Let me note that there is some truth to what the Straw Man says below. There is very little information that you can get and compare across all charities, and looking at the Straw Ratio (program expenses / total expenses) is probably the single quickest, easiest way to spot the worst of the worst (i.e., Lighting Your Cash On Fire International).
There are a surprising number of charities that fall into the “lighting your cash on fire” category. Websites like Charity Navigator, which evaluate huge numbers of charities using these simple metrics, provide an extremely valuable service to society. They help expose and avoid the worst of the worst, and it’s also worth mentioning that this filter (and the categorization they do) makes work like ours feasible.
To read about the worst, read the Charity Navigator blog. It’s good reading, and eye-opening. But when you’ve knocked out the crooks, you still need to separate the well-intentioned and effective from the well-intentioned and ineffective. For this, the Straw Ratio is useless and even destructive. In the coming weeks, I will go into a lot of detail on why. Right now I’m hungry.
Comments
I love what you’re trying to accomplish and admire how you are working to evaluate charities from as many angles as possible. Your reviews are much more indepth and helpful because you are assembling evidence, not just crunching numbers and equations. Great work!
[…] The Straw Man opened the series, dubbing “% of expenses that go to programs” as “the Straw Ratio.” I then proceeded (after grudgingly conceding a tiny bit of value in this metric) to rip him apart. I started with the obvious: even if the Straw Ratio were useful, there would be a lot more to do to find the best charities. I then argued that administrative expenses are valuable in running a charity (or anything) well, and pointed out that the obsession with penny-pinching has consequences for the quality of the sector’s people, technology, and evaluation capacity. The Straw Ratio isn’t just a silly number: it’s a mentality that has infected everything from the Internet to donors’ brains, and it’s a mentality that GiveWell exists to fight. […]
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