We live in unprecedented times in which we have an astonishing opportunity to improve the world through charitable donations.
However, where you donate really matters. As individuals, we all have limited resources. If you'd like to maximise the impact of your donations, it's vital to find and support the most cost-effective organisations. Some charities are tens, hundreds, or even 1,000 times more effective than others.
This article will help you understand how charities can be evaluated based on their cost effectiveness. It will also direct you to a number of organisations that evaluate charities and publish their findings.
A useful framework for evaluating the impact of a cause area involves assessing each cause area's scale, tractability, and need for more funding.
Generally, donors can maximise their impact by supporting cause areas that are large in scale, tractable, and in need of funding.
Learn more about scale, tractability, and need for more funding on our cause selection page. We currently recommend a dozen particularly high-impact causes.
After choosing a promising cause to support, donors can select from among the charities working in that area.
To ensure that every donation does as much good as possible, it’s important to support charities that are cost effective. In other words, we should try to determine which charities can accomplish the most good with the resources we give them.
Charities that do well on the following criteria are very likely to use donations effectively:
One good indication that a charity will use your donation effectively is that effectiveness is part of their mission and/or strategy. Charities that are focused on effectiveness will run programmes that are supported by evidence and reason. They will run regular evaluations of their own programmes and organisation — and they will adapt, if necessary, in response to what they learn. If a charity is making all of these efforts to ensure the effectiveness of their work, you can be reasonably confident that any donations to them will be put to good use.
A good way to learn about a charity's attitude towards effectiveness is on their website's "About" page. For instance, The Good Food Institute's "About GFI" page makes several references to effectiveness, evidence, and doing "the most good we can." It even provides a theory of change, which explains the way in which its programmes are expected to have an impact. Similarly, the Global Catastrophic Risk Institute's "About" page states its goal of finding "highly effective solutions" for reducing risks, and makes several references to its use of scholarly research. Finally, the Against Malaria Foundation has a page dedicated solely to cost effectiveness. It provides three ways in which it aims to use donations effectively.
Charities that select their programmes based on evidence will generally be happy to provide that evidence to potential donors. It should be easy to find references to research and data in the charity’s communications.
Of course, there are different types of evidence which vary in terms of their strength, generalisability, and availability. The following types of evidence are listed roughly in order of strength (although there is a lot of overlap and variability):
In general, it’s best to support charities whose activities are supported by multiple types of evidence. When evidence from different streams converge to support the same claim, that evidence is collectively more robust than the individual pieces of evidence.
One excellent example of self-reflection and agility is Evidence Action's 2019 decision to end one of its programmes. They gathered enough evidence to determine that the cost of the programme was too high relative to its impact, and they knew that they had other, more cost-effective opportunities. They made a public announcement that they would end their less effective programme in order to direct more resources towards their most effective programmes.
Look for signs that a charity regularly evaluates itself and makes appropriate changes over time. Some effective charities (like GiveWell and Animal Charity Evaluators) keep public records of mistakes they've made or changes they've implemented. Such lists of mistakes should be understood as positive or neutral reflections of the organisation, not negative ones. After all, every organisation makes mistakes. The important thing is that the organisation can recognise its mistakes, fix them, and be transparent with donors.
Cost effectiveness is the measure of how much it takes in resources to achieve a desired outcome. In theory at least, you can calculate a charity’s cost effectiveness by:
In practice, however, calculating a charity’s cost effectiveness is typically quite complicated, because it’s not always easy to measure or quantify the charity’s achievements and costs. Still, since cost effectiveness is such an important indicator of how effectively a charity uses donations, we encourage donors to be familiar with the concept.
Imagine that you are trying to determine which of two charities is more cost effective. Both charities have similar programmes: they both save lives by administering healthcare. You’ve added up all the lives that each charity has saved, all of the costs incurred by each charity, and you’ve divided each charity’s achievements (measured in lives saved) by its costs (measured in dollars).
|Charity A||Charity B|
|Total lives saved||10,000||5,000|
|Cost effectiveness (Lives saved per dollar)||.00002||.0005|
If you compared Charity A to Charity B without doing a cost-effectiveness calculation, you would immediately notice that Charity A has saved more lives. However, when you calculate cost effectiveness, it becomes clear that Charity B is the more effective charity. Charity A saves .00002 lives per dollar — or, put a different way, it saves two lives per $100,000. Charity B, on the other hand, saves .0005 lives per dollar, or 50 lives per $100,000.
