Month: December 2014

Last week Charity Navigator released a “naughty and nice” list, listing the highest and lowest rated charities by category (civil rights, animal rights, etc.), In the spirit of the holidays, shaming the “lowest” rated charities seemed a rather naughty thing for Charity Navigator to do, so I was intrigued to learn more about what makes a charity naughty or nice according to the charity rater.

I wrote a program to scrape data on the 68 charities listed in the 34 categories from Charity Navigator’s site (two charities per category, one high and one low rated). I used this data to discover a few interesting points about the naughty and nice list, detailed in the rest of this post.

Highly rated charities have significantly greater revenues than low rated charities

The highest rated charities earn quite a bit more in revenue than the lowest rated charities. Highly rated charities have median revenues of $6,386,300 versus $1,418,200 for low rated charities. In this way, Charity Navigator is less highlighting who is naughty and nice, and instead who is well funded and who is not.

Highly rated charities spend more on programs

Not surprisingly, program expense (percent of the charity’s budget spent on the programs and services it delivers) is a strong predictor of whether a charity is highly rated or not. In fact, no charity with a program expense ratio below 79.1% (blue line in the following chart) was highly rated, with just four low rated charities having program expense ratios above this threshold. I guess we’ll have to wait until next Christmas for the end of the overhead myth.

Highly rated charities tend to be clustered on the East Coast

With only 34 highly recommended charities, there’s no way Charity Navigator could have a highly recommended charity in each state. But I was surprised to see the East Coast bias in where highly recommended charities are located. The green lines outline the density of high rated charities, which are identified as green dots. The red dots are the locations of the low rated charities. My poor Southern California is especially naughty it seems, home to four low-rated charities and not a single high rated one.

Concluding remarks

I’d like to be clear that I have no problem with Charity Navigator. I think this list was a fairly silly thing for them to put together, and believe their data backs up this claim. I don’t think there’s much to be gained by shaming “naughty” nonprofits, especially when so much of that shaming is driven by how money is spent rather than what outcomes are achieved. Moreover, the lack of geographic diversity likely makes these “top picks” not super useful to a swath of the giving public.

As an aside, I often struggle with how technical (or not) this blog should be. I intentionally shied away from the more technical pieces of this mini-project, such as discussing how I retrieved and explored the data. If there is any interest in detailing the process or sharing the data, let me know and I’ll be happy to do a followup piece.

Giving Tuesday is this Tuesday, December 2nd. I’ve compiled a list of a few of my picks for Giving Tuesday, separated into two groups; safe picks and speculative gifts. As the grouping names suggest, “safe picks” are gifts to organizations that I feel confident deliver effective interventions. The second group, “speculative gifts”, are organizations I’m supporting but whose interventions/execution I’m not as confident in.

Safe picks

• GiveDirectly – GiveDirectly provides unconditional cash transfers to those living in extreme poverty. I frequently write about GiveDirectly because I believe both in the intervention and their data driven philosophy. If you care about extreme poverty and believe people should be empowered with capital to lift themselves out of poverty, this is by far the best way you can spend your donated dollars.
• Family Independence Initiative – I work at the Family Independence Initiative (FII), so I’m obviously biased. Of course, I joined FII because I believe in their approach of investing in the poor directly. If you care about U.S. domestic poverty, and are especially interested in the empowerment aspect of democratizing access to capital, then FII is a solid choice.
• Housing first – Housing first is not an organization, rather it’s an approach to homelessness that argues it is cheaper to place people into housing first, and then provide supportive services, rather than to try to “treat” people living on the streets. There are a lot of organizations taking a housing first approach throughout the U.S. (and other countries as well). If you care about chronic homelessness, find an organization committed to housing first in an area you care about. Here in Los Angeles, I recommend People Assisting the Homeless.

Speculative gifts

• Team Tassy – Team Tassy helps prepare and place people in Haiti into jobs. This is an admittedly bias recommendation, as the executive director there is a graduate school friend of mine and I’ve worked with Team Tassy on their outcomes measurement framework. The organization is in relative infancy being only a few years along, but they’ve gained the trust of the families they work with in Menelas, and have embraced a data driven approach that I believe is the bedrock for effective interventions. If you care about Haiti, a country that has lost its fundraising luster long after the 2010 earthquake, and you are looking for a speculative gift to a small nonprofit with unrealized potential, I definitely recommend Team Tassy.
• LivelyHoods – LivelyHoods provides products to youth living in impoverished communities in Kenya and trains the youth to sell the products. LivelyHoods is better than most organizations at consistently reporting key performance indicators on their blog, which wins them a lot of points in my book. I also like the concept of the model, as the purpose of the intervention is to spark economic activity rather than a purely charitable approach. I think there are legitimate questions about the efficacy of both this model and of LivelyHoods itself. I’m also interested in how this approach compares to an unconditional cash transfer. That said, if you care about impoverished Kenyan youth, buy-in to the model, and are looking to add a speculative gift to your portfolio, I think LivelyHoods is a worthwhile bet.