Charity Navigator’s Proposed Rating System: A View from CARE

Posted on 07 April 2010

In response to this blog’s March 7 invitation of a variety of views on Charity Navigator’s decision to change its rating system (to reflect accountability and outcomes measures in addition to financial metrics), Steve Lawry shared his perspective, George E. Mitchell and Hans Peter Schmitz contributed their opinion, and Ken Berger and Robert M. Penna responded with Charity Navigator’s view. In this post, an NGO viewpoint is provided by Maliha Khan from CARE USA.

By Maliha Khan

I have been following the exchange that started with Sherine Jayawickrama’s March 7, 2010 blog post “Charity Navigator’s Proposed Rating System: Thoughts, Anyone?” The discussions have been interesting.  Everyone has made very coherent and convincing arguments for and against Charity Navigator’s new “triad” assessment system. 

While not advocating one way or the other for Charity Navigator’s new system, the one thing I would strongly advocate is that the system be implemented slowly, in stages and with considerable consultation with a variety of stakeholder organizations.  The concept is good, but the devil is in the details!

Charity Navigator is not the only organization pushing to have more accountability in demonstrating effectiveness in development, and international NGOs are certainly included within these debates.  Several new types of philanthropy and giving also require more direct involvement of the donors and demonstration of the “payoff” of the investments made.  All this plus internal pressures are pushing many organizations to grapple with the question “how do we demonstrate our effectiveness and impact?”

While I share Mr. Lawry’s concerns about over-simplifying and causing a perverse system, I do not agree that strong measures of financial management and accountability speak more directly about the prospects for a charity to be effective and successful.  Good management means more efficiency, but does not at all imply more effectiveness, and certainly does not mean that the results that we would like to see are being realized. 

While it is not possible to have effectiveness without good financial management, it is certainly possible to have good management without effectiveness.  In fact, just having measures of financial management without concurrent measures of program quality and impact would result in systems that encourage the wrong incentives.  The organization focuses on being efficient, and does not encourage innovation, taking risk or asking critical questions. That is why at CARE we have initiated an organizational performance and management system (called Ubora, meaning “excellence”) that looks at three elements:

• The efficiency of our support systems (including but not limited to financial reporting)
• The quality of the processes that underlie our work (such as how we design  programs, how well we include our stakeholders, etc)
• Measuring and demonstrating the effectiveness and impact of our programs 

It would have been easier to just look at the first dimension – it’s easier to measure, cheaper, and for the most part, the data is available.  However, it was strongly felt that without balancing this with the other dimensions it would provide the wrong incentives to the managers of the organization and lead to less impact.  Thus, over the last two years, we have been setting up organization-wide systems to assess how we measure and demonstrate the quality of our processes and the effectiveness of our programs.  We hope that, within the next two years, we will be able to measure and demonstrate all three aspects.

While I agree with all the reasons for demonstrating effectiveness, one very important reason has not been mentioned.  Organizations that push their ability to demonstrate impact have to greatly improve their analytical capacities and reward learning and knowledge in the organization.  Simply put, they have to change from being “doers” to “thinkers, learner and doers”.  This can only mean that they end up doing better work.

Maliha Khan is Director for Program Impact at CARE USA.  Prior to joining CARE, she was teaching and doing research in the field of international development for almost a decade.