- About Us
- Why Give
- Where to Give
- Recommended Charities
- Charity Evaluation
- Reports on Poverty
- How to Give
- Getting Involved
How We Differ From Other Charity Evaluators
In the same way that there are many persistent myths about aid, there are also persistent myths about how to evaluate charities. One of the most prevalent and most damaging of these is that we should just look at charity's overhead; the amount they spend on advertising or salaries and broader administration. According to this idea, we should support those that spend most of their revenue directly on the programs they operate.
The grain of truth in this is that, if we assume the program has a certain value, every dollar spent on admin is indeed a dollar not spent on the program. But this assumption isn't true. A dollar spent on admin may in fact be valuable, as it may be used to improve the program, or even to generate more dollars for the program.
Large quality differences between programs...
Firstly, the quality of the program is not constant. Some programs are thousands of times more effective than others. If charity A spends slightly more on administration than charity B, but operates a program that's ten times as effective, then overall it will still be much more effective. As overall effectiveness is what we care about, it would be misleading to focus on overhead costs.
...mean lots of room for admin to improve program effectiveness...
The variance in charity effectiveness means there's great room for improvement. Improving the efficiency of its operations means a charity can achieve much more - but this requires spending money on gathering data, analysing it, producing a new strategy and implementing it. This is extremely beneficial, so it doesn't make sense to punish the charity for it - and yet that's exactly what the 'overhead' metric does.
...and fundraising can multiply your donation...
Raising money is a valuable activity! If a $100 donation funds a media campaign that raises $200, then you've helped twice as many people as if the money was spent directly. Advertising campaigns aims to cover their own costs through the money raised as a result of the campaign; if a charity’s advert is successful then they will generate more money for their program. Obviously some of the money has to be spent on the program, but as long as investments in advertising is yielding more money to spend on interventions, it's a worthwhile thing to be doing; and certainly not something we should be punishing charities for.
...so we should use QALYs per dollar instead.
While there is a grain of truth to the anti-administration argument, there are powerful considerations on the other side. The solution is to look at an overall metric, like QALYs/dollar. Since ultimately we want to help as many people as possible, and only care about the charities as a means to this end, it makes sense to look at QALYs instead. QALYs/dollar takes into account both the internal structure of the charity, their relationship with donors and the impact their intervention has. It allows us to avoid the messy question of judging the organisational structure of charities, and focus instead on helping as many people as we can.
To find out more or show your support, please sign up for our monthly updates:
Latest blog posts
How rich am I?
You are in the richest % of the world's population - see more