All else equal, it is more effective to give money to Charity B. Though it has saved fewer lives than Charity A overall, it saves lives more effectively.
Two charities that work towards the same goal (e.g., saving lives) are relatively easy to compare. However, two charities that help people in different ways can be difficult to compare.
Suppose you are trying to compare Charity C, which provides massages to millionaires, and Charity D, which distributes insecticide-treated bed nets to children in low-income countries.
|Charity C||Charity D|
|Programme||Providing massages for millionaires||Distributing insecticide-treated bed nets|
|Outcome||One hour of pleasure, enjoyed by a millionaire||Preventing a case of malaria|
|Total outcomes achieved||10,000||50,000|
|Total costs||$100,000||$10 million|
|Cost effectiveness (Outcomes per dollar)||.1||.005|
Simply comparing the number of outcomes that each charity achieves per dollar would be misleading in this case. Charity C achieves 0.1 outcomes per dollar. Put another way, it costs them $10 to achieve one outcome. Charity D, on the other hand, only achieves .005 outcomes per dollar. In other words, it costs them $200 to achieve one outcome.
If Charities C and D were both producing the same outcome, Charity C would be the more cost-effective option. However, they are producing very different outcomes. It costs Charity C $10 to give a millionaire a massage and it costs Charity D $200 to prevent a case of malaria. If you had $200 to donate, would it be better spent at Charity C (giving 20 millionaires massages) or Charity D (preventing a case of malaria)? Of course, we think preventing malaria would be a much better use of your donation.
Comparing charities can be like comparing apples and oranges. It isn't always easy, and there aren't perfect ways of making decisions.
But there are some useful approaches. One way of comparing charities with different outcomes is to create an equation to convert different outcome measures to a third, common measure.
For instance, the charity evaluator GiveWell evaluates charities that create several kinds of outcomes. Possible outcome measures include lives saved, increased consumption, years of healthy life (i.e., disability-adjusted life years or quality-adjusted life years), and years of happy life (i.e., wellbeing-adjusted life-years).
To compare the cost effectiveness of different kinds of charities, GiveWell compares each charity's cost effectiveness to a single measure: the cost effectiveness of simply giving cash to people in need. GiveWell uses some complex formulas and value judgements to convert outcomes like lives saved into an equivalent amount of cash given. These calculations aren't perfect, but they can be helpful in comparing different interventions and charities.
|Charity||Cost-effectiveness ratio to giving cash|
|GiveDirectly (Baseline: they give cash to people in need)||1.0|
|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, donating to Deworm the World is estimated to be about 29 times more effective than giving cash to people in need.
When you compare charities that you are interested in supporting, you may need to think further about how different outcomes compare to each other. For instance:
There are no clear answers to these questions, but some lines of reasoning are better than others.
You shouldn't just look for charities that have been cost effective in the past; you should look for charities that will be cost effective in the future, particularly with the use of your donation.
To determine whether a charity will be as cost effective in the future as it has been in the past, you should consider how much need the charity has for more funding:
Charity evaluators like GiveWell and Animal Charity Evaluators refer to a charity's funding needs as "room for more funding." To determine how a charity will be affected by your potential donation, you should consider:
The three guidelines described above should go a long way towards helping you identify the most effective charities to support. Still, there are other factors you may want to consider too. These include:
A common misconception is that the best charities are those with the lowest administrative (or "overhead") costs. However, overheads rarely contribute significantly to the effectiveness of a charity. Consider Charities E and F, described in the table below.
|Charity E||Charity F|
|Programme costs||$498 million||$8 million|
|Overhead costs||$2 million||$2 million|
|% spent on overhead||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 spends very little on overhead costs, but Charity F still saves lives more cost effectively.
Just as successful businesses "spend money to make money," successful charities invest some of their budget in hiring talented teams and building reliable infrastructure in order to achieve their goals. To identify effective charities, you shouldn't simply look for the charities that spend as little as possible; you should look for charities that achieve a lot relative to the amount they spend.
