2011 Charity 100 Methodology

See how we ranked Canada’s top 100 charities.

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The financial data comes from the charities’ 2007, 2008 and 2009 Canada Revenue Agency T3010 information returns. The charities on our list are the biggest charities in Canada terms of tax-receipted donations and non-tax receipted money received through fundraising. We excluded gifts in kind when sorting the list. We also excluded some organizations not generally thought of as charities, such as churches and universities.

Charities were divided up into nine categories: Animal Services, Culture Arts & Research, Environment, Fundraising Organizations, Health/Health Services, Hospital Foundations, International Aid & Development, Religion and Social Services. Fundraising organizations were defined as organizations that spent more than 60% of their expenses on donations to other charities or that spent less than 10% on programs.

OVERALL CHARITY EFFICIENCY (MAX 10 POINTS)
1) Money spent on charitable programs and money donated to other charities was added up and divided by the total expenses.

2) Then points were awarded based on these ranges:
REGULAR CHARITIES
10 points for 85%-100%, 7.5 points for 75%-85%, 5 points for 65%-75%, 2.5 points for 60%-65%, 0 points for less than 60%.

FUNDRAISING ORGANIZATIONS AND HOSPITAL FOUNDATIONS
10 points for 90%-100%, 7.5 points for 80%-90%, 5 points for 75-80%, 2.5 points for 70%-75%, 0 points for less than 70%.

3) Scores were totalled and a normalized for each type of charity, so we would be comparing each charity against other charities in this category.

FUNDRAISING EFFICIENCY (MAX 10 POINTS)
1) Fundraising costs were divided by the total of money raised through tax-receipted and non-tax receipted donations and money raised through fundraising.

2) Then points were awarded based on these ranges:
REGULAR CHARITIES
10 points for $0 to $10; 7.5 points for $10-$20, 5 points for $20-$30, 2.5 points for $30-$35, zero points for more than $35.

FUNDRAISING ORGANIZATIONS AND HOSPITAL FOUNDATIONS
10 points for $0-$5, 7.5 points for $5-$10, 5 points for $10-$20, 2.5 points for $20-$30, 0 points for more than $30.

3) Scores were totalled and a normalized for each type of charity, so we would be comparing each charity against other charities in this category.

GOVERNANCE (MAX 10 POINTS + 1 BONUS POINT)

This category is has a maximum score of 25 points, which is reduced to an overall weighing of 10 points. At that point, one bonus point is possible for disclosing the highest paid salary.

1) Twenty of the points in this category are awarded based on a short governance questionnaire that we sent out to all 100 charities. A charity got one point for answering “yes” to questions 1 to 11; one point for answering “yes” or “N/A” to question 12; and one point eachfor one for answering “no” to questions 13 to 14. If the organization didn’t respond to the questionnaire after a follow up phone call, they received zero. Here are the questions:

1) Does your Board of Directors approve the following:
• The annual operating budget? Y [ ] / N [ ]
• Audited financial statements? Y [ ] / N [ ]
• Fundraising policies? Y [ ] / N [ ]
• Governance policies? Y [ ] / N [ ]
• A formal process to identify the organization’s major strategic and operation risks? Y [ ] / N [ ]
• A formal multi-year strategic plan? Y [ ] / N [ ]
• Canada Revenue Agency filings? Y [ ] / N [ ]
2) Does your board formally review the performance of the most senior staff person at least once every year? Y [ ] / N [ ]
3) Is the most senior staff person’s total compensation package approved by the board of directors or a board committee? Y [ ] / N [ ]
4) Are expenses of the senior staff member reviewed by a member of the board? Y [ ]/ N [ ]
5) Has the board formally adopted a written code of ethics for directors, staff and volunteers? Y [ ] / N [ ]
6) Does the organization have an investment policy? Y [ ] / N [ ]
7) Is there a process in place for measuring the effectiveness of the organization’s programs? Y [ ] / N [ ]
8.) Is there a conflict of interest policy covering board members and staff? Y [ ] / N [ ]
9) Is there a formal process to orient new board members to ensure they understand their legal and fiduciary responsibilities and are fully informed on the organization’s finances? Y [ ] / N [ ]
10) Does the board review the performance of board chairs, committee chairs and individual directors annually? Y [ ] / N [ ]
11) Does the board or a board committee review the actual revenues and expenses versus the budget at least quarterly? Y [ ] / N [ ]
12) If the organization rents, trades or shares donor list, does it ensure donors’ request to be excluded from lists are honoured? Y [ ] / N [ ] / not applicable [ ]
13) Does the organization sell its donor list? Y [ ] / N [ ]
14) Does the organization directly or indirectly pay fundraisers finder’s fees, commissions, or percentage compensation based on contributions? Y [ ] / N [ ]

2) The other five points in this category were given for transparency. Charities that had complete audited financial statements on their website were given five points. If they posted only partial financial statements online, we gave them two and a half points. If they had no financial statements on their site, they got zero.

