Who’s Watching the Watchers?

There has been a recent surge in the number of organizations and individuals providing services designed to help potential philanthropists evaluate charities. A recent article in the New York Times discusses the new GiveWell site, which is already generating controversy for its detailed evaluation and criticism of existing charity rating methodologies.

First of all, I applaud anyone who decides to dedicate their life to helping other people. Whether it’s the guys who started GiveWell or more established organizations like Charity Navigator, any sincere attempt to improve the way society takes care of its most vulnerable citizens is important and impactful.

That said, any attempt to create a universal ranking system for the approximately 1.4million 501c3 organizations operating in the United States is destined to fall short. A quick review of general statistics such as the ratio of program spending to fundraising expenses, the percentage of repeat donors, or the number of people served can’t even begin to tell the whole story of an individual charity’s impact. On the other hand, providing specific details and complex analysis can detract from organizational effectiveness, particularly for smaller charities, by diverting staff time and resources away from programs.

The answer, of course, lies somewhere in between. Top level analysis is important, but does not paint the clearest picture. Smart donors will need to ask more specific questions about documented results, long term planning and management focus. Getting advice and analysis from a third party is not a bad idea, but donors need to understand how the methodology and ratings used pertain to a specific charity. Getting the highest rating may mean that an organization excels at achieving its mission—-or it may mean that it excels at being rated.