What’s an Efficiency Rating and Why Is It Important?

Posted on May 23, 2019

Have you ever wondered WHAT an efficiency rating is, HOW they're achieved, or WHY they're important? Then this is the article you have been waiting for!


Just because an organization is designated as a non-profit, does not mean they hold themselves to high standards. Unfortunately, there are a lot of “charities” out there whose donations and fundraising efforts don’t exactly trickle down to the people they say they are serving. Instead, they pay C-Suite executives extremely high salaries and the small portion left over goes to their cause.  

That’s why it’s so important to do research before you donate to a specific charity. No matter how good their marketing is, what you see is not always the whole story. Because of this, there are several charity watchdog organizations whose sole purpose is to provide a process for the public to understand where the money is going and shine a light on non-profits who truly do what their mission states.

The Accreditation Process

The Better Business Bureau has an arm specifically for charities called the BBB Wise Giving Alliance (WGA). The WGA is dedicated to evaluating national charities and reporting on their practices (just like the BBB does for businesses). They compile data, do extensive research, and then highlight the charities who meet their high standards of conduct. This keeps donors informed, and provides charities with a roadmap to follow in terms of ethics and conduct.

This process is called the Accreditation Process, and it’s a huge deal! There are 20 standards that are at the foundation of it. The standards are broken up into 4 main categories:

  • Governance and Oversight (Do you have a board that meets regularly and oversees staff and operations?)

  • Effectiveness (Do you regularly assess your effectiveness in achieving your mission?)

  • Finances (Are you spending funds honestly, prudently and in accordance with statements made in fundraising appeals?)

  • Fundraising and informational appeals (Are your charity's representations to the public accurate, complete and respectful?)

After each analysis, the BBB WGA publishes their findings in single reports for each charity. These reports can be accessed through the Give.org website. You can find ours here.

 

Efficiency Rating

Another very important number to look at for non-profits is their Efficiency Rating. The rating is a calculation based on the organization’s financials. Nonprofit expenses are categorized into 3 categories: Program Services, General and Administration, and Fundraising. The Efficiency Rating is how much of the total dollars go to Program Services vs. G&A and Fundraising. Said differently, it’s an organization’s percentage of giving that goes directly to its programs and the people it serves.

Soldiers’ Angels holds a 96.5% efficiency rating. That means that 96.5% of giving goes directly to our service members and veterans instead of covering administration and fundraising costs.

Other Credentials and Designations

We hold ourselves to high standards and are passionate about using funds to serve our service members, veterans and military families. Soldiers’ Angels has been one of the highest rated nonprofits in the U.S. for the past four years. We’ve also received a 4-star ranking with Charity Navigator, one of the most respected charity watchdog organizations for intelligent giving in the U.S. We were also rated as one of the top nonprofits by GreatNonprofits, and are a GuideStar Platinum Participant. You can be assured that your money and time will go directly to our men and women who are or have served our nation.

Where Does Our Money Come From?

The majority of donations that come to Soldiers’ Angels come from private and corporate donors. We do not receive aid from the government.

As you can see, transparency and ethics are very important to us.