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AFP Responds to Canada's MoneySense Charity Rankings

July 13, 2011

MoneySense, a personal finance magazine in Canada, has released its second annual Charity 100, a ranking of 100 charities based mostly on fundraising costs, along with governance and transparency.

Charities receive a letter grade based on the percentage of funds that went to programming, as well as how much it cost to raise a dollar. Charities were also queried about their governance practices and how transparent they were with their financial information.

The 2010 MoneySense Charity 100 can be found here. While the 2011 version is not available online yet, it can be found in the print version of the magazine.

AFP wrote a letter to the editor, citing numerous problems with the use of a ranking system based on fundraising costs. Chief among the concerns was the attempt to try to take all of the various factors that could affect fundraising costs and break them down into a single letter grade. "As the Canada Revenue Agenda readily acknowledges, there are dozens of factors that affect fundraising costs," wrote AFP Chair Andrea McManus, CFRE, and Canadian Government Relations Chair Ken Mayhew, CFRE. "Trying to distill all of those factors into one all-encompassing, objective letter grade is impossible."

The full text of the letter is below.

AFP President and CEO Andrew Watt, FInstF, also posted comments about the ranking system on the AFP blog.

AFP will be looking at additional ways to educate the public about fundraising costs, including using National Philanthropy Day® as a vehicle to address the issue.


 

To the Editor:

The intent of the MoneySense Charity 100 is laudable, and we appreciate the changes you have made since 2010.

Nevertheless, we are concerned that the results provide few benefits and skew towards certain types of charities. In general, larger, older, more-established and better-known charities will tend to receive the best grades. Those organizations that use certain types of fundraising (major gifts) will tend to do better than those that emphasize others (direct mail), as will those who are not significantly dependent on fundraising revenue.

In addition, as the Canada Revenue Agenda readily acknowledges, there are dozens of factors that affect fundraising costs. Trying to distill all of those factors into one all-encompassing, objective letter grade is impossible.

The real challenge with rankings is that, despite their best intentions, they consistently tell us little about which organization does a better job at ethically or efficiently fulfilling the mission, the impact of a charity's work or even how caring or dedicated their staff is. Ratios simply do not tell us which organization we should support, especially since there are more charities in Canada (81,000) that can possibly be analyzed by a simple ranking.

Our advice to donors: identify those causes and charities that mean the most to you. Learn more about them, volunteer and ask questions. Make your giving personal and informed, and you will be far better served than making a decision based on a ranking.

Sincerely,

Andrea McManus, CFRE
Chair, Association of Fundraising Professionals

Ken Mayhew, CFRE
Chair, AFP Government Relations Committee



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