Recently, it came to our attention that Charity Navigator had posted a misleading “Donor Advisory” regarding how we are operated. After communicating with Charity Navigator, the group made some changes to the Advisory, but it continues to provide a misleading description of the relationship between us and our management firm. We offer this reply.

Charity Navigator’s claim is that we are operated in an “atypical” manner because we use a management firm that is owned by our executive director. The use of management firms is a common model that allows for increased efficiencies across several nonprofits that any given management firm runs.

In our case, our program services, such as updating this website daily, managing HumaneWatch, building profiles on Activist Cash, writing op-eds and letters to the editor, producing and placing print ads and videos, and many other activities that support CCF’s exempt mission and purpose of educating the public, are executed by staff members of the management firm, and CCF pays the management firm for those services. Those payments also cover normal overhead costs (like rent and keeping the lights on).

CCF’s arrangement with the management firm is reviewed and approved annually by its independent officers and directors in a process that complies with the organization’s conflict of interests policy, and its financial statements are audited each year by an independent CPA. We asked Charity Navigator to include this in its Advisory, but it did not. [UPDATE 5/22/13: Charity Navigator now includes this material in its advisory. However, the remainder of our reply still stands.]

Additionally, we are concerned about Charity Navigator’s subsequent Advisories about unaffiliated nonprofits that share the same management firm and had not previously appeared on Charity Navigator’s list of nonprofits under review. Charity Navigator even included ratings of a (c)(4) and a (c)(6) organization managed by the same primary service provider, despite Charity Navigator’s own standards that the organization rates only (c)(3) nonprofits. It is notably “atypical” for Charity Navigator to provide profiles for nonprofits that are not set up as charities. [Charity Navigator disputes our assertion.]

More information about our management firm can be found at www.BermanFacts.com. We hope this clears up any confusion about Charity Navigator’s “atypical” claim.