This resulted in a score out of 25. We divided it by 2.5 to get a score out of ten. At that point, charities received a bonus point (one full point on top of the possible score of ten out of ten) for disclosing the exact salary of their CEO or executive director.

RESERVES (MAX 5 POINTS)
1) We looked at how much cash and investable assets the charity had for this category. The result was then expressed in years and months. Community foundations were not scored for this category, as they hold investments for other charities.

2) Points were awarded for the amount of reserves as follows: 0 points for less than one month in reserve, 2.5 points for 1-3 months, 5 points for 3 months to 3 years, 2.5 points for 3 years to 5 years, 0 points for more than 5 years.

3) Scores were totalled and a normalized for each type of charity, so we would be comparing each charity against similar charities in their category.

FINAL SCORE
The overall score for each charity was as follows:
Maximum of 10 points for charity efficiency
Maximum of 10 points for fundraising efficiency
Maximum of 10 points for governance plus 1 bonus point for salary disclosure
Maximum of 5 points for reserves for all charities other than community foundations.

Each charity’s total out of a maximum of 35 + the bonus point (30 + bonus point for community foundations) was converted to a percentage out of 100. These percentages were then normalized by category of charity to the total charity population, meaning charities final letter grades were dependent on the performance of charities in their category.

If you have questions about the Charity 100, feel free to contact Sarah Efron at sarah.efron@moneysense.rogers.com; tel: 416 764 1271.

8 comments on “2011 Charity 100 Methodology

  1. One has to be very careful when relying heavily on financial numbers from the T3010 in evaluating the work of charities in Canada. While the T3010 is a great resource and you can search any charity at http://www.cra-arc.gc.ca/chrts-gvng/ the information is not always accurate. Furthermore, the heavy reliance on administrative/fundraising costs can be very misleading and you may wish to view my article "How Much Should A Canadian Charity Spend on Overhead" http://www.globalphilanthropy.ca/ which discusses some of the complexities in rating charities.

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    • Thanks for your thoughts Mark. Yes, it is true that there are inaccuracies and inconsistent categorizations in the T3010s. However we feel this is the best tool we have available for comparing charities' financial information.

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  2. in light of the recent news articles written about the big salaries some charity staffs are making, and the large portion of the money raised being used in "administration", I think the next evaluation should include the ratio of salaries paid to the # of staff, vs. the $ being actually spent on the causes the charities are meant to do.

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  3. I searched out this MoneySense article after seeing some media attention received by Chalice subsequent to their excellent 2011 ranking. I found CTV Atlantic coverage flawed a pinch (video interview http://atlantic.ctv.ca/?video=501569), as they stated that Chalice had the lowest percentage of overhead of all international development charities (which is incorrect – in this category, it ranks in the top group, but is not number one either in 2010 or 2011). I wouldn't normally bat an eye, but I noticed that a Chalice representative was being interviewed and did not correct. Still, we might say that it would have been awkward to correct, so I let it pass, and continued my research on Chalice's web-site. I was dismayed to read that the error made by CTV was rooted in the Chalice news release, which includes a spokesperson quote stating, "Everyone should sponsor a child through Chalice! Of all the charities in Canada, it has the lowest overhead and administrative costs, which means the highest possible percentage of each donated dollar goes directly to those in need." (Chalice news release http://chalice.ca/index.php?option=com_content&am….

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  4. I couldn't agree more with Mark. In our research and building out our platform we found that almost 70% of the charity filings on CRA site have errors. In addition, there is so much more than financial metrics to what makes a good charity a good charity. For example, one of the things that donors should focus on is the alignment that the charity has with the donor's expectations on addressing the issue that they are passionate about. A donor who likes high risk ventures would consider a start-up organization that has higher admin costs, because they are just starting out; or perhaps that same individual might be interested in crisis funding or an organization operating in a war-torn country. At the end of the day, it is up to the donor ensure that his/her money is going where they intended.

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  5. I would have liked to see Autism Speaks Canada on that list. The CEO is based in the US and makes $600,000 a year or more. Considering I have given of my time and $ to this organization, I was dismayed to learn of their ritzy, Manhattan highrise office and high administrative salaries. I will be putting my $ into more local initiatives to help kids like my daughter, who are affected by autism. The though that my hard earned money went to their rent and high salary sickens me.

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  6. It would be good to be able to search for a charity by name. What about charities like The Red Cross & Unicef?

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    • Hi Jean, I agree it can be a bit tricky to navigate. Unicef is called Canadian Unicef Committee and it is under Fundraising Organzations. Canadian Red Cross Society is under Health/Health Services. cheers, Sarah

      Reply

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