According to a new study of nonprofits by an industry watchdog group, charities in Indianapolis spend more on administration and fundraising than their peers elsewhere in the country, the Indianapolis Star reports.

Out of twenty-five U.S. cities scrutinized by the nonprofit rating group Charity Navigator, Indianapolis charities as a whole ranked third-highest in median administrative expenses, fourth-highest in fundraising expenses, and lowest in spending for programs when compared with charities of similar size elsewhere. Taken together, those measurements ranked Indianapolis charities second-lowest among all the cities for "organizational efficiency." In terms of revenue growth, Charity Navigator reported that Indianapolis charities rank third from the bottom, with a median annual growth rate of 1.3 percent, compared with the national median of 4.4 percent. And given inflation, the report noted, the city's charities are actually shrinking.

Some local nonprofits took issue with the study, as did the Indiana University Center on Philanthropy. The report's reliance on 990s filed by the charities is problematic, said Patrick M. Rooney, director of research at the center, whose own research has found that tax-return data can be unreliable. For instance, 18 percent of the charitable organizations that report fundraising revenues of $5 million or more also report zero fundraising costs. "That seems highly unlikely," said Rooney. "It costs money to raise money."

Brian Payne, president of the Central Indiana Community Foundation, said directions for filling out tax forms can be interpreted in different ways, and so yield unreliable numbers for comparison. "This is nothing more than a formulaic snapshot," he added, "and we believe the formula is flawed."

A 2005 study of industry watchdog groups, including Charity Navigator, by the National Council on Nonprofit Associations concluded that "there is a great potential for these ratings to be misinterpreted and misused. In the worst case scenario, donors could withhold vital contributions from a worthy organization based on inaccurate, incomplete, or misunderstood information."