Laci Texter, a 31-year-old entrepreneur in New York City, used to give to charities based on who had the most heart-tugging ad campaign. When she recently switched to an online tool debuting today called How to Do More Good in the World, she learned to pick charities based on impact on the community they’re trying to help.
“Now, I know I can help a whole community for the cost I was spending to sponsor one child,” she said.
How to Do More Good in the World is part of a new trend in the last few months among charity evaluation tools to help individuals figure out the impact their donated dollar makes.
Old ways of reviewing charity relied too heavily on ratios of administration and overhead costs to total expenses, says Rick Cohen, communication of operations director of the National Council of Nonprofits. High ratios were considered undesirable, but these costs aren’t just for executive paychecks, he says. Overhead costs can include expenses for maintaining facilities such as putting a new roof on a homeless shelter.
Each tool has a different way of measuring impact: picking charities for you based on your giving interests, sharing information provided by the charities themselves on impact, or analyzing charities on factors such as financial sustainability.
Guidestar.org lets people evaluate more than 1,800 organizations that self-report their successes, comparing data like how much money was distributed and for what purpose and also less quantifiable successes like lobbying for legislation. But all charities do have a way of guestimating how far your donated dollar goes. For example, Nature and Culture International, a charity dedicated to working with local communities and governments in Mexico and South America, states on its GuideStar Nonprofit Profile it was able to protect nearly 2 million acres in 2015 from an annual budget of about $5.69 million. Dividing acres protected by annual budget results in a cost of about $3 per acre protected. You can self calculate most charities on the site this way and gauge impact for yourself.
Robin Hannah, a 68-year old former CFO for Bank of America who lives in Paradise Valley, Arizona, uses Guidestar.org to evaluate each charities tax filing, and also takes the time to look up their board members and what the charity’s missions are. “I don’t want to rely on just what a charity posts on their own website,” she said.
CharityNavigator.org provides grades based on an organizations accountability and transparency. They’re researching this year how to incorporate impact into the star rating system. Currently, you can use the tool to make sure a large national charity is financially stable and can pay staff, says Sandra Miniutti, CFO of Charitynavigator.org.
You won’t give money to a Charity Navigator 3 or 4 star-rated charity such as Doctors without Borders, USA and find out it is bankrupt before using your donated dollars, Miniutti says. You might if giving to charities with zero or one star ratings such as The Committee for Missing Children, she says. To supplement the information they provide she recommends calling the charities with three or four star ratings and getting information on impact or use Guidestar’s tool in tandem about the accomplishments of the charity.
The How to Do More Good in the World tool takes the approach of picking charities and actions such as volunteering based on your values. The tool asks two questions that focus on how you’d like to impact the world (from changing jobs to donating money) and what causes you care about (ranging from reducing child mortality to reducing the likelihood of social collapse).
For example, if you chose reducing child mortality and donating to a highly effective charity, you’d get a recommendation of the Against Malaria Foundation or Living Goods. Both of these charities do work overseas where dollars go further. The best organization to volunteer for would be much different because you would more than likely choose one that’s local. The tool saves time if you don’t have a particular charity in mind.
Suppose you’d like to give away $5000 dollars this year to help people with blindness. You could fund one quarter of a seeing eye dog or fund 250 surgeries in poorer countries to reverse the effects of trachoma, a condition that causes blindness, said Spencer Greenberg, CEO of Clearerthinking.org, the nonprofit that came up with the How to Do More Good in World tool. If you’d like to give to a charity not mentioned, you’d want to use the other two tools to evaluate charities you are considering or do additional research on your own.
Research charities with as much as care as you would when picking a stock or any other investment, says Cohen. This may involve using multiple tools and your own phone calls, he says. When you donate to charity, they’re investing your hard earned dollars and you want to make sure it’s spent well on the causes you believe in.