Charity Navigator Extends Time to Respond to Watchlist Notice

Charity Navigator will give nonprofits more notice that they will be placed on one of the group’s rating watchlists, a move that can present big headaches for charities and their fundraising operations.

The notice period — which will increase from two to five days — gives a charity time to provide information that could prevent it from being added to the “CN Watchlist” or “Donor Advisory list.” Charity Navigator’s watchlist committee makes decisions on the public lists, which aim to help donors make better-informed giving decisions.

The committee meetings will now be held on Mondays, and charities will have until the following Friday to respond. At that point the committee will make a decision to post, not to post, or to request additional information.

Charities can be placed on the CN Watchlist if a credible news organization or other source bring to light illegal or inappropriate operational activities. Nonprofits on the watchlist retain their Charity Navigator ratings and can be removed from the watchlist at any time.

A charity may receive the more severe Donor Advisory label for reasons including an attorney-general investigation or failure to report fundraising expenses on a Form 990. The label replaces a charity’s rating and typically remains in place for at least a year.

Balancing Act

In making its determination, the committee tries to balance two things: accuracy and timeliness, says Charity Navigator President Michael Thatcher.

“Where it’s tricky is where you have accusations or unconfirmed, alleged offenses,” he says.

Nonprofits that land on the list can provide publicly available information for the watchdog to consider. That additional information is also published on Charity Navigator’s site.

The change follows an appearance by Mr. Thatcher last month at a conference during which audience members grilled him about aspects of the group’s rating system and whether it will commit to rating itself.

One person expressed concerns about the timing of the watchlist process.

“I am very happy to hear that you would be willing to take somebody off a watchlist,” she said, “but the damage to an organization gets done simply by being put on a watchlist.”

Getting removed from the list, she said, is less newsworthy.

As he described the two-day timeline, the roomful of fundraisers erupted in chatter.

“I agree that’s not a lot of time,” Mr. Thatcher said. “It’s hard to turn on that dime. At the same time, you’re already reacting when something’s hit the news.”

Veterans group Wounded Warrior Project was added to the watchlist in January following damning reports by CBS News and The New York Times. The charity pledged to conduct an independent review of its spending. It remains on the watchlist.

Mr. Thatcher also told The Chronicle that Charity Navigator’s board next week will take up whether to rate itself publicly for the first time. Internally, the watchdog rates itself as a four-star charity, the highest on its ratings scale.