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Jennifer Mayo
@JenniferMayo25
Assistant Professor working on issues in public finance and the nonprofit sector, PhD , London transplant 🇬🇧
jennifer-mayo.comJoined October 2021

Jennifer Mayo’s Tweets

The design of an optimal rating system depends both on how you weigh the size of the effect against the number of impacted organizations, and on donor preferences. If salience is important, then synthesizing information under a notched rating system can be welfare-improving.10/10
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Charity Navigator’s stars have a large effect! But only on those organizations close to the thresholds. What if charities were to be rated using a continuous measure instead? Well, the effect would be smaller, but all charities would be incentivized to change their behavior. 9/10
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I also find that some charities make intentional adding up errors to try to improve their rating. A back-of-the-✉️ calculation suggests that about 2% of the bunching at the 4⭐️ threshold is due to these errors. 8/10
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The final section of the paper attempts to disentangle real changes in behavior from manipulation. Comparing rated and unrated charities, I find that 19% of rated organizations relabel expenses to try to inflate spending on program services. 7/10
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The figure below shows that, compared to rating charities using a continuous measure, the 4⭐️ threshold induces some organizations to improve their rating. This effect is equivalent to charities halving administrative expenses in response to the 4⭐️ threshold. 6/10
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Exploiting a change in the ratings methodology, an increase from 3⭐️ to the highest 4⭐️ rating raises contributions for that charity the following period by 6% (and by 11% for smaller charities). But losing a 4⭐️ rating does not result in a subsequent decline in donations. 3/10
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Charity Navigator has become the most utilized evaluator of charities in the U.S., with rated organizations attracting around $100 billion in donations every year. So it’s important that we understand how the rating system affects donor and nonprofit behavior. 2/10
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