Charity Ratings: How To Be A Good Consumer Of Information And Resources

Lou-Ellen Barkan
Founding Director

CaringKind, like all not for profits (NFPs), submits data to several ratings organizations. This brief summary should serve to make it easier for you to understand and analyze what you are seeing.

On December 1, 2015 CaringKind chose to discontinue our affiliation agreement with the Chicago based  Alzheimer’s Association and returned to our roots as an independent 501 c 3. Our day to day operations remained the same; providing programs and services for individuals and families affected by an Alzheimer’s diagnosis; training professionals in the field and advocating for care and research. While we knew that the transition might create some short-term brand confusion, we  recognized an opportunity to re-organize to better serve the community. I am proud to report that throughout this period; we continue to provide the gold standard in dementia care and support for all New Yorkers who need our help.

We are proud of our rating as a Better Business Bureau Accredited Charity and our GuideStar Silver Star rating. But constituents are confused by how these and other similar agencies establish their ratings. To clarify: 1) These rating agencies are privately run. They are not government agencies. 2) Their ratings are established by compressing  complex and detailed information in an attempt to standardize and simplify the presentation. This results in losing important detail that differentiates different kinds of NFPs 3) Rating agencies do not distinguish between organizations, like CaringKind, that are 95% funded by private donors vs those funded by government grants and programs including Medicare and Medicaid.

One particularly difficult standard is the ratio of funds spent on program vs. development/administrative expenses commonly referred to as “overhead.” (You can learn more about this in a TED talk by  Dan Pallotta as he explains how  “overhead” has been unfairly demonized.)  Traditionally, rating agencies provide more favorable ratings for organizations that spend a large portion of their revenue on programs. This means that if an organization has a single employee administering the distribution of funds to other agencies without directly delivering any programs, the NFP is shown as spending  99% of revenue on programs, delivering a favorable rating.   Hardly a fair comparison with agencies raising and spending funds on  staff, offices, supplies and other administrative expenses in order to actually deliver a program or service work. Obviously, these agencies have to  invest in fundraising staff and resources, even more so if they are primarily dependent on private funding.

As a reminder, CaringKind is 95% privately funded and today, as in the past, uses every dollar to help a growing community of families that need our help. So,  when you see a rating for CaringKind or any NFP and you have questions,, dig down below the superficial information. Ask questions and get the detail. You will be surprised at what you learn.


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