Concept: Ratings Agencies

For-profit companies are analyzed by rating agencies. Their goal is to analyze the risk and potential of the companies they follow as well as the instruments issued by those companies (stocks, bonds, convertibles etc.)  Each rating agency generally creates their own rating scale (for example AAA-DDD for bonds).

Ratings issued by these companies greatly influence a company’s ability to raise funds and therefore help enforce accountability.  For example, when a for-profit rating agency drops a company’s bond rating below investment grade, it becomes harder for the subject to borrow at favorable rates.

Financial accountability & transparency are equally important in the non-profit space.  Donors want to know that their funds are being utilized efficiently by the company and that the company is following through with its project objectives.  If it does not, there should be consequences in the form of lower future ratings.

I think the concept of rating agencies maps very well to non-profits.  In fact there are already some organizations such as Charity Navigator ( that seem to perform this task.