1. Don’t look at overhead ratios
Overhead ratios are the worst way to pick a charity. They tell you nothing about the impact that the charity has and actually encourage charities to make decisions that make them less effective. In short, choosing a charity based on overhead ratio means more wasted money, not less.
2. Look for opinions and information about the charity from the people who have had direct experience with it
GreatNonprofits.org, the nonprofit that I run, allows beneficiaries, clients, donors and others to post both positive and negative reviews. The reviews also get automatically posted to the nonprofits’ guidestar report.
3. Look for expert opinions on the charity
Philanthropedia is a new site that is providing access to the knowledge of experts that would normally only be available to large foundations.
4. Look for direct evidence of impact
This is more than just a few nice stories and pretty pictures. Ask the charity how it is evaluating the effectiveness of its programs. GiveWell has reviewed hundreds of charities looking for direct evidence of impact. Their site provides a great deal of information on what we know works and what we know doesn’t—and surprisingly many charities are carrying out programs that have little or no evidence that they work.
5. See It For Yourself
Do a donor tour or sign up to volunteer and experience for yourself what the nonprofit does.