Charity Navigator utilizes data from charities’ 990 form to measure seven financial performance metrics. The first four, program expense, administrative expense, fundraising expense and fundraising efficiency, measures financial efficiency. While the final three, program expense growth, working capital ratio and liabilities to assets percent measures financial capacity.
In Florida, there are nine four-star Humane Societies. The top Humane Society financial rating performers are:
Earning a perfect Charity Navigator financial score requires attaining the following benchmarks.
Program Expense %: > 85%
Admin Expense %: < 15%
Fundraising Expense %: < 10%
Fundraising Efficiency: < $0.10
Program Growth: > 10%
Working Capital: > 1.0
Liabilities to Assets %: < 5%
Charity Navigator's current methodology, CN 2.1, went into effect on June 1st, 2016.
Cash + Marketable Securities + Receivables
Average Monthly Expenses
Reflects how many months the organization could operate if no additional funds were received.
LFI= Total Net Assets – Restricted Net Assets – Fixed Assets
Average Monthly Expenses
The liquid funds indicator is similar to the defensive interval in its use but is more conservative in removing assets with restrictions on them from the calculation. It also determines the number of months of expenses that can be covered by existing assets.
LFA= Dollar Value of Unrestricted Net Assets - Net Fixed Assets +
Mortgages and Other Notes Payable
The liquid funds amount is a common size value that quantifies the liquid unrestricted dollar amount that an organization has available to meet current obligations.
(SI)= Revenue – Expense
The savings indicator measures the increase or decrease in the ability of an organization to add to its net assets. Values greater than one indicate an increase in savings. The savings indicator is a simple way to determine if an organization is adding to or using up its net asset base
CG= Revenue from Contributions and Grants
The contributions and grants ratio measures the composition of organization funds coming from these sources. Organizations can use this indicator to determine long and short-term trends in line with strategic funding goals that can change the organizational revenue composition in this area.
Revenue sources are analyzed in order to establish what proportion each of these revenue streams contributes to the organization’s total revenues.
In the past, comparing, grading, or assessing Humane Societies proved to be difficult for donors, advocates, and communities. Although Charity Navigator, the premier evaluator of nonprofits, rates nonprofits by assigning stars, four (4) stars being the highest rating, Charity Navigator does not rate the Quality of Care given to animals in Humane Society shelters, an opportunity for transparency loss since the welfare of the animals is of utmost importance.
By utilizing the Humane Society Scorecard, Key Performance Indicators (KPIs) and Quality of Care Indicators (QCIs) benchmark results that can be measured and graded. No need to explain a new grading system, most people are familiar with the ubiquitous school grading system of A, B, C, D, and F.
Additionally, since shelter QCIs are core to the Quality of Care for the animals, advocate and stakeholder concerns can be better addressed. Without knowing, measuring, or understanding QCIs, the shelter animals’ Quality of Care is left to anecdotal generalities and possible misrepresentations. However, a letter grade of “A” in Length of Stay (LOS) tells people that the average length of stay for the shelter animals is ten (10) days or less. A fantastic number and the letter grade is easy to understand by everyone.
Finally, for transparency, the grades should be posted on the humane society’s website and updated monthly. Implementing the Humane Society Scorecard will show the general public and the leadership of the humane society where opportunities are for improvement.
Measure Quality of Care to improve quality of care.
Mike Jones, M.Ed., CNP
Humane Society Solutions
A performance indicator or key performance indicator is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity in which it engages.
The International Society for Performance Improvement describes Human Performance Technology as “the systematic and systemic identification and removal of barriers to individual and organizational performance.” The interventions for each project, product or service are drawn from many disciplines, like behavioral psychology, instructional systems design, organizational development and human resources management.
The first four primary principles of HPT are:
Source: University of West Florida: