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Why % “Efficiency” Measures Like This Are Deeply Flawed
They don’t measure the quality of a charity’s services. They don't tell you anything about the caliber of the research being funded, or the services being provided to the needy. They can deceive you into thinking the charity with the better % is the charity with the better services, when the opposite may be true.
They don’t actually measure efficiency.
They ignore the volume of dollars raised, the speed with which it was raised, the economic value of the end result, intangible benefits, and they overlook what are called incremental effects.
They are unjust. They reward charities that use more agressive cost allocation practices than others, that is, that define “the cause” very broadly, in order to show a higher percentage return.
Then why do we show our percentages ? Because there was tremendous misinformation about what they actually were and because we never showed our participants or their donors what they would be if we used the same cost allocation practices that some other charities do.