Login with FacebookThe Worst (and Best) Way to Pick a Charity
Increasingly in the nonprofit world we are starting to see new, more nuanced perspectives on how to determine which organizations are the most effective. In an exciting new development, GreatNonprofits has joined with Philanthropy Action, GiveWell, Philanthropedia, Charity Navigator, GuideStar, and the Hewlett Foundation to emphasize the importance of seeing past one-sided approaches that focus exclusively on overhead ratios.
In fact, picking a charity based on overhead ratio is like choosing a school without looking at the quality of education it provides to its students. This means that an overhead ratio tells you next to nothing about the impact the charity has on the people it’s trying to help. Instead, as Paul Brest, president of the Hewlett Foundation explains, “Achieving a low overhead ratio drives many charities to behaviors that make them less effective and means more, not less, wasted dollars.” Overwhelming focus on overhead ratio actually alters nonprofit behavior and discourages charities from investing in tools and expertise that would make them more effective. Furthermore, the rules for determining overhead costs are vague and every charity interprets them differently, leading experts to estimate that close to 75% of charities calculate incorrectly.
This coalition of prominent nonprofit leaders seeks to highlight the various ways that overhead ratios fail to demonstrate impact. Bob Ottenhoff of Charity Navigator acknowledges that “It's understandable why people have looked at overhead ratios and executive salaries—they want to make sure their donation does the most good.” That being said, “The best way to do that isn't a financial ratio, it's information on how effective charities are.”
This giving season, as GreatNonprofits Founder and CEO Perla Ni says, "So many donors and volunteers want to know if their giving is going to make a difference. Now there are new tools for them to see which nonprofits are most deserving of their support,” User-generated reviews, expert opinions, and thorough examinations of nonprofits are a powerful tool for donors looking to make sure their dollar goes as far as possible. By making use of these new tools, we can change the way people evaluate nonprofits and direct resources to the organizations that are most effective.
To read the press release, and for more information on how to make an informed giving decision visit http://bit.ly/6kjV9d
This blog post was written by Emma Bundy, GreatNonprofits Marketing Manager
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