Accounting Commons^™

Implications Of Being A Highly Rated Organization: Evidence From Four-Star Rated Nonprofits, Qianhua Ling, Daniel G. Neely

Accounting Faculty Research and Publications

This study examines a group of nonprofits rated four stars by Charity Navigator. The purpose is to determine whether this select group of charities exhibits characteristics associated with top charitable organizations, or whether the four-star rating achieved is limited to the more narrow financial metrics employed in the methodology utilized by Charity Navigator. This study finds that organizations rated four stars by Charity Navigator show a lower level of excess cash holdings, report a lower level of compensation expenses and exhibit lower sensitivity of compensation to performance. Financially, these organizations are less vulnerable than their lower rated peers. The results …