With thousands of registered charities throughout the Milwaukee metropolitan area, donors have an overwhelming choice to make when deciding where to give.
Perhaps their donations are guided by a religious affiliation, political ideology, or just by a vested interest in the nonprofit’s mission. But whatever the cause – whether it’s education, human services, arts, culture, health care or the environment – donors also consider the organization’s fiscal responsibility and governance practices. Donors want to know how efficiently an organization would use their gift to support its cause.[caption id="attachment_356391" align="alignnone" width="770"] RMHC Eastern Wisconsin in 2014 added 26,400 square feet and 32 additional rooms to its Wauwatosa facility.[/caption]
Fortunately for donors, Glen Rock, New Jersey-based watchdog group Charity Navigator cares about the same factors, and keeps track of them so donors don’t have to. A public charity itself, Charity Navigator independently assesses and rates nonprofit organizations throughout the U.S. that are registered as 501(c)(3) public charities.
Using information from an organization’s website, as well as its Form 990 annual tax filings, Charity Navigator evaluates two areas of performance – financial health, and accountability and transparency – and rates nonprofits based on a numbers-driven system.
“Donors are very sophisticated now and they want to make sure that, where they are donating, their money is used in a really good way to further that particular mission,” said Ann Petrie, president and chief executive officer of Ronald McDonald House Charities Eastern Wisconsin.
The organization, which provides free or low-cost temporary housing and programs to families whose children are receiving medical care at Children’s Hospital of Wisconsin or other area hospitals, is considered by Charity Navigator to be the top-rated large-size nonprofit in Milwaukee.
With an overall rating of four out of four stars and an almost perfect overall score of 99.16 out of 100, RMHC Eastern Wisconsin tops the list of Charity Navigator’s annually published market study of what it deems Milwaukee’s largest nonprofits.
Fifty-two organizations are included in the study, which was updated on July 1. Following RMHC Eastern Wisconsin are the Greater Milwaukee Foundation, COA Youth & Family Centers, United Way of Greater Milwaukee & Waukesha County, and Catholic Charities of the Archdiocese of Milwaukee.
RMHC Eastern Wisconsin’s current rating, which is based on 2016 data, is its third consecutive four-star rating, and for Petrie, it has been something to brag about.
“When I meet people and I give them a tour of the house and talk about our organization, I will say every time that we are a four-star Charity Navigator-rated organization and that means a lot,” she said. “When you’re looking at foundations, individual donors, corporations, they look to that Charity Navigator rating, and it’s very important to us that we have that rating and we’re very proud of it.”
In 2014, RMHC Eastern Wisconsin completed a multimillion-dollar expansion that added 26,400 square feet and 32 additional rooms to its facility, which is located at 8948 W. Watertown Plank Road in Wauwatosa. The organization last year served more than 2,600 families, almost doubling its pre-expansion reach, Petrie said.
The cost of the project was entirely covered by an $8.5 million capital campaign, along with reserved funds accumulated throughout the organization’s then-30-year life. Because the expansion was completed without the need for a mortgage or a loan, Petrie said, RMHC doesn’t have to depend on programming funds to pay off any debt.
By Charity Navigator’s standards, a major indicator of a nonprofit’s financial health is its program expenses. That’s the portion of the organization’s total expenses spent on its programs and services – not on paying its staff members, putting on its annual gala, or paying off incurred debt.
In 2016, 83.6 percent of RMHC Eastern Wisconsin’s expenses were put toward its programming, which means for every dollar the organization brought in, 84 cents was spent directly on necessities like bedding, furniture, the facility’s electric bill and keeping its guest rooms clean.
This level of financial efficacy wouldn’t be possible without strong governance practices, Petrie said, and a major part of maintaining those practices is a nonprofit’s board of directors. The board holds the organization’s leadership accountable, advising them to make financial decisions that are transparent and mission-focused.
Tom Schneider agrees. He has served as the executive director of COA Youth & Family Centers for almost 18 years. COA offers educational, recreational and social work programs for children and families in the city’s underserved areas.
With an overall score of 96.99 out of 100 and a perfect accountability and transparency score of 100 out of 100, COA holds the highest four-star rating of any human services organization in the state. Since it was first rated by Charity Navigator in 2004, COA has received a four-star rating every year except 2015.
Schneider said donors have voiced their appreciation for the organization’s Charity Navigator rating, but for COA, that rating tells only one side of the story. That’s because COA relies on both internal and external evaluations that measure the effectiveness of its programming.
“That’s something that Charity Navigator doesn’t necessarily do,” Schneider said.
For COA and other human services organizations, outcomes-based measurements are essential to receiving funds from large donors such as United Way of Greater Milwaukee & Waukesha County – not to mention for the nonprofit’s own credibility.
“Organizations need to be doing outcomes measurements,” Schneider said. “You can run a wonderful program and you might say it helps, but how do you show that it’s making a difference?”
Charity Navigator’s market study also includes the organizations whose ratings place them toward the bottom of the list. In Milwaukee, those include Partners Advancing Values in Education, Skylight Music Theater, the Endometriosis Association, the Sharon Lynne Wilson Center for the Arts, and Christian Life Resources.
Richfield-based Christian Life Resources is a pro-life organization that advises religious leaders and lay people on the morality of life-related issues such as abortion and euthanasia. It runs several pregnancy care centers throughout the Midwest and Arizona, as well as a housing and resource center for single mothers in Milwaukee called New Beginnings.
Its overall score is 68.13, with a financial rating of 57.50 and an accountability and transparency rating of 85.00. Christian Life Resources has held a one-star rating from Charity Navigator for 10 consecutive years, but in the eyes of the organization’s national director, Rev. Robert Fleischmann, the low rating isn’t a major cause for concern.
In 2011, the organization’s main donor at the time, the Marvin M. Schwan Charitable Foundation, withdrew its funds due to its own financial problems. The loss buried Christian Life Resources in $350,000 of debt, but seven years later, the organization has completed its recovery program and reduced its debt to $148,000, Fleischmann said.
After the 2011 incident, Fleischmann said the organization’s fundraising efforts shifted away from corporate support. Its main funding source is now comprised of a smaller, more exclusive group of private donors who generally are not concerned with the Charity Navigator rating, he said.
“We have a relationship with most of our donors,” Fleischmann said. “They know us, they know what they’re doing, they get an audit report if they want. You might get a business person who might go on to Charity Navigator to see what our ranking is, but that’s really not where our donors come from.”
Fleischmann said the first time he had even become aware of the low rating was when BizTimes Milwaukee reported on it in 2016. Since then, he said, the organization has taken steps to update the website according to Charity Navigator’s accountability and transparency requirements. And for what it’s worth, Christian Life Resources’ current overall score is the highest it has received since 2006.
Overall, Milwaukee’s nonprofit sector performs better than the nonprofit sectors of more than half the nation’s largest cities. According to Charity Navigator’s national Metro Market Study, Milwaukee sits at number 12, with an overall score of 88.16 out of 100, topping the national overall score of 87.77.