How do charity watchdog ratings (CharityWatch, Charity Navigator) interpret St. Jude/ALSAC’s spending and reserve levels?

1. CharityWatch: hoarding rules, three‑year cutoff, and downgrades

CharityWatch applies a hardline rule: if a charity’s available assets in reserve exceed three years’ worth of its annual cash budget, the watchdog downgrades the charity’s final letter‑grade rating, on the view that excessive reserves mean donors’ dollars are being withheld from current needs ^[1]. That policy was invoked against St. Jude in reporting that its reserve fund had swollen to levels that prompted a one‑letter‑grade cut from CharityWatch — a public example of CharityWatch’s three‑year ceiling being applied in practice ^{[2] [1]}. CharityWatch frames this as an ethical and sectoral argument: charitable capital should address present problems rather than accumulate indefinitely ^[1].

2. Charity Navigator: different metrics, high accountability score

Charity Navigator takes a different tack, emphasizing financial health, transparency, and program‑expense ratios derived from IRS Form 990 data; its framework measures whether charities publish audited statements, disclose governance practices, and devote a high share of expenses to mission programs ^{[4] [5]}. Under that methodology, St. Jude/ALSAC has received a four‑star accountability and finance rating and is presented as efficient and trustworthy — in part because Charity Navigator looks at multi‑year averages and distinct indicators rather than a single reserve‑size ceiling ^{[3] [4]}. Charity Navigator also reports program‑expense metrics such as how much of each donated dollar goes to patients and research, a figure St. Jude notes as roughly 82 cents per dollar when combining ALSAC and hospital data ^{[6] [4]}.

3. The underlying disagreement: prudence versus immediacy

The divergence traces to competing ideas of fiscal prudence: CharityWatch treats large reserves as evidence of “hoarding” that deprives present beneficiaries, while Charity Navigator treats reserves as one element within broader measures of accountability, sustainability and transparency — potentially legitimate for long‑term research, capital projects or market volatility protection ^{[1] [4]}. ProPublica and related reporting highlighted St. Jude’s billions in reserves and how that contrasted with wider shortfalls in pediatric cancer funding, which crystallized public concern and drew CharityWatch scrutiny even as Charity Navigator’s ratings remained strong ^{[7] [2] [3]}.

4. How donors should read these ratings together

Both ratings provide useful signals but answer different questions: CharityWatch signals whether an organization is actively spending raised funds now (and penalizes multi‑year reserves), whereas Charity Navigator signals governance, transparency and program‑spending efficiency across several indicators ^{[1] [4]}. A prudent donor should weigh CharityWatch’s warning about multi‑year reserves against Charity Navigator’s endorsement of financial transparency and program focus, and also consider the charity’s own explanations for reserves — St. Jude has defended large reserves as a cushion for market swings and global uncertainties and as funding future capital needs ^{[7] [2]}.

5. Limits of available reporting and open questions

The public record shows the methodologies and the resulting judgments, but it does not settle what exact reserve level is “right” for a global research hospital with capital plans; IRS rules do not cap reserves and experts differ, so ratings reflect normative choices rather than absolute legal breaches ^{[7] [1]}. Reporting documents the downgrade by CharityWatch and Charity Navigator’s four‑star accountability rating, and St. Jude’s stated rationale for reserves, but assessments of whether those reserves should be spent now remain contested among watchdogs, journalists and sector experts ^{[2] [3] [7]}.