We live in unprecedented times where we have an astonishing opportunity to improve the world by donating to charities.
However, where you donate really matters because some charities are much more effective than others. That's why evaluating charities based on their effectiveness is really important.
What is charity evaluation? Charity evaluation (or charity assessment) is the process of analysing how much good a charity (or non-profit organisation) can do with the money donated to it.
While the relative cost-effectiveness of charities vary significantly, it turns out only about a third of people do any research before giving to charity, and only 3% give based on relative performance.
If you are one of the growing number of people that care about picking a charity that can do the most good with your donations then we applaud you and hope to help you in this process.
This article will help you understand how charities can be assessed based on their effectiveness, how charity evaluators work, and how you might apply these ideas to your own donation decisions.
Contents Charity Evaluation: How To Find An Effective Charity
- 1. Pick a good cause to support
- 2. Choose a good charity to support
- 3. Consider your tradeoffs
- 4. Review advice of charity evaluators
- 5. Take the 'effective altruism' approach
- 6. Donate to highly effective charities
- 7. Join an effective giving community
If you care about doing the most good, it is important to find causes that offer the greatest opportunities for impact.
How do you choose a good cause to support? The most promising causes are generally working to solve problems that are bigger, more tractable, and less crowded. Let's explore using this cause selection framework.
A problem is bigger if it affects more lives, affects lives more significantly, or both.
For example, curing a rare disease is good, but curing a similar common disease is even better because more people are affected.
Similarly, curing a disease which causes a small irritation would be good, but curing a disease which causes a lot of suffering would be better because it affects people more significantly.
More tractable causes show clear ways of making progress – there's a path forward. All else being equal, we'd rather work on something where it's easier to get a lot done.
For example, if you are donating to reduce the risk of human extinction you could have a lot more impact by funding organisations working on pandemic preparedness than on preventing the heat death of the universe.
Finally, less crowded causes are fantastic opportunities because a popular cause may already be getting a lot of resources.
This is true especially for things that make the news - a rare or surprising problem may get a lot of attention, while ongoing problems like "lots of people still have malaria" get less media attention exactly because they are so common (they're not news). And yet this is exactly what makes them important to work on.
You may be able to do more good by finding opportunities that aren't already getting a lot of attention.
Here are some areas that people in this community have found particularly promising due to being big, tractable, and uncrowded.
One promising area is global health and development.
There are tens of millions of people in low-income countries whose lives could easily be improved by proven, inexpensive interventions.
Global health and development is a highly tractable area: even small donations can have a huge impact on improving people's lives and preventing premature deaths.
This isn't cutting-edge medicine — it's practices that are so commonplace that we barely have to think about them in high-income countries. It's interventions like making sure kids get vaccinated and have the nutrients they need to avoid predictable health issues.
Learn more about why global health and development is a promising problem.
Another promising area is animal welfare, in particular factory farming.
If you value the lives of animals, there's an astonishing amount of unnecessary suffering that we can prevent.
Especially promising solutions include legal reform to ban certain farming practices and the development of animal product alternatives (such as cell-based or plant-based meats).
Animal welfare only a few percent of total charitable donations, with most of that money going to the comparatively few companion animals in shelters. This leads to some groups of animals being highly neglected in relation to their numbers and likely capacity for suffering.
Learn more about why animal welfare is a promising problem.
A promising opportunity, for different reasons, is to address the risks that threaten everyone on the planet.
Problems like pandemics and nuclear fallout are so big in scale that they are important even if it's hard to measure how much progress you make.
These are risks that could affect humanity on the biggest scale. They could significantly curtail our potential, either by reducing human civilization to a point where it could not recover, or by completely wiping out humanity.
These are just a few promising opportunities. There are many more that people in our community are donating to, researching, or working on. Plus, we are constantly on the lookout for more promising causes.
The most comprehensive collection of cause area evaluations that we recommend is 80,000 Hours's problem profiles.
After we choose a promising cause, we can then go on to decide on an individual charity to support.
But how can we identify the most effective charities? To answer that, we need to define how to evaluate charities by picking the right criteria.
Picking a charity can still be tricky and will involve important trade-offs, but the following guidelines can help.
What is the best way to evaluate a charity? The best charities are generally ones that are cost-effective, are supported by strong evidence and reasoning, and are transparent. Let's explore using this charity evaluation framework.
Cost-effectiveness is the measure of how much money it takes to achieve a certain outcome. Importantly, this is very different to a charity's operational efficiency or overhead ratios.
Measuring effectiveness starts with having a robust outcome measure. An outcome measure is the "effect" that the charity is trying to achieve.
For example, you might want to save lives, lengthen lives, improve wellbeing, increase educational attainment, or decrease inequality.
