The Wrong Questions

I respect anyone who chooses to give to charity.

Donating to a cause you believe in is an act of hope and a protest against selfishness. (And I suppose it also has some tax benefits).

At this time every year I see people posting lists and links of the best and worst charities. The intent behind these is good. We’ve all seen stories of charities that misuse funds, fail to accomplish anything relevant to their cause, or spend seemingly ridiculous amounts on salaries and perks for their leaders. No one wants to see their generosity abused.

It can be discouraging.

I’ve spent my whole career working with the charitable sector in several different ways. I care, a lot, about charities doing good work and doing so ethically.

The problem with these lists is that they never represent a full analysis of a charity’s impact. Some are better than others, but they all rely on some formula dependent on limited information provided by the charities themselves.

Often a key factor is minimizing “overhead costs”. I’ve ranted about this for years.

But even those that have adjusted to allow for more reasonable operating costs are vulnerable to having their numbers skewed as charities are incentivized to reallocate expenses to a variety of budget lines and adjust their own reporting to emphasize whatever will provide the highest score in the ratings system; even if it doesn’t bring the best results in the field.

Doing a truly valid assessment of any particular charities performance is fairly complex and requires more time and insight than most of us are likely to do.

So treat these ratings with a hearty degree of suspicion.

Instead, look for an organization that is working on a cause or issue that is meaningful to you. The vast majority of charities are doing their best, often with limited resources. Ask them a simple question:

“If I give you my $100 (or $1000, or $10) what difference will it make in the world?”

If they can’t give you an answer you find satisfying look elsewhere. And if you need help finding one you can trust I’m always happy to make some recommendations.

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