How MinistryWatch Arrives At A Transparency Grade
MinistryWatch stands for transparency and accountability. That’s why we think it is important for Christian ministries to be as transparent as possible with donors and with the public.
That’s why MinistryWatch grades every ministry in its database based on transparency. Our transparency grade evaluates the ease with which donors can see into the finances of a ministry. We use three indicators:
- The completion and public availability of a Form 990. The Form 990 highlights revenue, expenses, fundraising costs, and executive salaries. Form 990s have a great deal of information of interest to donors, though they are not a “gold standard” because this information is self-reported. If a ministry is classified as a church, it is NOT exempt from this requirement.
- The completion of an audited financial statement. Audited financial statements do not list executive salaries, but they have the advantage of being created by an independent accounting firm, thus giving donors and the public greater assurance that the numbers reported by management are accurate. (Reviewed financial statements are acceptable for ministries with annual revenue of less than $1-million.) The audited financial statements must be posted on the ministry’s website to get credit for this requirement.
- Membership in the Evangelical Council for Financial Accountability (ECFA). Members of the ECFA publicly commit to live up to the “Seven Standards of Responsible Stewardship.”
The grading system is simple.
- If a ministry complies with all three of the standards above, that ministry will receive a Transparency Grade of “A.”
- If a ministry meets two of the three standards, that ministry will receive a “C.”
- If a ministry meets only one of these standards, it will receive a “D.”
- If it fails to meet any of the three standards, that ministry will receive a Transparency Grade of “F.”
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