Trends in Effective Giving

Effective Giving Makes a Lasting Difference

One of the driving forces behind Givers by Design is the question of effective giving. Donors wishing to give towards helping those who live in extreme poverty are rightly concerned about well intended but ultimately ineffective practices in the charitable world; would-be donors want to know that their gifts will have the greatest possible impact on the Effective Giving and Extreme Poverty:  Resourcespeople or causes that are on their hearts.  These concerns are addressed in the article Helping Well, which takes a close look at how the very best organizations approach the problem of extreme poverty, eschewing hand-outs for the more effective hand-up.  Our list of Top Organizations provides detailed information on cutting-edge parachurch organizations devoted to bringing sustainable change to the world’s poorest people.  Read Sources and Criteria for more information on how this list was developed.  Additional articles can be found under the Resources tab.

 

Effective Giving:  Asking the Right Questions

In considering how to give with effectiveness, the following questions spring to mind:  Would you rather give to an organization that raises its funds more efficiently, or one whose programs are more effective for the people they serve?  Would you rather support an organization with a lean overhead ratio, or one that has made the investments in improved methods necessary to field high-impact programs?

With the advent of Charity Navigator and similar charitable ratings agencies, many donors have come to rely on financial ratios, rather than program effectiveness, when making decisions about which organization to support.  Among those in the know – especially the consultants who advise multi-million dollar donors on where to give – this approach is increasingly being seen as inadequate.  Similarly, at the grassroots level, a recent poll showed that 85% of donors wanted information on program effectiveness.  All in all, this trend towards prioritizing impact has become so pronounced that together, Charity Navigator, Guidestar, and the BBB Wise Giving Alliance have recently launched an initiative called The Overhead Myth aimed at encouraging donors to look at the complete picture — and in particular, indicators of program effectiveness, instead of financial ratios, as the main measure of an organization’s worthiness.  The mainstream press has also recognized this trend:  check out these articles on effective giving from The NY Times, (and a second article here), The GuardianForbes, Christianity Today, and Richard Stearns.

 

“Rating” Program Effectiveness: A Mixed Blessing

This trend towards making philanthropic decisions based upon impact is long overdue — it just makes good sense.  In response to this trend, Charity Navigator has begun working toward the 2016 rollout of a results-ratings system for charities’ program effectiveness.  It is reasonable to expect that other ratings services will follow suit.  While we applaud the intent, we are troubled by how this might work in practice — particularly considering the vagaries of applying standardized formulas to work of such wide-ranging and variable scope as alleviating extreme poverty.

    • True program effectiveness (the lasting change or long-term impact on a community or region) does not lend itself well to quantitative analysis using standardized formulas.  While numbers of people served, goods delivered, and other achievements are easy to track, the end outcomes are much more difficult to quantify.  Further difficulties will be encountered in attempting to compare organizations of different sizes, using different approaches, or working in different sectors.
    • Proper analysis of program effectiveness almost by definition requires long-term longitudinal studies, which require many years (up to 20) to conduct, as well as significant expertise and expense.  This is a burden that will impact smaller organizations in a disproportionate way.
    • We know from unfortunate experience that all rating/ranking schemes are subject to manipulation by those being rated; a recent example of this is the trend towards grossly overstating the value of “gifts in kind” (medicines are the most prominent example) in order to improve fundraising and overhead ratios.

We suspect that, for the foreseeable future, large-scale, standardized approaches to developing “ratings” for program effectiveness will prove to be inadequate at best, and misleading at worst.  A better approach will be to look for research-based, reliable indicators of program effectiveness — meaning “best practices” — on a case by case basis.

 

Effective Giving:  Choosing Organizations

In the end, donors wanting to base their giving decisions on program effectiveness will still be on their own in trying to determine which organization within a given sector to support.  Givers by Design is a Christian organization dedicated to bringing you the resources and tools you need to take informed, generous, and effective action in making a lasting difference for the world’s poorest people.  For those wishing to give, with effectiveness, towards the problem of extreme poverty, we suggest the following two resources:

  • Helping Well, an in-depth article examining research-based best practices for maximizing long-term impact in efforts to serve those who suffer in extreme poverty.
  • Top Organizations, a list of Christian humanitarian organizations known for their effectiveness in bringing sustainable change to the world’s poorest people.

 

ps… Why have we built so much of our website around the idea of effective giving?  Many people have told us that they could give more than they do, that they actually want to give more, but hesitate for fear that their gifts won’t really make much of a difference.  And this gets right to the heart of our mission at Givers by Design –- we suspect that there is a flood of Christian generosity waiting to be released, waiting for the reasonable assurance that our gifts will indeed make a real and lasting difference.  Imagine that flood unleashed… and the vibrant witness that would naturally flow from it…

 

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