The impact rating
How can you find out which charities provide the greatest impact for your donation dollar? That’s where Ci comes in. Ci has released top impact lists now for six years (starting in 2017). And for the past five years (starting in 2018), it’s done a deep dive into Canadian charities to come up with an “impact rating”—a financial measurement of the on-the-ground work each one does.
Ci was already using publicly available information—including financial statements, annual reports, and websites—to rate charities in four areas: results reporting, financial transparency, need for funding, and “cents to the cause” (how much of each donated dollar goes to a charity’s programs after paying for administration, management and fundraising costs).
In 2018, Ci started adding impact scores on some of its charity reports, and currently includes this metric in about 300 of the 800-plus Canadian charities it researches. And while it had plans to increase that number, it currently remains the same, as rather than spending their time expanding the amount of charities with an impact rating, in 2022 Ci chose to invest in refining its understanding of the change created by different charitable programs. Thomson notes that more food banks included for the Top 10 Impact Charities lists is due to additional research into food banks. “We looked more holistically at the research to say, what happens when people have more food? What does it impact?” What they found is that having enough food to eat improves people’s health and well-being and even their income. And the benefit to society includes reduced health-care and welfare costs, and even means a bit more revenue for the government because people are paying more income tax. “People may think that a food bank just gets people fed. Well, it actually has ripple effects both for the individual and for society at large,” explains Thomson. (For a full explanation of how Ci evaluates a charity’s impact, read Methodology.)
Why charitable impact matters
“We realized that until we got ‘impact’ in there, we had a problem with our ratings,” says Thomson, noting that some of Ci’s top-ranked charities under its old rating system haven’t been able to answer simple questions about the specific outcomes of their programs. “With ‘impact’ in there, we believe (our ratings) are far more reliable for donors.”
Habitat for Humanity is one charity that gets dinged by Ci because of its impact rating, not because it isn’t able to answer questions about its impact, but because of the social return on a donation to the charity. “Habitat for Humanity is probably the charity that frustrates me the most,” says Thomson. “It has data showing that its programs are effective, but, since it is a very costly program per client, the Habitat charities all score ‘low’ or ‘fair’ on demonstrated impact.” Habitat for Humanity charities are rated as “low” or “fair” impact because they cost, on average over $200,000 per family housed, and sometimes much more, he explains. “They’ve got data that shows that they change these people’s lives—and we wish more charities had data showing that—but it’s one of the most expensive charitable programs we’ve seen anywhere.” Of the seven Habitat for Humanity charities Ci has rated for impact, its best estimate is that they range from creating between $1 and $2 per dollar donated. “Five of them are rated low for demonstrated impact and two are rated fair. If we look at the national charity, Habitat for Humanity Canada (the national charity), overall it rates fair with a best-estimate social return on investment (SROI) of three to one; however, this is brought up significantly by its international operations. If we look just at its programs within Canada, building houses for Canadian families, our best estimate is that it creates $1.40 per $1 donated.”
Compare that with Against Malaria Foundation Canada—an arm of the U.K.-based Against Malaria Foundation—which is one of Ci’s 2022 Top 10 Impact Charities, and has a high impact rating. “Our best estimate is that Against Malaria Foundation creates $17 from every dollar donated,” says Thomson. Though he does note that its overall rating would be three stars instead of four stars if impact wasn’t included since according to Ci’s research, they have an X score for financial transparency—Ci’s second lowest rating in that category—because their financial statements are only available upon request. “They frustrate us, and I’m sure they frustrate some donors that want to understand them better, but at the end of the day, the bed nets that they provide are saving lives so cost-effectively, and that’s what matters in the end,” he explains.
