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What Seals of Approval and Evaluations Are There For Aid Organizations? How Meaningful Are They?

In theory, all evaluation agencies fall into one of two groups which pursue different objectives and have different approaches. It’s important to understand what the awards really mean. The first group is made up of traditional evaluation organizations, like Germany’s DZI or Charity Navigator in the US, who evaluate the largest possible number of aid organizations. Their assessment is based primarily on easily accessible standardized data such as annual reports and tax returns. The objective here is to reassure the donor that a large part of the funds is actually spent for the stated purpose and that certain transparency standards are met. However, these assessments do not make any statements about the results achieved with these funds. A professional assessment of the effectiveness of the projects requires an immense effort and is simply not feasible for hundreds, or even thousands, of aid organizations. This first group of organizations has contributed significantly to higher transparency of aid agencies in the past.

The second group is made up of a newer type of agency which carries out a far more detailed evaluation of a project’s results, GiveWell is probably the best-known in this group. These evaluations include visits to the aid organization’s administration, on-site visits to aid projects, interviews with project participants, with staff at various levels of the organization, and with independent experts to assess the work of the aid organization. In addition, they make a cost-benefit calculation, critically assessing all underlying assumptions. Since such an assessment requires a lot of time and manpower, only a handful of aid organizations can be evaluated; they must meet the following criteria even to be considered:

  • Very high transparency
  • High effectiveness of the focus activities has been demonstrated in evaluations carried out according to scientific standards.
  • Very high cost-benefit ratio in terms of effect that can be achieved with donations.
Traditional Evaluation Agencies: What are donations spent on?
Evaluation Agency Seat / Number of Employees Examination/Evaluation Criteria # of Excellent Aid Organizations Examination/Evaluation Costs for the Aid Organization
DZI – Spenden Siegel Germany 10 Employees
  • Administration & Advertising <30%
  • Transparency
  • Structure of the supervisory bodies
approx. 250 500 EUR plus 0.035% of the total annual donations, up to max. 12,000 EUR / year.
ZEWO Switzerland 7 Employees
  • Cost structure
  • Transparency
  • Structure of the supervisory bodies
>500 Average 4500 CHF for initial certification plus 0.033% of the total annual donations, up to max. 13,000 CHF.
New evaluation agencies: In addition: “What do the donations really achieve?”
Evaluation Agency Seat / Number of Employees Examination/Evaluation Criteria # of Excellent Aid Organizations Examination/Evaluation Costs for the Aid Organization
GiveWell Worldwide 32 Employees
  • Transparency
  • Funding gap
  • Proof of effectiveness
  • Cost-effectiveness. The most thorough examination of all evaluators.
7 top aid organizations plus 6 other organizations. Only a few aid organizations are examined, which potentially promise extremely high effectiveness Free
Giving What We Can Worldwide 3 Employees in the rating of aid organizations
  • Impact
  • Lack of attention and donations
  • Influencing the problem
4 Free
Animal Charity Evaluators Worldwide
  • Transparency
  • Funding gap
  • Cost/Effectiveness calculation
  • Organization (processes, structure, leadership)
3 top relief organizations plus another 10 organizations Free

In addition, there are a number of agencies who evaluate only US-based aid organizations. However, similar to the DZI, the criteria is also largely limited to the fulfillment of transparency and financial ratios:

 

DZI (Deutsches Zentralinstitut für soziale Fragen/German Central Institute for Social Issues) – Largest evaluation agency in Germany

The DZI is probably the only organization in Germany specializing in the evaluation and certification of aid organizations.

The main criteria used by the DZI is the percentage of administrative and advertising expenditure. It also checks whether aid organizations transparently publish a detailed list of the following data:

  • Income and expenses in an annual report
  • Employee compensation
  • Names of the members of the management bodies

Their aim is to check the seriousness of the organization and to identify possible areas of abuse. Conclusions about the effectiveness and results of the aid organizations cannot be made following this criteria or, only to a very limited extent.

Approximately 250 organizations have been awarded the donation seal of approval. According to the DZI, this corresponds to about a quarter of the volume of all donations  in Germany, and about 5% of the aid organizations that collect donations in Germany. Since the award of the seal incurs not inconsiderable costs of up to 12,000 EUR per year, it’s hard to know for certain whether the large number of aid organizations in Germany without a seal of approval, is due to non-fulfillment of the criteria or if the aid organization has deliberately chosen not to pay the cost of certification.

 

GiveWellGiveWell – The largest evaluation agency worldwide

GiveWell was founded in 2007 and now employs more than 30 people. The objective is to identify aid organizations which make the greatest possible positive impact with the donations they receive. Promising organizations are subjected to a very in-depth analysis. GiveWell is a world leader in evaluating the actual project results of aid organizations. Through recommendations in the press, in literature on better donations and last but not least from the recommendations of well-known philanthropists, GiveWell has grown considerably in recent years and has been the world’s leading aid assessor in terms of donations since 2013. The assessment is free for aid organizations. GiveWell is funded by hundreds of small donors and the Good Ventures charitable foundation of Facebook co-founder Dustin Moskovitz.

Donation platforms where aid organizations, both large and small, collect funds for their projects cannot actually review or evaluate the aid organizations on their site. Betterplace.org, the largest donation platform in Germany is very transparent in this respect and writes in each project profile: “Up to the current exemption decision of the tax office (“charitable”), Betterplace.org does not assess this aid project”.