Methodology

How the rating is decided

Every organization gets one letter on an eight-step scale — A+, A, B+, B, C+, C, D, F — built from four criteria. Each criterion is scored separately on the same letter scale, then the letters combine as a weighted average (grade points, GPA-style). Each profile shows the per-criterion letters, so you can always see why an organization got its grade.

Three guards keep a strong score from hiding a weak one:

• The worst criterion drags the rating with it — the overall letter can never sit more than one full letter grade above the weakest scored criterion.
• Insolvency caps the rating at C+— when liabilities exceed assets, efficient spending doesn't matter.
• A+ requires full disclosure— organizations that file without the full Form 990 detail are scored on the criteria they do report (never punished for a section their form doesn't have), but top out at A.

Criterion 1 · Program efficiency (40%)

The worseof two measures, so strong program spending can't offset wasteful fundraising. Measure 1 — program services expenses ÷ total functional expenses (Part IX, line 25), averaged over the last three filings so one unusual year can't swing it:

Measure 2 — fundraising expenses ÷ total contributions × 100. Applied only when contributions exceed $10,000 — organizations funded by program fees aren't judged on fundraising they don't do:

A strained balance sheet (liabilities above ~90% of assets) caps this criterion at C+.

Criterion 2 · Financial health (25%)

The worse of two signals from the latest return — months of reserves (net assets ÷ one month of expenses) and operating margin ((revenue − expenses) ÷ revenue):

One deliberate ceiling: reserves are prudent up to a point, but once an organization sits on roughly five years or more of operating budget, the reserves measure stops earning an A — a very large surplus reads as stockpiling rather than top-tier stewardship, the same stance donor watchdogs take.

Criterion 3 · Governance (25%)

Six checks from Form 990 Part VI and Part XII — the standards watchdogs like the BBB weigh: a board where the majority of voting members are independent, a board of at least five, a conflict-of-interest policy, a whistleblower policy, a document-retention policy, and financial statements reviewed by an independent auditor. The letter comes from the share of disclosed checks that pass (6/6 A+, 5/6 A, 4/6 B, 3/6 C+, and so on down to F). Only checks the organization actually disclosed count — 990-EZ / 990-PF filers, whose forms don't carry this section, simply skip the criterion.

Criterion 4 · Transparency (10%)

Five disclosure signals, 20 points each: a filing within the last ~3 years, a mission statement, program descriptions, a listed website, and the full functional expense breakdown. 5/5 A+, 4/5 A, 3/5 B, 2/5 C, 1/5 D, none F.

From four letters to one

Letters map to grade points (A+ = 4.3, A = 4.0, B+ = 3.3 … F = 0). The overall score is the weighted average across the criteria the organization could be scored on — 40 / 25 / 25 / 10, renormalized when a criterion is missing — mapped back to a letter, then the three guards above are applied. Deterministic, identical for every organization, and fully reproducible from public IRS data.

Data pipeline

• Organization registry from the IRS Business Master File, refreshed monthly.
• Financial history from e-filed Form 990 / 990-EZ / 990-PF returns (multi-year revenue, expenses, balance sheet).
• For the largest organizations we parse the full 990 XML: functional expense split (Part IX), officers & compensation (Part VII), contractors, Schedule I grants, and governance signals (Part VI board independence and oversight policies, Part XII audit).

Donor signals

The colored chips on each profile translate the same math into plain language, plus two extra checks: reserves (net assets ÷ monthly expenses; 6+ months is strong, under 1 month is thin) and revenue trend (±15% vs ~3 years earlier).

Limitations — read this before deciding

• A grade needs financials in the e-filed return. Organizations that only file the Form 990-N postcard, or whose latest return doesn't report revenue, expenses and net assets, are honestly left unrated — that is not a bad sign in itself.
• Ratios describe efficiency, not impact. A hospice and an advocacy group have different cost structures; compare within a cause, and look at trends over several years.
• Figures are as reported to the IRS and can lag the current fiscal year by 1–2 years.

More context in the donor guides: program expense ratio, cost to raise $100, how to read a Form 990.