It’s giving season once more and as the year winds down you may find yourself looking to donate your hard-earned assets to charity (or a donor-advised fund). Whether you are looking for a tax deduction for charitable contributions, asking others to give donations instead of gifts, or simply being a good samaritan - it can be difficult to choose which charity should be the target of those assets. Or if you should donate to a fund instead of a charity. A lot of the decision winds down to the question, what makes a good Charity?
Our goal here is to outline some ideas which might influence your own approach to making your own donation decisions. This is not a philosophical argument for what “good” is. What we do want to discuss here is what criterion separates the “Good” from the “Bad” when it comes to charities. We are by no means experts and there are groups of professional charity evaluators such as the Happier Lives Institute (HLI), the Better Business Bureau’s (BBB’s) Give.Org, Charity Navigator, Etc. which evaluate charities by various criteria and do a good job of showing the bases of their evaluations.
Our list composes of 6 different umbrellas for criteria, no match to the Better Business Bureau’s 20-criterion list. We simply lay out a few top metrics separated into two categories: Those which focus on the charity and those which focus on the intervention. The reason we chose to break the criterion down into two categories is that some charities may be practicing the same intervention and if that is the case digging deeper into their application of the intervention; the amount of overhead, the amount of time they’ve been around, internal evaluations, etc. are all indicators of the whether the charity would be a good “investment”. Similar to when evaluating stocks you can’t always just focus on what the company does, but how they do it.
Evaluating the Intervention
In our opinion, the impact of an intervention is the least discoverable from sites such as Charity Navigator or Charity Watch, and one of the hardest to evaluate on your own. Give.org, the better business bureau’s charity navigator does a fair job of evaluating effectiveness, but it primarily focuses on the process of implementing effectiveness evaluations more than the impact itself. This is where more EA evaluators come into view and why funds might be a better option than individual donating.
Impact to Dollar Ratios
Charity Navigator incorporates this metric, if available, into their evaluations under “Impact”, and it is a frequently discussed metric for charities. This is a ratio such as $1 USD deworms a child or $1200 USD prevents 1 kid from dying from malaria, etc. The value of this ratio depends on what effect is measured. For example, $5 USD buys 1 bednet. The true impact is not about the resource acquired but the impact that resource has. An interesting perspective on this is offered by the Happier Lives Institute (HLI).
Overall this ratio evaluates the effect versus the cost. EA believes that the lowest cost which brings the highest value is what we should aim for - it’s the most effective. But there are a lot of other considerations. Much like a cheap haircut, just because something is inexpensive does not make it effective. Sure you have less hair now, but you did not walk away from the salon any better off than we you entered - and you might even be worse off.
Giving someone a dollar today doesn’t keep them from starving tomorrow.
As longtermism becomes more prevalent in EA discussion groups - “long-term” has begun to refer to the far future (thousands to millions of years in the future) more than it refers to 30 years down the line. And both do matter, but understanding the continued impact of an intervention, positive or negative, is important. Consider the age-old idea of sending used clothing to other nations. It is fairly cheap and affordable to get items of clothing into impoverished markets - but the long-term impact of those donations destabilizes a local garment industry and creates more waste and sometimes more poverty in an area, worse than having a local Walmart.
Impact beyond the near term is a still-developing metric and not available for newer ventures - but organizations that show those considerations may hold more water.
If everyone gives to a single charity, your donation holds less weight. This is why neglectedness is a relevant metric. Sometimes investigating ventures not as often publicized or less interesting to the masses can help your donation go further, and is noted as a key metric in determining the value of a cause area in Will Macaskill’s Doing Good Better.
Animal Welfare, BioSecurity Funds, and Nuclear Risk funds are all less funded than their counterparts of Global Health and AI Alignment.
Evaluating the Charity
When it comes to evaluating the charity, evaluators such as Charity Navigator and Give.Org do a good job of explaining their findings and how they arrive at any particular score. Organizations are primarily evaluated financially, organizationally, and through their track record of transparency and thus integrity.
A notable aspect of a good charity in our books is their ability to deliver the most value to their impact. Beyond a good impact-to-cost ratio for the intervention, you also want a high impact-to-donation ratio. With a lot of the US’s top charities both the charity itself and the intervention are paid for with your donation - including the fundraiser you went to where you made that donation.
Fortunately, being a nonprofit requires public financial disclosure at a high level via form 990. In addition to the disclosure, most charity evaluators thoroughly evaluate these forms along with other financial audits performed by the charity or third-party organizations.
Most charities start from a place of care, kindness, and determination to reduce suffering in the world for the target group of that charity. But as a charity get’s larger, becomes more bureaucratic, and is focused on fundraising over intervention administering we tend to see some value drift. Implementation of Auditing frameworks, the reliance on external review boards, and other methods of self-regulation are key signs of a charity that is actually trying to stick to its values, and not merely paying lip service to its founder.
Honesty and Integrity
The most important quality of any charity that impacts all of the above metrics is its integrity and trustworthiness. As individuals, our ability to find third-party analyses on any aspect of a charity is limited - without the charity itself transparently and honestly reporting those key metrics.
Charity Watch is not comprehensive - especially regarding local and global charities - but is the most committed to reporting on fraudulent or morally questionable activities. As with everything, these reports should be taken with a grain of salt, but the less drama the better is a good rule of thumb.
In conclusion, the answer to "What makes a good charity?" is something you decide. These metrics can guide your decision, but the real questions are: What do you value? What do you think “good” is? These are your assets that you are donating - and the choice comes down to you. If you are unsure about your donations EA Raleigh is happy to take time to look into your favored charities (as much as it can), and the EA forum has a special Effective Giving Subforum live during the season of giving. All we ask is that you do a little digging into where that money goes.