The most difficult question in the charity world is also its most important: how can you tell if a charity is any good?

At the moment, nobody has a solid answer. At IG, we say that transparent charities deserve your cash more than secretive ones – but we can’t tell you which transparent organization you should give to. New Philanthropy Capital, a whizzy research outfit, supplements office-based analysis with site visits and then makes specific charity recommendations. But it would never do anything so crude as to give a score of charities’ effectiveness.

This is a big problem. Until it’s possible to compare charities directly – probably by giving them an effectiveness score – deciding which cause most needs your support will be next-to impossible. If you want to put your donation where it will have the greatest impact, you ultimately just have to guess.

This unsatisfactory situation has led to the development of a cottage industry which tries to assess the impact charities make. Last week saw the latest effectiveness tool emerge: the Portfolio Data Management System (PDMS), backed by the Clinton Global Initiative, and given positive write-ups in the New York Times and Business Week.

PDMS is doubtless a worthy initiative. In fundamental terms, the analysis it’s based on looks sound. But its most intriguing promise – that it will assess how many people’s lives have been affected by a charity – looks extremely hard to fulfil. According to the PDMS website, “we [will] opportunistically partner with world-class research organizations to conduct in-depth research to better understand the social impact of select investments.” Hmm. That doesn’t explain much.

Measuring impact is exceedingly hard, which explains the PDMS’s reticence. But it’s still galling to find that even the massed resources of Bill Clinton, the Skoll Foundation and Google.org can’t come up with a convincing answer to the question of how to compare charities.

Does anyone have any better ideas?
 

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Thanks to the Charity Navigator Blog for getting me to read the NY Times.
 

 

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