Nonprofit Chronicles

We don’t have comprehensive ratings or rankings of the best nonprofits, and we probably never will. You can’t compare Harvard to Carnegie Hall to the DC Central Kitchen in a meaningful way.

But, by using evidence, it is possible to identify nonprofits that have a positive impact at a reasonable cost. That’s what the Center for High Impact Philanthropy (CHIP) at the University of Pennsylvania does in its annual High Impact Giving Guide, which was released last week, in time for the holiday giving season.

Now in its sixth edition, this is the single most useful guide to smart giving that I’ve come across since I began writing about philanthropy nearly two years ago. The High Impact Giving Guide goes deeper than broad-based platforms like Charity Navigator and Guidestar, which collect information about many thousands of charities. And it appeals to a broader spectrum of donors than GiveWell and The Life You Can Save, whose advice is shaped by the principles of effective altruism, focuses on global poverty and guides most of my own giving.

Still, most people give with their heart as well as their head–and most people want to donate closer to home. (Only about $16bn of the $373bn that Americans gave away in 2015 went to international causes, according to the Giving USA report.) If you want to give in the US and you care about low-income families, hunger and homelessness as well as global poverty, you will find value in the High Impact Giving Guide.

The guiding force behind the guide is Katherina “Kat” Rosqueta, the founder and executive director of Center for High Impact Philanthropy. I met Kat last month at Opportunity Collaboration, a conference about global poverty in Cancun, Mexico, and we talked again by phone last week.

To evaluate charities, Rosqueta works with the equivalent of 15 to 20 full-time people at the center, drawing upon experts at Penn. “Our team is multidisciplinary,” she told me. A pediatrician might be called upon to assess a child health clinic, while other researchers get up close and personal with nonprofits.”We spent a day in Philadelphia’s foreclosure court, and were able to listen in to foreclosure help lines,” Rosqueta said, to learn how to help homeowners in the wake of the 2008 financial crisis. The center’s recommendations often play off the news; this year’s guide, for instance, includes an updated section on disaster relief, tied to the devastation caused by Hurricane Matthew in Haiti.

Impact, but at what cost?

The new guide identifies 11 “distinct opportunities that you can act on immediately.” These aren’t necessarily the world’s most effective charities, Rosqueta says. Rather, they are nonprofits that use proven approaches to solve important problems. “Every one has been rigorously vetted for evidence of impact and cost-effectiveness,” Rosqueta says.

Costs matter, of course, and they are frequently overlooked by donors. Many nonprofits that talk about their “impact” on their websites don’t report on their costs of their programs. So it’s hard, without doing further research, to know what your donation is is buying–and whether it could buy more impact elsewhere.Like investors, smart donors want to maximize the return on their dollars. 

Some examples of nonprofits highlighted in this year’s guide:

The Nurse Family Partnership offers visits from registered nurses to low-income mothers and their children, from early pregnancy to the child’s second birthday. Rigorous studies, going back to the 1970s, document long-lasting benefits for the mother and child.

Year Up is a training program that provides low-income high school graduates between the ages of 18 and 24 with six months of skills education, and six months of hands-on training at a corporate internship. It’s not cheap–the costs of moving a student through the program is about $51,000, half of which is covered by the companies who hire them, but an independent study found “that the program boosted a young adult’s annual earnings by an average of 30%, or about $13,000 more than a similar group of young adults who did not participate in Year Up,” the guide says.

Food for the Hungry, a faith-based group, runs a child survival program in Mozambique that promotes healthy practices such as breast feeding, malaria prevention, nutrition and sanitation through “care groups” of women led by health professionals. A review of similar care group projects found a 26% to 48% reduction in under-five mortality, with an average cost of $3 to $8 per beneficiary, the guide says.

We could argue with some recommendations. A nonprofit in Haiti is highlighted because it relies on a well-tested approach, called the graduation model, that has helped lift women out of extreme poverty in Bangladesh, Kenya, and India. But this particular NGO, called Fonkoze, has not been independent evaluated, as best as I can tell, so it’s hard to know if it is carrying out the program well.

Still, I’d rather take my chances with Fonkoze than with most US-focused nonprofits, including those identified by CHIP. That’s because the needs are greater in Haiti, and other poor countries, than they are in the US, and because our dollars go much further there. For example, for the roughly $25,000 in donor funds that it costs to put a student through Year Up, GiveWell estimates that 10 lives can be saved through the distribution of long-lasting bed nets that prevent malaria in Africa. Or, imagine sending that $25,000 to some of the poorest people in the world, no strings attached. Cash transfers have been shown to have long-lasting effects on poverty, health and education, GiveDirectly says.

Advocacy groups, think tanks and arts organizations are also mostly left out of the report. Arguably, Black Lives Matter will have as much impact on poverty as any social service agency. What’s done about declining rates of work force participation? The American Enterprise Institute has ideas. How do you measure the value of the Public Theater of New York, which provides free Shakespeare in the Park, not to mention Hamilton?

The Center for High Impact Philanthropy intends to look at advocacy groups and policy, Rosqueta says: “That’s absolutely on our agenda…There is evidence about what policy campaigns work, and which don’t work.” The center provides a wealth of information on its website, along with the guide; it offers courses to donors, as well personalized advice to high net worth individuals. It works closely with Fidelity Charitable, a donor-advised fund that has become America’s biggest charity.

“We have coached billionaires, and we know that a 13-year-old used our guide to choose organizations for her bat mitzvah gifts,” Rosqueta says.

That’s all to the good. Giving is always going to be personal. But the more that donors are guided by evidence–by the head, as well as the heart–the better off the world will be.