My Finance class in Humber College’s Fundraising and Volunteer Management program also engaged in a lively debate about Charity Intelligence, and the potential effect an independent ratings service of this sort might have on the sector as a whole — from the viewpoint of both charity managers and of donors / members of the public.
The students had both positive and negative comments to make.
Everyone affirmed the importance of transparency, and for charities to produce a clear benefit to the community. However, the balance of opinion tended to be against a service such as this, which appears to rely on financial analysis not necessarily complemented by an insightful investigation of the charity’s overall work and impacts on its community.
The possibility for misunderstanding, and for tarnishing not only individual charities but the sector as a whole was seen as a major defect.
Since the appearance of the article, I’ve personally spoken to a couple of people — one colleague who received a negative assessment from Charity Intelligence based on a misinterpretation of his organization’s financial statements — and one donor who had decided to eliminate her givings to a charity said by this organization to have too much money. (It was a health charity that funds ongoing research projects; one imagines there might be a reason for it to maintain sufficient reserves to guarantee support for multiyear projects through downturns in givings.)
A “ratings service” that offered a balanced point of view has the potential to advance the work and enhance the benefits of the charitable sector by promoting best practices — if it demonstrated a practitioner’s understanding of reasonable measures of financial and other aspects of sustainability, and didn’t inadvertently drive away supporters from worthy causes.