How to Choose a Charity: Red Flags, Green Flags, and What the Data Says

Most charity evaluation advice focuses on overhead ratios — a metric experts widely consider misleading. Here is what the evidence-based giving community actually recommends for evaluating where your money goes.

The standard advice for evaluating charities — "check how much goes to 'the cause' versus administration" — is, according to most serious researchers in this field, actively harmful. It causes donors to defund the operational capacity that makes organizations effective, rewards charities that starve themselves of management talent and technology, and ignores entirely the question of whether the programs being funded actually work.

Here is what rigorous charity evaluation actually looks like.

The Overhead Myth

In 2013, the CEOs of GiveWell, Charity Navigator, and the Better Business Bureau Wise Giving Alliance published an open letter — addressed to the donors of America — explicitly warning against using overhead ratios to evaluate charities. Their argument: a charity that spends 30% on administration but runs evidence-based programs with measurable outcomes is a far better use of your money than one that spends 5% on administration but operates programs with no evidence of impact.

Stanford Social Innovation Review has published extensively on what they call the "overhead myth." The short version: organizations that chronically underfund staff development, technology, and evaluation capacity eventually fail or become ineffective at scale.

What Actually Predicts Impact

GiveWell, which conducts the most rigorous independent charity evaluations in the world, evaluates organizations on three factors:

• Evidence of effectiveness: Does the program actually produce the outcomes it claims? Is there randomized controlled trial evidence, or at minimum strong quasi-experimental evidence?
• Cost-effectiveness: How much does it cost to achieve one unit of meaningful outcome (e.g., one life saved, one child reading at grade level)?
• Room for more funding: Can the organization productively use additional donations? Some highly effective organizations are already fully funded.

Green Flags

• Published annual reports with specific outcome data (not just activity data)
• Reference to external evaluations or RCT evidence for programs
• Willingness to discuss what hasn't worked
• Clear theory of change: how does activity X lead to outcome Y?
• Audited financial statements available publicly

Red Flags

• Overhead ratio prominently featured as primary quality signal
• Impact reported in outputs, not outcomes ("we distributed 10,000 meals" not "hunger in target area decreased by X%")
• Founder salary not disclosed
• No mention of what happens when programs don't work
• Testimonials as primary evidence of impact
• Pressure to donate immediately without time to research

Tools Worth Using

GiveWell (givewell.org) — focuses on global health and poverty reduction. Rigorous. Their top charity list is evidence-based and updated annually. Giving What We Can — curates evidence-based giving opportunities across causes. Charity Navigator — broader coverage, less rigorous than GiveWell but useful for US-based giving. Open990 — US nonprofit tax filings, publicly searchable.

FAQ

Is 20% overhead "too high"? There is no research supporting any specific overhead threshold as a quality marker. GiveWell's top charities have widely varying overhead ratios. Focus on evidence of impact instead.

What if I want to support a local charity that has no external evaluations? Ask them directly: what evidence do you have that your programs work? Can you share your most recent financial statements? A good organization will answer both questions willingly.

Discover vetted initiatives and organizations on Good People Map — transparent, community-verified, mapped by location and cause.