DFW Receives Charity Navigator’s 3 Star Rating!
Thank you to all our members who voted to get Dining for Women rated on Charity Navigator! For the first time, DFW is on the list of rated charities with Charity Navigator, which is the world’s largest and most utilized evaluator of charities. There are 1.57 million nonprofits registered in the U. S. and Charity Navigator does not rate all of them, even those eligible to be rated under their criteria. It took our members voting for us to be rated to get on their radar.
Charity Navigator used our 2014 IRS 990 form to rate us, and I am pleased to report that we were given three out of four stars. According to Charity Navigator, a three star rating is considered “Good” and means that DFW “Exceeds or meets industry standards and performs as well as or better than most charities in its Cause.” While this rating is good, I want you to know that our board and staff are committed to achieving a four star rating and have already taken steps over the past few years that will increase our score. I think it is important for you to understand why we did not receive four stars, because I know that we exceed industry standards in all ways.
Accountability and Transparency Score: 96/100. This is an excellent score and will be updated soon to be 100/100 because I spoke with our Charity Navigator account representative and pointed out that our Donor Bill of Rights is posted right on our website.
Financials: DFW received low ratings in two main areas that affected our score of 72/100. There are two main reasons for this:
- Working Capital. Working capital is also known as “operating funds” that are kept in reserve to ensure sustainability. In 2014, our working capital was .19 years and Charity Navigator considers a perfect score to be one full year. We have a policy that requires that we maintain at least three months of operating funds reserved. We would very much like to have one year of operating funds reserved, but this will take some time and intensive fundraising. I would love to hear from members about their opinion on this and their ideas.
- Liabilities to Assets. Charity Navigator noted that our ratio of liabilities to assets was 61 percent in 2014. We don’t carry debt, so this seemed curious. The way our accounting works is that once we have featured a grantee, our grants become liabilities – as in “accounts payable” until the grant funds are paid out. Our old funding model (prior to 2016) required us to keep a grantees’ money three to four months past the month they were featured so that we were accumulating many months of grants before we could release the funds. In addition, because we have multi-year grant commitments, we keep the second year payments in liabilities from year to year. This meant that we were carrying up to 60 percent liabilities at any time. The program funding model change this year reduces this practice so that we are now releasing funds to our grantees usually within weeks of when they were featured. In future reporting we believe we will be carrying less than the 15 percent liabilities that will lift this Charity Navigator score.
The good news is that we began making changes two years ago that will affect our scores in the future, and I will not rest until we are rated with four stars!
Thank you for your vigilance on this subject and if your chapter has questions about this, I would be happy to speak with your chapter leader or Skype into your meeting so I can speak with the whole chapter.