Charity Navigator launches new advisory service for flagging questionable charities

• Date: 01 November 2016
• Published date: 01 November 2016
• DOI: http://doi.org/10.1002/nba.30248

NOVEMBER 2016

5

NONPROFIT BUSINESS ADVISOR

© 2016 Wiley Periodicals, Inc., A Wiley Company • All rights reserved

DOI: 10.1002/nba

Industry News

Charity Navigator launches new advisory service

for agging questionable charities

Charity Navigator, a popular online resource for

evaluating U.S. nonprots, has launched a new advisory

system that ags nonprots that have been implicated in

various levels of allegedly improper activity. According

to the group, the CN Advisory System aims to protect

donors from charity scams and alleged misconduct by

ensuring donors are informed, in a timely manner, of

information that may inuence their giving decisions.

The CN Advisory System combines elements of

Charity Navigator’s former Donor Advisories and CN

Watchlist services but puts the resulting information in

a more easily understandable format, the group said.

The former Donor Advisories generally dealt with

serious allegations against charitable groups, while the

CN Watchlist agged charities for comparatively minor

infractions. The CN Advisory System will replace them

both by covering the full gamut of improper activity,

using three separate categories of wrongdoing—Low,

Moderate and High Concern Advisories, which cover

everything from unconrmed reports of improper

conduct or mismanagement—say, for example, a report

Charity Navigator Advisory System advisory levels

Charity Navigator’s new Advisory System places agged charities in the following three categories:

• Low Concern Advisory. This will cover the following:

• Charities that have been reported on by a media outlet, nonprot expert or other third-party evaluation (typically

other than a governmental or criminal justice system entity) due to allegedly improper conduct or operations

after performing an independent investigation.

• Charities afliated with organizations that have a High or Moderate Concern CN Advisory. “This applies to a

formal afliation as reported in Schedule R of the Form 990,” said Charity Navigator’s Sandra Miniutti. “However,

we have also at times issued an advisory on an organization that shares the same board or ofcers with an

Advisory charity even if it does not list a formal afliation.”

• Charities that have had funding revoked by the U.S. government or U.S. agencies for alleged misconduct or

misdemeanors.

• Moderate Concern Advisory. Charities will be added to this list as a result of the following:

• Unconrmed allegations of fraud (mail, insurance or tax fraud), embezzlement, conspiracy, any type of abuse

(animal or other) and any other type of illegal or improper conduct or organizational mismanagement.

• The receipt of an incomplete or inaccurate Form 990 and the charity’s failure to provide an adequate explana-

tion or an amended Form 990. Examples that have led to a CN Advisory include charities that do not complete

the schedule of expenses or that do not report their fundraising expenses.

• Audits that contain a qualied opinion and/or an “Emphasis of Matter Regarding Going Concern.” “The ‘Mod-

erate’ advisory is for cases, for example, when we become aware that an attorney general has launched an

investigation into a charity,” said Miniutti. “Often there is a press release on the AG’s website that talks about the

investigation. Since it is in process, this would be a ‘Moderate’ advisory. Once the investigation was concluded

and wrongdoing is conrmed, then the advisory might move up to a ‘high’ level of concern.”

• She noted, “We do look to take into account the scale of the alleged wrongdoing in relation to the size of the

organization.”

• High Concern Advisory. This category is reserved for:

• An “alleged,” or fake, charity that is soliciting funds from the public.

• Conrmed allegations of fraud (mail, insurance or tax fraud), embezzlement, conspiracy, any type of abuse

(animal or other) and any other type of illegal or improper conduct or organizational mismanagement. ■

(See NAVIGATOR on page 8)