a certain limit. This limit depends on the total functional expenses of the organization.
Fund raising expenses
Charities try to get money from the donors by spending on fund raising programs. But this should not be the main purpose of the charity so the expenses incurred on fund raising should be very less compared to the money they spend on other charity programs because people donate, impressed by their charity programs and not by their ability to raise funds.
Fund raising efficiency
Charities raise funds and for this they spend some money to attract donors. But an efficient charity spends less to raise more money. This is called fund raising efficiency. This is also considered to give the rating to a charity.
The charity ratings is mainly given to those charities, the donations to which are entitled with tax deductions and to all types of charities. So the donors can decide to give funds to whatever charity they are interested in.