An "ineffective charity" is the name given to a charity which consumes a substantial portion of its gifts and donations in management and administration fees. The charity is thus "ineffetive" at serving its intended beneficiaries.
The organization Charity Navigator seeks to guide you towards more effective charities that truly benefit the intended recipients of your donated funds. www.charitynavigator.org
There is one caveat to Charity Navigator raised by critics of Charity Navigator – a focus placed solely on an a charity’s organizational expenses may shortchange some worthwhile charities. Focusing solely on (a) how much an organization spends of fund raising and (b) the ratio of administrative costs to their overall revenue may end up giving an undeserved poor rating to some worthy charities, critics counsel.
"By focusing on administrative costs,’ said Sean Stannard-Stockton, a consultant on philanthropies, "it encouraged donors to steer resources toward organizations pushing everything into the cause rather than investing in people with expertise, new technology and other things that make a nonprofit strong." As quoted by Stepanie Strom, NY Times, Saturday, November 27, 2010, "To help Donors Choose, Web Site Alters How It Sizes Up Charities"
Charity Navigator is growing more sophisticated in response to these critics, reports Ms. Strom of the NY Times. Over the next three years, Charity Navigator plans to add evaluations of a nonprofit’s accountability and transparency to its ratings, as well as research on its impact and research by other organizations, reports Ms. Strom, so it would appear that Charity Navigator is still a good "starting point", and is going to continue in its relevancy over the coming years.
Oly about 35% of donors do any research before making a gift, and only 10% use a service like Charity Navigator as their primary source of information about nonprofits, according to research by the firm Hope Consulting, reports Ms. Strom in her 11/27/10 NY Times Article.