Tuesday, June 15, 2010

we're #28! (according to charity navigator)

charity navigator, a site that researches the finances of various charities, has just released its 2010 metro market study. i wanted to be sure i posted about the study, because its findings contradict the beliefs of a certain right-wing blogger who routinely criticizes local charities despite having no comprehension of how the nonprofit sector works.

in the study of the nation's 30 largest metro areas, indy ranked 28th (up from #29 last year). we ranked below average in every category except administrative expenses, working capital ratio, total expenses, and total net assets. even worse, indy ranked dead last in the categories of fundraising expenses, program expenses, and program expense growth.

our relatively high ranking for administrative expenses (#10) is the opposite of what you might expect if you've been relying on the opinion of said blogger, who regularly claims that indy's charities are bastions of corruption and waste. overall, our charities are actually quite good in this regard. another category i want to point out is indy's low ranking in terms of CEO compensation. yes, despite what some would have you believe, many local charities actually pay their executives too little, and suffer for it. the indy star explains:

In the increasingly complex work of fundraising, the ability to solicit a lot of cash at a minimum cost is paramount. That requires savvy leaders with business and social skills, perhaps honed in the private sector. And it requires someone who won't hesitate to scrap time-consuming, money-wasting donation methods, such as phone solicitations.

Attracting such leaders takes money that some Indianapolis charities have been unwilling to pay.

"Indianapolis has consistently ranked low in CEO compensation," Minuitti said. "These organizations are really multimillion-dollar operations, and that requires a certain level of compensation to attract and retain top talent."

in short, you can't hire just anyone, pay them peanuts, and expect them to do quality work. if you want talented executives, you have to pay them what they're worth—a concept that you'd think right-wingers would understand.

other factors dragging down our rating include the fact that we have a lot of human services charities—which "tend to be hit hard" during recessions—and a reliance on inefficient means of fundraising such as telemarketing, direct mail, and expensive fundraiser events.

of course, the charity navigator study has its flaws. first and foremost, it's lacking in context and can be difficult for the layperson to understand. also, the site's analysis centers on finances, which isn't necessarily the best measure of how a charity is doing—in some fields, it would be better to focus on results. it doesn't matter how efficient your fundraising is if you're not getting good results, and likewise, a bit of inefficiency is fine if you're doing great work.

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