The 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.
Check out our giving recommendations for the latest list of particularly cost-effective charities.
If you know which causes you'd like to support but you're having trouble selecting a charity, consider donating to a fund.
Funds are easy for donors and highly effective. They help donors to pool their money together so that they can find outstanding giving opportunities that are evaluated by expert grantmakers and trusted charity evaluators.
We recommend that you donate to the most effective charity you can find. If you're confident you've found the right charity, you may want to send all of your donations there. There are compelling arguments to be made that donating a lot of money to a single effective charity is better than donating smaller amounts to multiple charities.
However, some donors may be passionate about multiple high-impact causes or uncertain about which charities to support. Such donors may prefer to diversify their giving by giving to multiple charities or supporting multiple causes. One benefit of supporting multiple causes is what Open Philanthropy calls "worldview diversification."
Every donor has their own "worldview," or set of values that informs their decisions. For instance, one donor may believe that we only have moral obligations to humans living in the present, and another may believe that we have additional obligations to nonhuman animals or to future generations. The first may choose to give to a charity working on global health, while the second may choose to give to an animal welfare organisation. If you're uncertain about your worldview, or if you believe that multiple worldviews are plausible, you may want to give to a global health charity, an animal welfare charity, and a charity working to safeguard the long-term future.
There are several organisations dedicated to evaluating charities based on how effectively they use donations. We particularly recommend using the advice of GiveWell, which evaluates charities working on global health and development, and Animal Charity Evaluators, which evaluates charities working on animal advocacy.
At Giving What We Can, we partner with several evaluators and grantmaking organisations and have compiled their charity recommendations in one place.
GiveWell conducts detailed research on charities and recommends just a few that it finds to be exceptional.
They evaluate charities based roughly on four criteria: evidence of effectiveness, cost effectiveness, room for more funding, and transparency.
GiveWell focuses on charities that help people living on less than the equivalent of $2 per day. There are many high-impact giving opportunities in this area, because we can do the most good with our resources by helping people in the greatest need. As GiveWell puts it, "your dollar goes further overseas."
In addition to recommending the best giving opportunities, GiveWell provides the evidence and reasoning behind their recommendations.
Animal Charity Evaluators (ACE) thoroughly researches a number of animal charities every year and publishes detailed reviews.
They evaluate charities based on four criteria: programmes, room for more funding, cost effectiveness, and the leadership and culture of the charity.
ACE focuses on areas of animal advocacy that are particularly large in scale, tractable, and in need. This includes farmed animal advocacy, wild animal advocacy, and more.
In addition to recommending three top charities and 13 standout charities, ACE conducts foundational research and publishes the thoughts and reasoning behind their decisions.
In addition to donating to charities that have been recommended by a third-party evaluator, you might want to look into charities that have been supported by trusted foundations or funds. While funds don't always publish extensive reviews of the charities they support, they usually provide some reasoning for their decisions. If you find a fund that aligns well with your giving goals, you can check which charities the fund has supported in recent months or years. Chances are, at a minimum, these charities have been vetted by the grantmakers and no red flags have been found.
We recommend the Centre for Effective Altruism EA Funds platform. They have four funds:
Each fund's page includes a section called "Payout Reports," which lists the charities recently supported by the fund. Feel free to peruse these lists for charities you might want to give to.
We also recommend checking out recent grants made by an organisation called Open Philanthropy. Open Philanthropy is an offshoot of GiveWell that conducts research, prioritises causes, and gives grants to particularly effective charities.
Open Philanthropy hosts an online database of grants they have made. You can search the database by organisation, focus area, or other keywords. Because Open Philanthropy takes a risk-tolerant, "hits-based" approach to giving, you might find some innovative or unusual charities in their grants database that you are unlikely to encounter on a more traditional charity evaluator's website. (Of course, it's up to you to determine whether you're comfortable donating to higher-risk organisations.)
Here at Giving What We Can, we've compiled the advice of multiple evaluators and grantmaking organisations in one place.
Our charity recommendations Our inclusion criteria
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 written and edited by multiple members of the Giving What We Can team. If you have any feedback, questions, or suggestions, please contact us.