ERGF and Online Ratings
Non-Profit Ratings, Scorecards, Reviews, and the like…a valuable tool for the prospective donor, and a potential resource for the non-profit itself. However, the benefits come with drawbacks, often at the expense of small non-profit organizations.
ERGF has been asked before “Why aren’t you certified through [such-and-such organization]? I would feel more comfortable donating if you were.” And there is usually a good answer as to why we may not be certified through a particular organization.
There are many ratings organizations out there, and while we try to remain aware of the larger ones, we may be unaware that a certain donor-preferred ratings/review organization even exists.
Some ratings/review organizations are limited to the top largest non-profit organizations and will not even look at smaller organizations. And ERGF is not a large organization. We do not have bloated compensation structures, million-dollar marketing budgets, or the like.
Even if we qualify by size, we may be otherwise ineligible for review. One of the most prominent ratings organizations will rate any non-profit, with some caveats. First, this organization requires 3 years of IRS Form 990 tax returns. Seems reasonable, right? However, the IRS requires that non-profit organizations file one of three versions of the Form 990, based on gross receipts and total assets. Smaller organizations typically file a Form 990-N (gross receipts normally under $50,000) or Form 990-EZ (gross receipts normally under $200,000 and total assets under $500,000). Larger organizations file the longer Form 990. The Form 990-N and 990-EZ are shorter and less costly to prepare. Many organizations, like ours, can prepare this filing in-house, and do not need to hire a third-party CPA.
Unfortunately, the above-mentioned ratings organization will not review organizations that file Form 990-N or Form 990-EZ. And while an organization can voluntarily file the longer Form 990, this filing is 12 pages plus any required Schedules. It can be difficult for smaller organizations to navigate this filing, and fiscally unreasonable to hire a CPA to do it for the organization. Thus, smaller organizations are disproportionately affected by a ratings organization that will not look at the IRS filings that the organization is authorized to use.
Interestingly, this same prominent ratings organization offers an alternative review process, but makes this process available only to organizations that focus on one of a small handful of very specific programs (such as spay/neuter, eyeglass provision, and shared book reading organizations). It is unclear why this ratings organization will allow alternative certification for these specific programs. Unfortunately, many small non-profits, like ours, will not qualify for review by this popular ratings organization.
ERGF maintains that ratings and reviews organizations are an important tool for donors. We are proud to work with those organizations that are willing to work with smaller non-profits. We recently qualified for Candid Silver Transparency for the third year in a row and are continuously working to achieve higher certifications. Despite this, we also acknowledge that the information available to the public does not provide the whole picture and that the current landscape works to the detriment of smaller non-profit organizations.
If you cannot find the independent, third-party information about ERGF that you are looking for, please reach out. We would love to talk. Surprisingly, there is very little actual, human interaction between non-profits and ratings organizations, and ERGF believes that many concerns or questions can be resolved by traditional means…talking to each other directly.