Best charities to donate for the most charitable impact 2021

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• Charity Intelligence top 10 impact charities in Canada for 2021
• What impact means for charities—and for your donations
• Why charitable impact matters
• Overhead vs. Impact
• What donors should look for
• Methodology for the impact rating of charities

Charity Intelligence top 10 impact charities in Canada for 2021

Ever wonder how a charity uses the money you donate? Is it mostly on marketing, or is it going directly to those in need? If you want to boost the impact of your charitable donations, check out our rankings of best charities for impact. We have four lists for you:

1. Top 10 Impact Charities Overall
2. Top 10 Canadian Impact Charities
3. Top 10 International Impact Charities
4. Top 10 Impact Canadian Food Banks

Top 10 Impact Charities Overall

Top 10 Canadian Impact Charities

Top 10 International Impact Charities

Top 10 Impact Canadian Food Banks

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What impact means for charities—and for your donations

“Some charities create a lot of change with the donations given to them. Others have almost nothing to show for the money coming from donors,” says Greg Thomson, director of research at Charity Intelligence (Ci), a non-profit that helps Canadians make informed giving decisions. 

Indeed, there are charities that can take a $100-donation and turn it into nearly $700 worth of value for the people it supports and society at large. For example, a charity that helps at-risk teens could provide a sizable financial benefit to the youth who use its programs (in the form of food, housing, wellness, etc.), as well as to the greater community through costs savings to the public health-care and shelter systems. 

On the other end of the spectrum, there are charities that destroy value, perhaps producing just $40 worth of measurable change from the same $100-donation because of spending too much in relation to the benefit they create. For example, charities that grant wishes to critically ill children often spend upwards of $25,000 per child, but the value provided to the child and their family is much lower, says Thomson. 

“Wish charities are wonderful-feeling things that people love to give to, but they are really expensive,” he says. “One child receives a bedroom makeover, a trip to Disney World, or some other thing that makes them feel really good for a while—and may even improve their physical health a little bit. But when we do the value creation for that one child, we struggle to even get $10,000, out of that $25,000.” And that includes the cost savings to the family if they had taken on the expense of a trip or renovation themselves, he adds.

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The impact rating

How can you find out which charities provide the greatest impact for your donation dollar? That’s where Ci comes in. For the past four years, it’s done a deep dive into Canadian charities to come up with an “impact rating”—a financial measurement of the on-the-ground work each one does. 

Ci was already using 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 on some of its charity reports, and currently includes this metric in about 300 of the 800-plus Canadian charities it researches, with plans to increase that number to 400 charities by 2023. 

(For a full explanation of how Ci evaluates a charity’s impact, tap Methodology.) 

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Why charitable impact matters 

“We realized that until we got ‘impact’ in there, we had a problem with our ratings,” says Thomson, noting that some of Ci’s top-ranked charities under its old rating system haven’t been able to answer simple questions about the specific outcomes of their programs. “With ‘impact’ in there, we believe (our ratings) are far more reliable for donors.”

One such example is WE Charity, which became embroiled in scandal last year due to conflict-of-interest concerns between the organization and top members of the federal Liberal government. Before Ci started measuring impact, it routinely gave WE four stars (the top category at the time). “They were a four-star charity because they ticked every box,” he says. “They had their financial statements, and they had enough reporting generally to give donors a sense of what they do.” 

But in 2018, when Ci started asking WE tough questions like, “Where did you spend the money?” and “How many lives did you change?” things started to unravel. More specifically, researchers asked WE to provide details such as how many kids were educated the previous year through their programs and to what level, and how many people got clean drinking and/or sanitation water the previous year because of donations they received. 

“The information wasn’t on their website; it’s not in their annual report. We asked them numerous times and they wouldn’t provide it, or I don’t know if they could provide it,” says Thomson. As a result, WE now has a dismal impact score—according to Ci, it currently creates just $1.10 in impact for every $1 donated—and its overall rating has dropped down to two stars out of five. 

“It’s the perfect example for me as to why impact matters, because it’s easy to paint a rosy picture of what’s going on,” he says.

On the flip side, there’s JUMP Math, a charity that aims to help kids learn math by creating programs and resources for educators and parents so they can teach the subject more effectively. While the charity has an overall rating of three stars, that doesn’t tell the whole story, considering JUMP Math is one of Ci’s 2021 Top 10 Impact Charities, creating $6.50 in impact for every $1 donated.

“They’ve got studies showing how they’ve improved the math capabilities of many, many kids in Canada. However, our traditional rating system dings them for their overhead costs because they spent a heck of a lot on fundraising for a couple of years … and it didn’t pan out in terms of donations,” he says.

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Overhead vs. impact

Historically, financially conscious donors have gravitated toward large established charities and focused on factors like overhead costs and salaries, thinking if those expenses were high then the charity wasn’t doing good work with the money it received. But those measures can be misleading, says Thomson. “We’ve found almost no correlation between impact and things like overhead and reputation,” he says.

Going back to the examples above, for fiscal 2020 WE Charity had an impressive 93% on Ci’s “cents to the cause” metric and a low impact rating, while JUMP Math had a 41% “cents to the cause” score and a high impact rating.

