How does the nonprofit group that rates the charities measure up to its own standards? That was one of Nanci Martin's questions after reading the recent column ("Track Your Giving Dollars," Aug. 18) on the American Institute of Philanthropy's (AIP) quarterly Charity Rating Guide and Watchdog Report, which discloses how nonprofit groups allocate donations.

Martin, the director of communications and advertising at Catholic Relief Services (CRS) in Baltimore, suggested that AIP's ratings, based on financial "performance assessments," such as the percentage of donations spent on overhead and funding deployed to a nonprofit's cause, aren't foolproof gauges of the quality and effectiveness of the organization's real-world work.

"Donors should be concerned about how their donations are spent, and researching an agency's overhead costs is certainly a key factor," Martin says. "It is not the only factor, however. Donors need to know that the organization . . . gets results. It just seems that having a small group of people in Bethesda judge the work that CRS and other agencies do without ever having seen even one of their projects is rather shortsighted."

The issues she raises aren't sour grapes, Martin says. Catholic Relief Services consistently grades among the highest in its AIP category. But she wonders who's watching the watchdogs. "What is AIP's overhead?" she says. "What makes AIP suitable to judge the work of other nonprofit agencies?"

Daniel Borochoff, AIP's founder and president, knows well the shortcomings of his ratings. He urges donors to use his service as a starting point: "We state in each issue of the Charity Rating Guide that selecting a charity to support is a bit like playing God. Ideally it should take into account your most deeply held concerns and convictions. AIP encourages each donor to consider these factors and others, which you may feel are more significant."

But donors need to do some digging themselves. "We encourage donors to insist that a charity's descriptions of its programs and accomplishments be quantifiable and clear," says Borochoff, who suggests asking nonprofits questions such as how many hungry were fed thanks to their funding.

"I know that Ms. Martin would like us to rate the quality of a charity's programs, but it would be a Herculean task requiring program experts on medical research, environmental science, youth development, international relations and hundreds of other areas," says Borochoff, an accountant with an MBA and more than 12 years of experience analyzing charities.

As for how AIP rates: Borochoff says his watchdog group does indeed "walk our talk." For 1998, AIP would receive an "A" grade, with 75 percent of its total expenses going to researching charities and helping donors make informed charitable decisions--well above AIP's minimum standard of 60 percent. "And we only spend $4 to raise each $100 of contributions," he adds. AIP considers spending $35 or less to raise $100 a reasonable expense.

"In over a decade of experience, I have learned that the first thing most people ask when judging a charity is: What portion of a charity's money is being spent on its programs?" says Borochoff, who discloses that he now earns $71,200 annually after six years at the rudder of AIP (his first year was unpaid). "We believe AIP does a better job of answering this question than any other organization."

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