Culture & Community Beacon

Complete Ratings Trump Good Ratings

An overwhelming majority of donors prefer charities that have completed each of Charity Navigator’s four beacons, even if they have a lower overall score than another charity that only completed one or two beacons. Prioritize completing each beacon to attract more donors.

Solicit feedback From Donors to Build Trust

Studies show most donors view direct feedback from beneficiaries as a key metric when determining where their donation dollars will go. In addition, nonprofits should actively engage in feedback loops with those they serve to build transparency and trust.

There are Myriad Ways to Measure Equity

Charity Navigator scores organizations on equity based on their policies, but also based on data. Is compensation equal across races? Are team members able to identify racial disparities? Does your nonprofit have long-term strategic plans and measurable goals that focus on equity? These are all factors.

Webinar Recap: Megan Campbell, senior director of programs & strategy at Feedback Labs, and Noelani Pearl Hernandez, VP of culture & leadership at Charity Navigator, take a deep dive into one of the four components of Charity Navigator’s rating system: Culture & Community.

Research from the Lilly Family School of Philanthropy found that trust in organizations is at an all-time low. Sure, nonprofits are ahead of corporations in terms of trust; 39% of consumers trust nonprofit organizations, compared to 5.8% who trust large corporations. However, there’s still plenty of work to be done.

Donors want to give to trustworthy nonprofits. Charity Navigator allows nonprofits to tell their story and earn potential donors’ trust.

Each eligible organization has a star rating on Charity Navigator. That rating is based on a combination of four domains, which Charity Navigator calls Beacons.

Recently, Jeremy Ladyga, nonprofit board consultant at OnBoard, sat down with Megan Campbell, Senior Director of Programs & Strategy at Feedback Labs, and Noelani Pearl Hernandez, Vice President of Culture & Leadership at Charity Navigator, to take a closer look at one of those beacons: Culture & Community.

The session covered topics including:

The importance of equity and feedback practices in nonprofit performance
How Charity Navigator evaluates a nonprofit organization’s culture and connectedness to those they serve
Tips for engaging with the Culture & Community score

Here, we share key takeaways from this session.

Donors Gravitate Toward Organizations With “Complete” Ratings on Charity Navigator

Each eligible organization has a star-rating on Charity Navigator that ranges from zero to four stars. In the past, these ratings were determined primarily based on financial metrics. Today, ratings are calculated based on a comprehensive analysis of charity performance across four key domains, which Charity Navigator refers to as “Beacons.”

Impact & Results: How much benefit the charity’s programs achieve relative to the cost required to run it
Accountability & Finance: How accountable, transparent, and financially efficient and sustainable the charity is
Leadership & Adaptability: Whether the charity has the leadership capacity, plan, and ability to adapt to changing circumstances
Culture & Community: Whether the organization has practices that strengthen its overall organizational health and is responsive to those it serves

Completing each beacon is an important way to attract more donors. According to Hernandez, 80% of donors say they’d rather donate to a charity with a “complete” rating rather than one with just one or two beacons completed – even if the former has a lower overall score.

The Culture & Community Beacon Rounds Out Your Organization’s Story

The Culture & Community beacon, which was introduced in 2020, tells a key piece of your organization’s impact story. But what exactly is it?

The Culture & Community beacon is an assessment of an organization’s “overall culture and connectedness to the constituents and community they serve.” It examines how organizations listen to their constituents and use that feedback to foster impactful programs and services.

This beacon also considers organizations’ diversity, equity, and inclusion (DEI) workplace culture.

As Hernandez explained, positive organization health and strong engagement with constituents are critical to the implementation of high-quality, impactful programs.

Ongoing Feedback Loops Boost Trust – and Donations

Consistently soliciting feedback from constituents – and then using that feedback to inform improvements – is extremely important. There’s plenty of data to back that claim.

A study from the Stanford Social Innovation Review found that most donors see direct feedback from beneficiaries as a key metric when determining where to make donations. “You get more money when you get more feedback,” said Hernandez.

In addition, research from Feedback Labs found that organizations that actively engage in feedback loops with those they serve are perceived as more transparent and trustworthy.

“Listening to feedback is essential to ensure programs are effective and equitable,” said Campbell.

Campbell told attendees about “How We Listen,” which is a tool that nonprofits can use to share their feedback practices. To date, over 27,000 nonprofits have filled out “How We Listen.” That data then feeds into the Culture & Community beacon rating on Charity Navigator.

“It’s exciting for [charities] to get to diversify what they present to donors and funders…how they’re being responsive to and led by the people at the heart of their work,” said Campbell.

Equity at Work Drives Performance

Adopting DEI workplace practices is not only right thing to do, it also improves your Charity Navigator rating. In addition, there’s plenty of research that proves the positive impact of equity on nonprofit performance.

A study from McKinsey & Company provides evidence that organizations with greater diversity in their workforce are likely to have better financial performance. Research from Deloitte found that “organizations with inclusive cultures are twice as likely to meet or exceed financial targets, three times as likely to be high-performing, six times more likely to be innovative and agile, and eight times more likely to achieve better business outcomes.”

These are just two of the many studies Hernandez shared. One thing is clear: Equity is well worth the effort.

Charity Navigator Scores Equity on Multiple Measures

Charity Navigator scores an organization’s commitment to equity based on its data and policies.

Some of the data they look at includes whether the organization:

Reviews compensation data across the organization to identify disparities by race
Asks team members to identify racial disparities in their programs
Disaggregates data to adjust programming goals to keep pace with the changing needs of the community
Employs non-traditional ways of gathering feedback on programs and trainings
Has long-term strategic plans and measurable goals for creating a culture such that one’s racial identity has no influence on how they fare within the organization

Charity Navigator also aims to understand the policies and processes the organization has around things including:

Identifying vendors and partners that share their commitment to race equity
A promotion process that anticipates and mitigates implicit and explicit biases about people of color serving in leadership positions
Seeking individuals from various race backgrounds for board and executive positions
Helping senior leadership understand how to be inclusive leaders
Measuring, and disaggregating, job satisfaction and retention data by race, function, level, and/or team

Start Small and Build from There

There are a lot of factors that go into an organization’s Culture & Community rating. But it doesn’t have to be overwhelming.

“Completing the Culture & Community beacon is really important, even if you only have a few practices you’re doing,” said Hernandez. “This is a work in progress.”

Completing the beacon is a great way to reflect on your current practices and identify ways to improve. But remember you don’t have to take on everything at once. Instead, start small and build from there.

“It’s better to start small and understand that all of these practices are iterative,” concluded Campbell.

Ready to zero in on the other beacons that comprise your organization’s Charity Navigator? Check out the other sessions of our Charity Navigator masterclass – which each explore a different beacon.

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