Not all charities are equal. While most have pure intentions and are well run, the number of bad apples is much higher than you may think. This is because most people give based on emotion and fail to look into these charities. Even among the ones with the best intentions some do a far better job than others. By doing some research and creating the need for charities to compete for donations, the strong survive resulting in a far more efficient selection. I mentioned in a previous post that only 5 cents out of every $100 that American Christians make goes outside the US for both international ministering and charitable efforts combined. Even that is not the full story though. Not all of the money given to a charity goes to directly to the program expenses, the fundraising costs and administrative often make up a decent percentage of each charities budget. Of course fundraising and administrative expenses are a necessary expense for any decent size charity, but some definitely do a better job than others and it’s important to look into a charities before deciding on which ones to give to. A site that is extremely helpful with reviewing charities is Charity Navigator. Normally the fundraising and administrative expenses combined make up around 15-20% of the charities total budget but there are definitely some who do better and some that do far worse. If there are two charities that essentially do the same thing, but with one 60 cents out of every dollar goes to program expenses vs 90 cents out of every dollar with the other, your money will go much further supporting the charity who spends 90 cents out of every dollar on program expenses. With some charities these expenses get way out of hand. For example the Cancer Survivor’s Fund sounds like a great charity, but is among the top of the worst offenders list, spending 90 cents out of every dollar on fund raising. Yet people donated over $2 million to them last year from people failing to look into the charities they give to. Executive Pay I think executive pay is another important item to look at. If someone is able to devote themselves full time to charitable efforts without asking for pay, that is wonderful, but usually not the case. Everyone has bills to pay and needs to be compensated for their work. However in many cases, the director of the charity is also it’s founder and a board member and is able to set their own salary. It’s not uncommon for this power to be abused and I personally think if they can not be trusted to pay themselves a reasonable salary, they can’t be trusted with the much larger budget of the charity. One of the worst cases I’ve come across was a personal blow because it was a minister I supported. It turns out the board for this ministry was made up of the minister and her immediate family members who used ministry funds to pay themselves several million dollars in cash each year in addition to several million more in houses, luxury cars and a private jet. They have a large ministry so this large amount doesn’t affect the percentages much, but it makes it very difficult to trust they are using the rest of the resources wisely. Intangible Factors It would be great if we could just put together a spreadsheet with all these statistics and be able to calculate a clear winner of which charity we should support. Unfortunately, there’s a lot more to consider in addition to the numbers. For example, one charity may spend more on administrative expenses than another because putting infrastructure in place helps them get much more out of the percentage they spend on program expenses. Another may be able to drill a water well for $500 while a competing charity spends $2,000 to drill a well. It’s easy to jump to the conclusion that the charity drilling $500 wells is putting the money to much better use, but not if the well breaks down after 1 year where the $2,000 well lasts for generations. There’s no magic bullet to answer these questions. I think the best you can do is use the numeric factors to get your list down to 3-4 charities and then dig deeper into each one to figure out which to support. Carefully Consider the Mission of the Charity This last item is a tough one. There are more worthy charities than you can possibly support. It would be very inefficient to make small donations to dozens of charities and you’re far better of picking two or three you really believe in and focusing on them. This means you’re going to have to pass on some great ones. Let me use the Make-A-Wish Foundation highlighted in this Less Wrong post as an example. I don’t think anyone would disagree that the work they do is great by helping families of dying children to build life-long memories through their wish program. As the father of two little girls, I can’t imagine how hard it would be to loose one of them. As great as they are, I believe their are other charities far greater. The average wish costs $15,134. When you compare that to an organization like Village Reach that vaccinates children in Africa and saves an average of one life for every $545 spent. If you have $15,000 to donate it could either go towards helping a family in the US deal with a death of a child, or preventing 27 families in Africa from having to deal with it at all. We each literally have the power to make these life or death decisions. This post was somewhat long, but I hope it helps some to realize how much is at stake when choosing where to give. Please let me know any thoughts you have.