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Thanks for the link, a long, but extremely eye opening read. I has made me rethink how I donate to charity from now on: I really did use only one metric- overhead percentage.

Now I will have to reevaluate this.

Good. I (sort of) work in that sector and investments and grant/donations support often goes to things that look good in the marketing, and show low overheads. Imagine investing in startup based on low overheads. I know, it isn't the same but the end result can be very poor. Some of the biggest names in the aid-charity business are truly awful at implementation. And there is little transparency, so it is very hard to learn what is truly effective.

So what would you suggest? The article gets a little hand wavy about what donors should do - eg the playpump worked at first, then sucked, and is now working well in some instances.

So should I have invested in it at first, then stopped investing as it started sucking, and then reinvested again to the new people using it?

Given that type of friction, I may give up donating altogether. Or good ideas which hit a genuine rough spot may lose all funding and die off before reaching their full potential.

What would be a realistic ratio of overhead to target? Apple-like? Say 30% should be acceptable overhead? Or a sliding scale? For example, if a charity raises $1bn does it really need $300m for overhead? Maybe there is some middle band of maximum overhead percentage, say up to $1m <=5% $1m-$1bn up to 30% and over $1bn <= 15%?

How does that charity raise $1bn? It might have legitimate costs - for example, running thrift shops.


> Miller’s True and Fair Foundation argues (pdf) that charities should spend a minimum 65% of their total income on charitable activity. Any charity spending less than that, it says, “must by definition be one or more of poorly governed, unethical or appallingly mismanaged” (pdf). One in five larger charities is said by the foundation to spend less than 50%.



> The foundation has simply taken a charity’s total income and contrasted it with charitable expenditure. But, the total income for many large charities includes the costs of trading (eg running a charity shop) – money which could never be spent on the end cause, but helps generate additional funds for it. Like any business, part of the charity’s income goes to cover these costs, before a profit is made which can go directly to the charity’s cause.


> For example, a charity may spend £30 running a charity shop. It makes £40 on the till, so therefore makes a £10 profit which goes to the end cause, along with the initial £10 donation.

> In doing all this, its total income is recorded as £50 – the £10 donation, plus the £40 from trading. The £20 it has to spend on its cause is 40% of this £50.

Fyi, the site givewell.org is dedicated to evaluating charities and helping people make the decision of what to donate to. It's the first place I'd consult for this.

I only had a chance to look at one assessment of a charity they rated that I know relatively well, and the assesment was fair (they didn't recommend donating to the charity).

Invest in successful water charities instead? https://www.charitynavigator.org/index.cfm?bay=search.summar...

This site gives high railings for things that it can measure and are of marginal value, and not much for things that are important, like the effectiveness of the intervention. It gives high ratings to a least one charity I thinks performs poorly.

In international development there is an arbitrary (as far as I can tell) limit set on overheads. But without defining what the charity does. I see many organisations go through contortions to redefine their overheads to fit the norm, often unnecessarily, as the overheads are justified but not accepted according to the norm.

Donate to charities like you would invest money. Do your research and be sceptical about extraordinary claims and glitzy marketing not backed up by data.

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