501(c)3 Posts

4 Stars – and Proud of It!

It’s with pride, and a virtual bang of the gong (banging on a real gong is the way we celebrate achievements and good news in the GlobalGiving office) that we announce some exciting news:  GlobalGiving has been awarded a 4-star rating by Charity Navigator!

Charity Navigator currently “rates” over 5,000 501(c)3 organizations in the US by examining a charity’s financial health, and then awarding an overall rating – between 0 and 4 stars.  While sometimes criticized for focusing too narrowly on financial ratios that do not evaluate the “big picture” and outcomes of an organization’s work, Charity Navigator remains the most-utilized evaluator of charities, and many donors factor these ratings into their giving decisions.

In 2008, the first time GlobalGiving was eligible to be evaluated (4 years of IRS Form 990s are required to be considered), we scored a respectable 3 stars. This year, based on updated financial information, we were excited to learn that we have earned the 4-star rating based on (in Charity Navigator’s words) “(its) ability to efficiently manage and grow its finances.  Approximately a quarter  of the charities we evaluate have received our highest rating, indicating that GlobalGiving executes its mission in a fiscally responsible way, and outperforms most other charities in America.  This exceptional designation from Charity Navigator differentiates GlobalGiving from its peers and demonstrates to the public it is worthy of their trust.”

GlobalGiving is committed to extremely high standards around accountability, fiscal responsibility, and transparency, and we are proud of what this rating represents.  Especially during these tough economic times, we know that donors are giving extra thought to how they spend their donation dollars – and we hope this external validation gives them even greater confidence that they are making smart choices when they give to a project on GlobalGiving.

We appreciate your continued support!


Election season is in full swing, and today the spotlight is on the Potomac Primaries in Maryland, DC and Virginia.  Yesterday, Wired News published an article about the emergence of nonprofits as a vehicle for campaigning.  Today the Chronicle of Philanthropy published the transcript of a live chat that it sponsored about the effects this election will have on charities and how they can (if they want) play a role in the election.  The Chronicle‘s guests included Kay Guinane, the director of nonprofit speech rights for OMB Watch in Washington, DC and Laurette Edelmann, assistant director of the New Hampshire Center for Nonprofits.Says the Wired article:

…a new type of Web 2.0-enhanced nonprofit advocacy group is streamlining the process like never before, producing and distributing slick, effective videos in internet time.  Thanks to converging developments in campaign finance law, the improving technology of digital cameras and the rise of online social networking, voters’ inboxes this election season will be filled at strategic moments with forwarded web addresses for issue-oriented ads…

Brave New Films, the production company whose ads sparked the article, is a registered 501(c)4 – a “social welfare organization.”   These groups are allowed to participate in political campaigning, as long as that isn’t their primary objective.  Because political campaigning is not, theoretically, their main activity, they are not required to disclose their donor lists, unlike the the “issue advocacy” 527s, which were popular during the 2004 election.

In the Chronicle interview, Kay Guinane comments on the role played by 501(c)4 organizations in the election:

IRS rules do not limit how much lobbying 501(c)(4)s can do, but their electoral work cannot be their major purpose. (A nonprofit whose major purpose is to influence elections is tax exempt under Section 527 of the tax code.) The sticky question for 501(c)(4)s is how much electoral work they can do before it becomes their major purpose. The IRS has not cleary defined this. It is also important that the electoral work be related to the 501(c)(4) group’s overall mission.

She also argues that it is important for nonprofits, even 501(c)3 organizations to get involved in the political process by educating voters, but there is still a danger of diluting the mission and becoming targets of political fundraising if they get too deeply involved.

So how involved is too involved?  Where should the line be drawn for 501(c)4 organizations that are flooding the airwaves with political ads?  Should a line be drawn?  Do nonprofits need to be more involved? Are unregulated 501(c)4 organizations setting a bad precedent for other nonprofits, including 501(c)3 organizations?