Ci uses publicly available information—including financial statements, annual reports and websites—to rate charities in four areas: results reporting, financial transparency, need for funding, and “cents to the cause” (how much of each donated dollar goes to a charity’s programs after paying for administration, management and fundraising costs).
In 2018, Ci started adding impact scores to some of its charity reports, and it currently includes this metric for about 260 of the 850 Canadian charities it researches. That number is lower than it was last year, when it included impact scores in 300 charities’ ratings. The reason? Ci has paused its impact ratings for 40 charities because it wants to improve its research on them, explains Thomson.
Refining the research is something Ci does regularly. For instance, in 2022, it conducted more extensive research into different types of charitable programs. One area it focused on was the impact of food banks, and that additional research yielded more food banks placing on that year’s Top 10 Impact Charities lists. Thomson says Ci “looked more holistically at the research to say, ‘What happens when people have more food? What does it impact?’” What it found is that having enough food to eat improves people’s health and well-being and even has a positive effect on their income. And, ultimately, the benefit to society includes reduced health care and welfare costs, and even means a bit more revenue for the government because people are paying more income tax. It’s not just about feeding people. “It actually has ripple effects both for the individual and for society at large,” explains Thomson. (For a full explanation of how Ci evaluates the impact from Canadian charities’ impact, read the Methodology.)
In 2023, Ci removed from consideration any charity that isn’t transparent about its finances. “We decided to implement one additional rule this year—that no charities on our top impact lists can be rated as zero in financial transparency, meaning that we had to go to the Canada Revenue Agency (CRA) to obtain their financial statements as they are not available on the charity’s website and they would not send them to us,” Thomson says.
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Why charitable impact matters
Thomson feels the impact ratings Ci gives charities are reliable for donors. For example, Habitat for Humanity has a low impact rating because of the social return on a donation to the charity. “It has data showing that its programs are effective,” says Thomson, “but, since it is a very costly program per client, the Habitat charities all score ‘low’ or ‘fair’ on demonstrated impact.” The cost on average is over $200,000 per family housed, and sometimes much higher, he explains. Thomson says that Ci has data that shows that Habitat for Humanity changes people’s lives—and he wishes more charities had data for that. “But it’s one of the most expensive charitable programs we’ve seen anywhere.”
Ci has rated seven Habitat for Humanity charities for impact, and its best estimate is that they create $1 to $2 per $1 donated. Five of them are rated “low” for demonstrated impact, and two are rated “fair,” says Thomson. Overall, Habitat for Humanity Canada rates “fair” with a best-estimate social return on investment (SROI) of three to one; however, this is partly due to the impact of its international operations. “If we look just at its programs within Canada, building houses for Canadian families, our best estimate is that it creates $1.40 per $1 donated,” says Thomson. “Impact values do not change significantly from year to year, typically, and Habitat has not changed its model enough to make much of a change since we first analyzed them five or six years ago.” He notes, however, that some Habitat charities have launched home buy-back programs (for families ready to move on to other housing) and started building multi-family dwellings. “Both of these strategies should help them lower the cost per family helped and thus likely improve the overall social return on investment of the Habitat charities,” says Thomson. “But so far, this is still a very small portion of the homes overall for the Habitat charities.”
Compare that with Against Malaria Foundation Canada—an arm of the U.K.-based Against Malaria Foundation—which is one of Ci’s Top 10 Impact Charities for 2023. It has a “high” impact rating. “Our best estimate is that the Against Malaria Foundation creates $17 from every $1 donated,” says Thomson. Though he does note that its overall rating would be lower if impact weren’t included, since according to Ci’s research, the foundation has an X score for financial transparency—Ci’s second-lowest rating in that category—because its financial statements are only available upon request.