New rating site aims to assess on‐the‐ground ‘impact’ of donations
| Date | 01 March 2020 |
| DOI | http://doi.org/10.1002/nba.30729 |
| Published date | 01 March 2020 |
MARCH 2020 NONPROFIT BUSINESS ADVISOR
5
© 2020 Wiley Periodicals, Inc., A Wiley Company • All rights reserved
DOI: 10.1002/nba
Industry News
New rating site aims to assess on-the-ground
‘impact’ of donations
As the donor public turns ever more concerned
about getting as much “bang for the buck” as possible
with their charitable contributions, a multitude of
resources have cropped up to help them make deci-
sions about which nonprots to support. Sites such as
GuideStar (now Candid) and Charity Navigator aim
to inform donors by providing evaluations of chari-
ties’ activities, as well as the state of their nances
and business operations.
A new entrant in this realm is ImpactMatters, and
it aims to provide a different type of evaluation—one
that looks not so much at the day-to-day operations
of a charity but instead the on-the-ground impact a
supporter can expect to see per dollar donated.
Nonprot Business Advisor recently spoke with
Elijah Goldberg, the executive director of Impact-
Matters, about this new service and what sets it apart
from others in the eld.
Q: Why does the nonprot sector need another charity
rating service? What do the other ones get wrong or lack?
A: To make smart decisions, donors need to know
the impact of the nonprots they are asked to sup-
port. Little information readily exists. ImpactMatters
lls this information gap with a rating system that
takes an explicit account of how much good the
nonprot achieves per dollar of cost.
Other rating services provide valuable information
to donors, but we go beyond conventional measures
of nonprot success—such as the ratio of administra-
tive costs to total costs—to focus on what matters:
how the nonprot changes people’s lives.
Q: How does ImpactMatters differ from other rating
sites? What does it take into account that they don’t?
A: Simply put, we are the only group estimating
impact at scale. We dene impact as the change in out-
comes (e.g., lives saved or income earned) caused by a
social program compared to the costs to achieve those
outcomes. An example: For $2, Feeding America
feeds a person in need and earns ve stars.
We use cost-effectiveness as a determination as to
whether the benets outweigh the costs. To determine
cost-effectiveness, impact is compared to a bench-
mark. For example, the cost of a meal delivered by
the nonprot can be compared to the cost to buy a
meal in the same area. If the nonprot delivers for
substantially less than the cost to buy a meal, we
would conclude it is highly cost-effective.
Cost-effectiveness is a decision tool that makes
those resources go further—helping more people in
more ways.
Q: Please walk us through your rating system. What
does it involve?
A: Our rating process involves ve steps:
• First, we identify a type of program—such as tree
planting—and develop a methodology for analyzing
the impact of those programs. The methodology relies
on low-cost, low-burden data from the nonprot,
such as the number of trees planted. We combine
numbers from the nonprot with social science re-
search to build an equation that estimates impact.
• We then identify nonprots that implement that
type of program and search for the numbers we need.
Data comes from For m 990s, annual reports, nan-
cial statements, government datasets and nonprot
websites.
• With the numbers in hand, we calculate impact.
• We compare impact to a benchmark to assign
stars. For example, we use the social cost of carbon
to analyze the cost-effectiveness of tree-planting
programs.
• Finally, we ask nonprots to review and correct
our work before we publish.
Q: How does this benet the donor public?
A: We aim to give donors actionable information
about the impact of a chosen nonprot as they con-
sider a donation. To date, we’ve rated 1,077 nonprots
across eight cause areas. For those unsure of where
to donate, we organize our ratings into top lists by
cause area, local giving guides and star rating. Our
methodologies are transparent, and our ratings will
always be free to donors.
Q: How does this benet individual charities rated
on the site? Or the nonprot sector itself?
A: One of the most heartening facts that emerged
from our analysis is that 87% of the nonprots we
reviewed were determined to be cost-effective. Non-
prots are doing powerful work, and our hope is this
(See IMPACT on page 8)
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