Giving to charities. The five questions you should ask, and administration costs is not one of them.

In the decade or more I’ve been working in the charitable sector, the one question that seems to pop up frequently is “but how much of the money actually gets to the people?” People, quite reasonably, want to be assured that the money they are giving is achieving good outcomes for the people a charity purports to help. They then make the simplistic equation that low overheads equates to high impact.

The overhead question is however not a terribly good proxy for determining whether a charity is effective. Here are the questions I think you should ask:

  1. is this charity working for outcomes that I think are worthwhile? You can put money into just about any cause you like, from education programs for kids in inner-city schools, to orphanages in Cambodia, to research into cures for diseases. And they’ll all come asking you for money. So if you were going to be discriminating, start by asking whether this is a cause you believe in.
  2. does this charity have strategies for change that reflect best learning in their sector? The charity might be able to tell you heart wrenching stories of need, but that will tell you absolutely nothing about whether they are effective. In fact, it’s quite possible that they are extraordinarily well-intentioned but doing harm to the very people they seek to help. So the question I want to ask is what is their strategy for achieving change and does it reflect what their sector has learned. For example, I might be moved by the plight of orphans in Cambodia, but the very last thing I will put money into is an orphanage. These have been proven time and time again to be the least effective way to help orphans and in many instances do them severe damage.
  3. does this charity have staff capable of delivering their programs? Once again good intentions don’t guarantee good outcomes. I want to know whether the staff who oversee programs have the training, skills, and experience necessary to the task at hand.
  4. does this charity measure their effectiveness? The only way to tell if you’re achieving the outcomes you’re aiming for is to have some way of monitoring outcomes, evaluating the impact of your program in achieving those outcomes, and a mechanism by which to continually improve your effectiveness. It costs money to do this, but it is money well spent.
  5. does this charity have good governance systems? Does it have an independent board that holds the CEO to account and does it have measures to ensure good governance flow throughout the organisation?

At the end of the day a charity that delivers 100% of my money to the beneficiaries is not a charity I would ever support, for it would not be able to implement any of the five questions I have asked. 60 or 70 cents in the dollar that is spent effectively will always outperform a higher proportion that is spent ineffectively.


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7 years ago

Great questions to ask Scott.

7 years ago

If the organisational information is accessable – I’d also ask whether there are red flags such as high staff turnover, including CEO and/ or CFO, but also among operating staff. Bullying even occurs at board level and is aimed at executive staff. There is sometimes an organisational culture where people are expected to not question the status quo, so crucial organisational changes and improvements can’t be implemented. I suspect this is possibly more prevalent in the not-for-profit sector. I’ve watched (and personally experienced) this in one organisation, where there was poor management, poor internal controls and low levels of statutory… Read more »

Andrew Dawkins
Andrew Dawkins
7 years ago

Excellent thought provoking and practical article Scott. Thank you. I’ll be doing an “audit” of the charities we support today!

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