Monday 12 November 2012

Charity Ratings Kill Innovation

This may be blasphemy but I am going to say it. Charity ratings help to kill innovationNow before the charity ratings organizations go crazy and tell me how wrong I am, let me acknowledge a few things.

I am not against charity ratings. They play a valuable role in terms of evaluating efficiency, accountability and transparency. But they seem too focused on expense ratios and not enough on impact. If an organization's program spending relative to their operating spending is 70/30 but has a huge impact on health care or climate change, is that worthy of a lower rating to another organization that has an 85/15 ratio but far less impact? 
But let's leave this argument for another time.

My problem with charity ratings is that by focusing on the relative spend between mission (program) and operating, charities are reluctant (some are even scared) to spend money on innovating the way they engage the public.