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CharityWatch

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CharityWatch
Formation1992;32 years ago(1992)
FounderDaniel Borochoff
TypeNonprofit corporation
33-0491030
Legal statusActive
PurposeCharity Ratings
HeadquartersChicago,Illinois, U.S.
Official language
English
President
Laurie Styron
Main organ
charitywatch.org
Revenue
$605,768
Staff
5
Websitewww.charitywatch.org
Formerly called
American Institute of Philanthropy (1992–2012)

CharityWatch,known until 2012 as theAmerican Institute of Philanthropy,[1]is a501(c)(3)nonprofit organizationin Chicago,[2]created in theUnited Statesby Daniel Borochoff in 1992,[3]to provide information aboutcharities' financial efficiency, accountability, governance, andfundraising.

Mission

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CharityWatch's stated goals are "To research and evaluate the efficiency, accountability and governance of nonprofit organizations; to educate the public about the importance of wise giving; to inform the public of wasteful or unethical practices of nonprofits and provide recognition to highly effective and ethical charities; to advise CharityWatch members and conduct special investigations and evaluations of nonprofits; to expand and re-define our programs periodically to meet the continuing challenge of keeping the contributor informed."[4]

Activities

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CharityWatch is a nonprofit charity watchdog and rating organization that works to uncover and report on wrongdoing in the nonprofit sector by conducting in-depth analyses of the audited financial statements, tax forms, fundraising contracts, and other reporting of nonprofit. They only review 600 charities out of 1.5 million in the US.[5]CharityWatch encourages donors to give to charities that will allocate most of their contributions to program services that benefit the people and causes that donors wish to support. CharityWatch also promotes charity accountability and transparency through its research on the rapidly changingnonprofitfield[6]and through its work with investigative journalists uncovering wrongdoing within the nonprofit sector.[7]CharityWatch rates nonprofits on an A+ (best) to F (worst) scale and provides data on charity executive salaries, governance, public transparency, donor privacy, asset reserves, and other information uncovered by its analysts during their evaluation.[8]It publishes this information on its website[9]and in its biannualCharity Rating Guide & Watchdog Report.CharityWatch also publishes lists of Top-Rated Charities,[10]charities with high assets,[11]and a report of top compensation packages paid to charity executives.[12]

CharityWatch states that it is independently funded by small donations from the general public and that it receives over 95% of its support this way.[13]The majority of CharityWatch's content is free to the public, including its library of articles, giving tips, resources for donors and journalists, top charity compensation packages, and its full reports on all of its top-rated charities. Membership to access CharityWatch's full content is currently $50 per year.[14]

CharityWatch sets itself apart as a charity watchdog organization that performs individualized analyses of charities' financial reporting. It has been critical of other sources of charity information that produce automated ratings based solely or primarily on computer algorithms whose rating systems can easily be gamed by charities.[15]CharityWatch assigns low ratings to charities that have high fundraising costs and low program spending in cases where other charity raters have assigned the same charities perfect scores.[16]CharityWatch has also assigned high ratings to nonprofits with more complex accounting cases where the simplistic systems of other raters produced unfairly low scored for the same charity.[17]

CharityWatch also investigates ethical issues surrounding charity spending, including salaries and payouts, financial reporting,telemarketinganddirect-mailsolicitation campaigns, and governance. It shares the results of its research with the media and government agencies and works closely with these parties to educate the public about informed giving. CharityWatch founder Daniel Borochoff has testified before Congress about veterans charities,[18][19][20]the aftermath of HurricanesKatrinaandRita,[21]and the philanthropic response to the9/11 attacks.[22]

CharityWatch's ratings have received exposure from Congress and the media; including an appearance on the front page ofThe Washington Post.[23][24][19][25]

Governance and operations

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CharityWatch founder, Daniel Borochoff, retired from his role as president in 2020, but remains on the charity's board of directors. Laurie Styron, a former CharityWatch analyst, was appointed executive director in his place in February 2020.[26]In 2019, CharityWatch spent $615,950, of which 83% ($510,140) was spent on programs.[27]

Reception

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In 2005, prior to making all of its rating available on its website, the then-named American Institute of Philanthropy (AIP) was criticized in a study on rating nonprofits published in theStanford Social Innovation Reviewfor having a "gotcha" mentality and limited explanation for their ratings. The study criticized several nonprofit watchdog organizations for relying heavily on financial data that is not adequate for evaluating a nonprofit organization and may misguide the public, although the study noted that AIP "recognizes the limitations of the[IRS Form] 990and thus develops its financial health ratios by analyzing a charity's audited financial statements ".[28]