Let's look at a simplified cost per life saved comparison:
|Charity A||Charity B|
|Total lives saved||10,000||5,000|
|Cost / life saved||$50,000||$2,000|
At a first glance you'd notice that Charity A saves more lives. However, when you look more carefully you would notice that Charity B saves lives more cost-effectively.
All things being equal, it would be more effective to give money to Charity B because the cost per life saved is lower than Charity A.
Two charities that aim to reduce malaria are easy to compare by the number of cases of malaria, but two charities that help people in different ways aren't directly comparable until you distill their work into common outcomes.
To make this more concrete, let's look at two charities that try to help people in different ways:
|Charity C||Charity D|
|Cost / outcome achieved||$0.05||$3,600|
|Outcome measure||Seconds of pleasure enjoyed by millionaires||Preventing a child from dying of malaria|
|Intervention||Massages for millionaires||Insecticide treated bednets|
Initially the cost per outcome of $0.05 for Charity C looks pretty good, until you realise that you could trade 20 hours of massages for millionaires to save the life of a child.
When you are comparing charities it can be like comparing apples and oranges. Would you rather prevent 1 child of dying from malaria or give 100 children 4 additional years of schooling? It isn't easy, and there aren't perfect ways of making these decisions.
But there are some useful approaches. One way of resolving this is to choose a good comparative outcome measure.
Some common outcome measures include lives saved, increased consumption, years of healthy life (defined through disability-adjusted life-years or quality-adjusted life-years), and years of happy life (defined through well being-adjusted life-years).
One approach that the charity evaluator GiveWell uses in their cost-effectiveness analysis is to compare interventions to cash. This helps answer the question, "how much better is it to deliver this program than to just directly give cash to people in need?". This is quite a complex formula that takes many different benefits into account and weighs them to find a cost-effectiveness ratio.
|Charity||Cost-effectiveness Ratio to Giving Cash|
|Against Malaria Foundation||13.6|
|Deworm the World||29.0|
|The END Fund||5.3|
|Helen Keller International||18.9|
In this example from GiveWell, it is estimated to be 29 times more cost-effective to donate to Deworm The World than to give them cash.
If you are comparing across other dimensions (such as species or time) you may also need to think further about how you might weigh those comparisons. For example, how many days of averting suffering now for dogs are just as good as averting a day of suffering for a human in 100 years from now?
A common misconception is that the best charities are always the ones with the lowest administrative or "overhead" costs. However, overheads rarely contribute significantly to the effectiveness of a charity.
|Charity E||Charity F|
|% spent on overheads||0.4%||20%|
|Cost per life saved||$50,000||$2,000|
|Lower overhead ratio|
Less effective at saving lives
|Higher overhead ratio|
More effective at saving lives
In the above example Charity E might spend very little on overheads but Charity F is more effective at the common outcome measure of saving lives.
Successful charities use funds to hire talented teams and build reliable infrastructure just as successful businesses spend money effectively to make money. Furthermore, it can be costly to measure the effects of the intervention, but it is worthwhile because it is essential to knowing whether a charity is having a positive (and cost-effective) impact.
Searching for effectiveness isn't about asking how charities can spend as little as possible, it is about asking how much they can achieve with the money they spend.
This focus on efficiency instead of effectiveness is so pervasive that it's commonly known as the "overhead myth" – and it's something you want to be careful to avoid.
To find effective charities it helps to look for charities that rigorously examine their own methods and have robust evidence showing that they are effective. Sometimes it isn't possible to collect evidence. In those cases, you can instead look for a strong theoretical basis for effectiveness.
There are different types of evidence which vary in terms of their robustness, availability and ease of gathering. These are listed roughly in order of robustness (although there is a lot of overlap and context specificity).
- Meta-analyses and systematic reviews
- Individual scientific studies, especially randomized controlled trials (RCTs)
- Expert opinions
- Historical evidence
- Case studies, anecdotes and personal stories
Learn more about using different types of evidence when evaluating charities.
Evidence alone isn't enough to make an informed decision, and in some cases we might not be able to have any evidence at all (we cannot have any studies of human extinction).
Therefore it's important to have sound reasoning to use alongside evidence to make decisions. Key concepts to understand when reasoning through decisions are:
- Counterfactual reasoning (what would have happened without the program)
- Causality (how do we know the work of a charity caused the outcome)
- Room for more funding (how will additional funding impact the organization)
- Marginal impact and diminishing returns (how much impact might the charity have with the next dollar they receive)
For donors to understand how effective a charity is, the charity must be transparent, willing to share information, provide evidence, be clear about their funding needs, and open to new information. The more we can gather verified data on a charity, the more confident we can be that our donations will have an impact.
