A national charity watchdog group has raised the ire of some local nonprofit leaders.
At a time when public confidence in nonprofit organizations is low and calls for greater accountability grow louder, the nonprofit executives worry that Charity Navigator might do more harm than good with its ratings. Potential donors can use the group's star rankings to determine whether they are giving to a worthy cause.
"It's an injustice. It's not like I am fiscally irresponsible, and Charity Navigator portrays it like I am," said Adopt-A-Family Executive Director Wendy Tippett, after learning her agency had received just one out of four possible stars.
United Way of Palm Beach County President Scott Badesch was the first to come to the nonprofit's defense.
"They are being penalized because they are fulfilling their mission of helping the most vulnerable," said Badesch, whose organization funds Tippett's. The United Way has a four-star ranking.
"To suggest it's a one-star agency is dead wrong," he said.
Charity Navigator rates some 5,000 nonprofits by looking at their financial health, how efficiently they use their money and how well-positioned they are to sustain the programs they offer. The ratings are based on an analysis of a charity's tax returns. A charity's performance also is compared with that of similar charities.
Adopt-A-Family is one of 20 new Florida charities and 131 new ones nationally added to Charity Navigator's growing watchdog list.
A donation from the Hobbs Foundation in Tampa made the Florida additions possible.
Florence Fuller Child Development Centers in Boca Raton also is newly rated. It received two stars.
"I am obviously upset, but 2003 and 2004 were not good years," said Executive Director Lorry Herdeen, who had not heard about Charity Navigator until she was asked about her organization's ranking.
She also blamed the organization's financial woes not only on storms here, but on natural disasters around the world that pulled local donations away from her organization.
"Things are a heck of a lot better in 2006 and 2007," she added.
What Charity Navigator does not and cannot do is look at things that might affect a charity's bottom line, such as skyrocketing insurance premiums, damage from hurricanes or higher demands for services because of natural disasters.
"We have, for many years, provided quality care to the children who needed it most. Looking at this, I wouldn't know that," Herdeen said.
Boca Helping Hands, an 8-year-old agency that provides meals to low-income families in the city, got the highest ranking: four stars.
"We got hit hard during the hurricane with some of our donations, but we are bringing that back up," said the nonprofit's new executive director, Linda Gove. "Since Hurricane Wilma, we have been fortunate enough to have some board members join us who saw the need."
Boca Helping Hands is a much smaller agency, with $545,008 in revenue for fiscal 2005, the figures on which its ratings are based. Adopt-A-Family had close to $2.8 million in revenue for the same year. Florence Fuller had $3.8 million for fiscal 2004.
The information should be a conversation starter, Charity Navigator spokeswoman Sandra Miniutti said.
"We don't put caveats into what the data shows. We hope that what happens is that the donor contacts the charity to discuss it," Miniutti said.
Adopt-A-Family's one-star rating, she noted, was based on the fact that it did not have a lot of rainy day funds.
"They have less than three months of working capital. That combined with the fact that they are not bringing in money," Miniutti said. "We like charities to have six months to a year of working capital on hand."
"Misleading" is the word Tippett uses to describe the ranking.
"You have to look beyond the numbers," she said.
If Charity Navigator had done that, it would have learned that the 23-year-old organization, which helps the homeless and the working poor, had to dip into its reserves in the past few years to help the victims of Hurricanes Jeanne, Frances, Wilma and even those displaced Katrina victims who were housed in Palm Beach County, Tippett said.
"It's very explainable, but it sure looks like hell," she said.