Having said that, charities still need to be upfront about this information because extremely high or low overhead costs are a red flag that can point to impact issues. “If you spend $0.80 of every $1 on overhead, it’s going to be really hard to have a high impact on that remaining $0.20,” says Thomson. 

On the other hand, spending too little on overhead can be worrisome, too. For example, if a charity devotes just 5% of its budget to fundraising and administration, it’s either not investing enough in its staff, or it’s using creative accounting methods. “More likely they’re playing the game and saying, ‘Our accountants say we spend only $0.05 on $1,’” says Thomson. “But if you dig in and see where all the money is actually being spent, we would probably categorize it differently.”

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What donors should look for 

If you want to find a charity that’s going to make a difference, start by looking at Ci’s 2021 Top 10 Impact Charities, which deliver average returns of almost $7 for every $1 donated, compared with overall average returns at $1 to $2. You can also look up your favourite charities by name (or search by sector) on Ci’s website to see if they have been assessed for impact and, if so, what the impact rating is, including low, fair, average, good or high). Obviously, a better-than-average rating is what you’re after. 

If an organization you want to support is not currently among those that Ci rates for impact, look for specific, clear and easy-to-find information about what your charity of choice does, what its own expected outcomes are, and how it met those expectations last year, says Thomson.

“I specifically say last year because there are examples all over the place where charities say, ‘Since we started, we’ve helped 200,000 kids.’ You may have no idea whether the charity started five years ago or 50 years ago, so you don’t know what that number means,” he says. “I get very wary of a charity that presents very old data or presents very aggregated and non-specific data.” 

While he doesn’t expect charities to provide donors with a dollar value for the change they create—that’s where third-party organizations like Ci come in—Thomson does think it’s important for charities to collect and provide data as to what they accomplish so they can measure their own effectiveness and make it easier for donors to see where their money is going. 

That means you should be able to spend five minutes on a charity’s website or read its annual report, and understand what its main programs are. And, ideally, you should know how much it spent on each program in the previous year. You should also be able to quickly identify what the charity’s expected outcomes were and what it accomplished in that period. An education charity, for example, might cite a specific percentage increase in graduation rates over the previous year—and it should be clear whether that’s for high school or university—to help you evaluate what kind of change they’ve made. 

If a charity doesn’t offer that accountability and transparency, it may be best to keep looking to find one that does to place your trust in. 

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Methodology for the impact rating of charities

Ci assigns an impact rating of low, fair, average, good or high to about one-third of the charities it assesses. Because this is just one of five metrics Ci uses to rate charities (the other four are results reporting, financial transparency, need for funding, and “cents to the cause,” the impact rating currently accounts for only 20% of a charity’s overall star rating. That weighting will eventually go up to 40% to reflect the significance of impact to donors. “We believe impact is the most important factor,” says Thomson, director of research at Ci. 

Ci uses two metrics to calculate a charity’s Impact Rating: a demonstrated impact score and a data quality score, as explained below.

Demonstrated impact score

This score measures social return on investment (SROI), or the amount of social good that charities generate per $1 donated. SROI is expressed as a ratio—say, $5 of returns for every $1 donated, as follows:

SROI = Total monetary value of a charity’s outcomes ➗Charity’s annual spending

Annual spending is an easy figure to come by, since it typically appears in a charity’s annual report and financial statements. But how does Ci come up with a value for the outcomes of a charity’s work? 

Researchers first look at publicly available data and ask each charity: What outcomes did you achieve this year? For an organization that supports unhoused youth, for example, they would ask what benefits the youth received from the charity. Was it simply a place for them to sleep? Did they get a meal in the morning, counselling, or referrals for help? Or were they just kicked out during the day? 

Ci then uses external research to assign a monetary value to those outcomes, both for the benefits to the charity’s clients as well as to society. In this case, it would add the intrinsic value of the housing, food, counselling and referrals (where applicable), as well as averted risk of death in the value column for the client. And then would incorporate reduced costs to public health care, shelters, food banks, etc., in the value column for society. 

To provide a realistic picture, Ci calculates a range of SROI values—a lower bound, a best estimate and an upper bound. The lower bound is based exclusively on evidence from the charity. The best estimate is based on charity data and external research. And the upper bound includes additional value that “the charity could reasonably be producing but that is not yet appropriately backed by evidence.” The rating combines the three values together to get a demonstrated final impact score, but the lower bound and best estimates are weighted more heavily because they are evidence based and can prove actual impact.

Data quality score

This score measures the quantity and quality of impact-related information a charity gives to Ci. Analysts assess the data provided for each program a charity runs—such as number of clients, outcomes, duration of client engagement, spending breakdown, etc. Those results are then weighted according to the spending breakdown—in other words, the data provided for the programs that get the biggest outlay of funds count most—to come up with an overall data quality score, expressed as a percentage. 

Impact rating

The demonstrated impact score and data quality score are then plotted on a graph to provide a total Impact Rating of low, fair, average, good or high, as follows:

Return to list of charities

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