An excellent example of transparency is Evidence Action. In 2019 they publicly announced they were shutting down one of their programs after they gathered enough evidence to determine that the cost was too high relative to other opportunities they had to measurably improve people's lives. This commitment to transparency and their core goal of helping people led to more donations going to programs that were more effective, and therefore more lives were improved.
Check out our giving recommendations for the latest list of particularly high-impact charities.
Making donation decisions can be challenging when most choices require some trade-offs.
Sometimes these are practical trade-offs such as how much weight to give certain expert advice, whereas other trade-offs can be moral ones. Here are just a few of the trade-offs to think about:
- Helping people like me vs all experience beings
- Giving to more speculative opportunities vs or preferring robust evidence
- Giving now vs giving later
- Focusing on reducing suffering vs creating happiness
- Direct impact vs indirect impact
- Focusing on the long term future vs the near term
There are several organizations dedicated to evaluating charities, but not all these evaluators are the same. Let's look at three evaluators with different approaches and how they differ.
You may have heard of this website. It lists thousands charities and rates them on a four-star scale.
The most important factor on their scale is overhead costs. Charities receive higher ratings if they have lower overhead and greater transparency about their administrative expenses. This method is driven by the overhead myth. It doesn't tell us anything about what interventions are effective or which charities do the most good.
The rating system leaves us with over 3,600 organizations given the maximum four stars. This makes it hard to differentiate between them.
Charity Navigator also promotes charities with "Top 10" lists like "10 Celebrity-Related Charities", "10 Super-Sized Charities", and "10 of the Best Charities Everyone's Heard Of".
This website gives a small amount of information on a huge number of organisations, but doesn't provide a lot of help in finding the opportunities that are most cost-effective at improving the world.
Note: As of 14 October 2020 Charity Navigator has acquired ImpactMatters. This looks like it may result in an increased focus on charity effectiveness rather than overheads. However, they explicitly exclude charities that are conducting research or advocacy.
GiveWell conducts detailed research on charities and recommends just a few that it finds to be exceptional.
GiveWell focuses on charities that help people living on less than the equivalent of $2 per day. This offers a big opportunity to do good because of diminishing returns. This idea means that we can do the most good with our resources by helping people in the greatest need. For people who are wealthier, each additional dollar has less potential to positively change their lives. GiveWell's recommended charities either focus on improving the economic standard of living in the developing world or on global health and saving lives.
GiveWell looks for charities that meet the criteria of evidence of effectiveness, cost-effectiveness, room for more funding, and transparency that we talked about above.
They use these criteria to find just a few outstanding charities where donors can have over 100 times the impact as they would giving to an average charity.
In addition to recommending the best giving opportunities, GiveWell lists the evidence and reasoning behind their recommendations. They even list mistakes they have made in their process in the past, stressing the importance of transparency.
Open Philanthropy is similar to GiveWell in that it also focuses on cost-effectiveness, but it has a different approach to this same goal. Instead of focusing on a single cause area, they look across many cause areas selected by the same framework we mentioned above (causes that are big, tractable, and uncrowded).
They then have professional grantmakers look through the evidence base for promising organisations working within these cause areas.
Unlike GiveWell, they will often use a "hits based" approach to giving. Their overarching goal is to do as much good as they can, and as part of that, are open to supporting work that has a high risk of failing to accomplish its goals, so long as the overall expected value is high enough.
This means that they are much more likely to fund projects that are harder to directly measure scientifically, but have strong reasoning and other lines of evidence.
GiveWell and Open Philanthropy are examples of evaluators that apply the principles of effective altruism to help donors find outstanding giving opportunities. This helps donors to tackle some of the biggest, most tractable, and most neglected problems in the world today and have an enormous positive impact on the world.
Effective altruism is the project of using evidence and reason to figure out how to best contribute to helping others, and taking action on that basis. While altruism in general is about doing good things and making the world better, effective altruism thinks about how to improve the world as much as possible with the effort and resources we have.
Choosing the right giving opportunity for you will depend on your values and circumstances.
To help you find the highest impact giving opportunities we have partnered with effectiveness-focused charity evaluators and built a community of people who care about giving effectively.
We have collated these recommendations over on our giving recommendations page.
If you've made it this far, we hope you're inspired to give more, and to give more effectively.
Join the Giving What We Can community by taking a pledge to donate a meaningful portion of your income to help improve the lives of others. It can help you to live up to your values, meet like-minded people, and inspire others to follow suit.
Not ready to pledge? You can also donate to an effective charity, sign up to our newsletter, read our blog, attend an event, join an effective altruism group, or get in touch if you'd like to discuss anything.
This article was authored and edited by Lance Langille, Luke Freeman, Andrew Leeke, Dominika Krupocin, Heather Heckman. If you have any feedback, corrections, or suggestions please contact us.