How We’re Unique
Unlike every other organization that rates charities, we don’t allow anyone to bury mission-critical failures in the middle of a grading “average.” A charity that falls short on even one of our four key metrics gets a “Not Recommended” rating, no matter what.
We won’t recommend a veterans charity if any of these statements describe it accurately.
- It spends less than 75% of its budget on veterans programs.
- It keeps less than half of every dollar professional fundraisers collect from the public on its behalf.
- It raises money while sitting on asset reserves larger than triple its annual budget.
- It uses “joint cost” accounting to classify fundraising as a program expense for 5% or more of its budget.
There’s more information about these benchmarks below.
Are there other online charity ratings services? Yes, but we focus entirely on veterans charities, providing recommendations on more than 100 organizations.
Our laser focus allows us to apply rigid standards without worrying about whether they should also apply to universities, houses of worship, arts organizations, educational charities, sports nonprofits or animal welfare groups. And most importantly, our ratings are accessible without charge.
More Than Just Tax Returns
We understand that you probably want to know more about charities than just their raw numbers. We dig through their reporting to state attorneys general, but we don’t include this information in our calculations.
- Insider relationships. Charities have to report insider relationships such as employees who are related to officers. If we see this, we will tell you.
- Offshore investments. Some charities keep money in hedge funds in offshore tax havens including the Cayman Islands and Bermuda. This is one way they can avoid or minimize paying “unrelated business income” tax.
- Scandals. Lawsuits, government investigations, news coverage — we see it all, and we will disclose anything that we would want to know if we were donors ourselves.
More About Our Charity Tests
Our four tests for veterans charities are simple to understand, but explaining them can be more complicated. Here’s more information about why we chose them.
- Percentage of budget spent on programs: All charities can be expected to spend some money on overhead. Those that spend at least 75% of their budgets on their actual programs can earn our recommendation. Charities that spend 90% or more of their budget on programs are eligible for our “Highly Recommended” designation.
- Use of joint costs: Charities and their outside fundraisers send emails and direct mail every day, providing the public with important information and asking them for money. Is the cost of writing and sending these solicitations a “fundraising” expense? Is it an “educational program” that fulfills part of a charity’s worthwhile stated mission? Is it both? Federal law allows “joint costs” accounting, which can classify the whole thing as a program expense, even though its purpose was to raise money. Some charities spend millions of dollars on marketing efforts and claim it’s all part of their charitable purpose. Many don’t do this at all. We frown upon it, and we believe donors should know about it when it happens. If a veterans charity uses joint-costs accounting for more than 5% of its budget, allowing it to appear more effective than it actually is, we will not recommend it.
- Fundraising campaign results: Many states where charities operate require them to disclose the results of solicitation campaigns run by outside fundraising companies. In the best cases, charities keep 80% or more of the money. But some contracts allow the fundraisers to keep nearly all of it — meaning hardly any of your donation reaches the charity in the first place. We look at state records. If we see a history of solicitation campaigns with a charity keeping less than 50% of the proceeds, it does not meet our standards.
- Excessive asset reserves: Some charities are asking for donations while they sit on huge piles of money. We believe veterans organizations should spend your donations to accomplish things today instead of investing for the long term. We look for assets that are more than three times a charity’s annual budget. We will not recommend giving to those groups. If we make an exception to this rule, we disclose it and explain why.