Recently, Charity Navigator introduced seven financial metrics into its analysis. Because of charity: water’s business model and granting methodology, two of the seven metrics (liabilities to assets ratio and working capital ratio) inaccurately represent charity: water’s financial health, and contribute to the change in our rating.
charity: water operates under the 100% model, which dictates that the organization maintain two financial “buckets”: one bucket is restricted to internal business operations and a second bucket is restricted to water projects. Charity Navigator consolidates these buckets, which is inaccurate and damages the rating it provides for charity: water.
charity: water raises the entire amount necessary for a grant before granting, but does not disburse the entire amount upfront. This methodology keeps our partners accountable, but inflates our grants payable, and ultimately lowers our rating from Charity Navigator.