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Charity Navigator Rates Nonprofits’ Impact for First Time with Acquisition of Ratings Startup, ImpactMatters

Charity Navigator Rates Nonprofits’ Impact for First Time with Acquisition of Ratings Startup, ImpactMatters Austin Distel

Charity Navigator, the world’s largest evaluator of nonprofits, has acquired ImpactMatters, a startup that applies rigorous methodology to assess nonprofit impact. 

The announcement of the acquisition coincides with the rollout of Charity Navigator’s new Impact & Results beacon–part of its recently launched Encompass Rating System–which will continue the organization’s shift towards providing a more holistic assessment of nonprofit effectiveness. The organization has historically rated nonprofits based solely on measures of financial indicators and accountability.

The impact rating will, for the first time, give nonprofits and their donors an easily understood assessment of effectiveness. With a sophisticated assessment of impact, nonprofits and donors can spend their dollars more effectively.

“Rating based on impact is notoriously complicated,” says Michael Thatcher, Charity Navigator’s President and CEO. “Through its novel methodology, ImpactMatters has succeeded in giving donors the ability to identify high-impact nonprofits that are making the most effective use of their contributions. The acquisition of ImpactMatters will give our donors an even more comprehensive view of nonprofit effectiveness. It is a milestone for the nonprofit sector.”

Charity Navigator began rolling out the Encompass Rating System in late July, adding an unprecedented 150k previously unrated nonprofits to its platform. The new system will assess nonprofits based on four measures or “beacons”: Finance & Accountability, Impact & Results, Leadership & Adaptability and Culture & Community. The newly available Impact & Results beacon joins the Finance & Accountability beacon, introduced in July. According to a recent survey, Charity Navigator users consider impact to be the most important indicator in their charitable decision making. At present, 710 service-delivery nonprofits will receive a rating based on impact. Over the coming months, Charity Navigator will launch new tools to gather nonprofit impact data and begin issuing additional impact ratings. 

ImpactMatters was founded by Dean Karlan, a professor of economics and finance at the Kellogg School of Management at Northwestern University, and his student while teaching at Yale, Elijah Goldberg. It is the first organization to successfully develop a method for rating nonprofit impact at scale. ImpactMatters combines data made publicly available by nonprofits with theory and evidence from social science research to estimate cost-effectiveness.  

“With better information on the expected impact of giving, the nonprofit sector can better achieve social progress. And with less uncertainty on the expected impact of giving, donors may give even more,” said Elijah Goldberg, co-founder of ImpactMatters. “We are proud to bring ImpactMatters’ methodology to Charity Navigator and to advance our shared goal of making high-impact philanthropy easier for all.”

For those interested in learning more about the role impact plays in nonprofit effectiveness and sustainability, Charity Navigator is hosting a virtual event on November 18 at 2 pm ET with a panel including Chief Ratings Technology Officer Stephen Rockwell, Vice President, Impact Ratings, Elijah Goldberg, and other nonprofit industry leaders. RSVP here

ImpactMatters has transferred its intellectual property and other assets, including its brand, to Charity Navigator. ImpactMatters staff are now a part of the Charity Navigator team and have formed its new Impact Unit. Impact audits, originally created by ImpactMatters, will continue to be developed by Impact Audit Partners.

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