CharityWatch does not take charities' financial reporting at face value even when Generally Accepted Accounting Principles (GAAP) allow charities to includein-kindgoods of questionable value in their financial reporting, or allow charities to include telemarketing ordirect mailcosts in their reported program spending.[29]Many in the nonprofit space have taken issue with this approach.[30][31][32]

See also

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References

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  1. ^Perry, Suzanne (2012-06-28)."An MBA's Sleuthing Skills Put Charities on the Hot Seat"(PDF).The Chronicle of Philanthropy.Vol. XXIV, no. 14. Archived fromthe original(PDF)on 2015-04-21.Retrieved2023-10-13.Formerly known as the American Institute of Philanthropy, it has just adopted a snazzier name, CharityWatch
  2. ^"Charity Ratings | America's Most Independent, Assertive Charity Watchdog".CharityWatch.Retrieved2016-01-25.
  3. ^Daniel Borochoff."Mission Statement, Goals and More".Charitywatch.org. Archived fromthe originalon 2010-12-07.Retrieved2012-08-13.
  4. ^"Mission & Goals".www.charitywatch.org.Retrieved2021-03-11.
  5. ^"Questioning behavior".The Frederick News-Post.2007-12-21. Archived fromthe originalon 2012-02-17.Retrieved2012-08-13.
  6. ^"How to tell a good charity from a bad one".MSM Money. Archived fromthe originalon 2011-07-14.Retrieved2012-08-13.
  7. ^"In the News".www.charitywatch.org.Retrieved2021-03-11.
  8. ^"Charity Rating Process".www.charitywatch.org.Retrieved2021-03-11.
  9. ^"Charity Ratings | America's Most Independent, Assertive Charity Watchdog | CharityWatch".www.charitywatch.org.Retrieved2021-03-11.
  10. ^"Top Rated Charities".www.charitywatch.org.Retrieved2021-03-11.
  11. ^"High Asset Charities".www.charitywatch.org.Retrieved2021-03-11.
  12. ^"Top Charity Compensation Packages".www.charitywatch.org.Retrieved2021-03-11.
  13. ^"CharityWatch Difference".www.charitywatch.org.Retrieved2021-03-11.
  14. ^"Become a Member".www.charitywatch.org.Retrieved2021-03-11.
  15. ^"American Institute of Philanthropy aka CharityWatch".GuideStar.Retrieved2021-06-29.
  16. ^Weiss, Gary."Spotting Nonprofit Accounting Tricks".www.barrons.com.Retrieved2021-03-11.
  17. ^"Outstanding Veterans Charity Wrongly Given Low Marks by Others".www.charitywatch.org.Retrieved2021-03-11.
  18. ^Charity Alert: Committee on Oversight and Government Reform. United States House of RepresentativesArchivedJanuary 31, 2008, at theWayback Machine
  19. ^ab"Failing to Serve America's Heroes on the Home Front".ABC News.2007-11-09. Archived fromthe originalon 2011-07-23.Retrieved2012-08-13.
  20. ^[1]ArchivedJanuary 31, 2008, at theWayback Machine
  21. ^Hearing Archives: Committee on Ways & Means. U.S. House of RepresentativesArchivedJanuary 31, 2008, at theWayback Machine
  22. ^"Committee on Ways and Means, Oversight Subcommittee, 107-47, Response to the Recent Terrorist Attacks".Waysandmeans.house.gov. Archived fromthe originalon 2012-12-16.Retrieved2012-08-13.
  23. ^"Study Faults Charities for Veterans".The Washington Post.2007-12-13. Archived fromthe originalon October 20, 2012.Retrieved2012-08-13.
  24. ^"An Intolerable Fraud".The New York Times.8 February 2008.Retrieved25 January2016.
  25. ^"Vet's Charities Pocket Money".CBS News.2007-12-13.Retrieved2012-08-13.
  26. ^"Staff & Board".www.charitywatch.org.Retrieved2021-03-11.
  27. ^"2018 Charity Watch Audited Financial Statement"(PDF).2019-05-22.[dead link]
  28. ^Lowell, Stephanie; Trelstad, Brian; Meehan, Bill (2005)."The Ratings Game".Stanford Social Innovation Review.3(2): 3945.doi:10.48558/RWTM-P058.
  29. ^"CharityWatch Ratings Bridge the Knowledge Gap between Donors and GAAP Reporting".www.charitywatch.org.Retrieved2021-03-11.
  30. ^"Charity Navigator Dismisses Use of Joint Cost Allocations".11 January 2013.
  31. ^"Charity Raters Part I: Charting the Bad and the Bad".25 May 2013.
  32. ^"Is Charity Navigator's Revised Rating System an Improvement?".2 June 2016.
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