At the Happier Lives Institute, we found some charities are hundreds or thousands of times more cost-effective than others. This means that we, the donors, are funding the wrong things. If the charity sector was full of organisations trying to ruthlessly improve the lives of their beneficiaries we would find much smaller gaps. So what’s wrong?
The charity sector faces strange incentives—and over time, they can lead even well-intentioned organisations astray.
Why funding for the charity sector is broken
1.Survival isn’t success.
Most charities start out with the best of intentions. We tell ourselves that if someone we trusted showed us a better way to help, we’d listen—and change. But as organisations grow, our priorities shift. We justify decisions based on what keeps the lights on or pleases funders. That’s understandable—but it’s not the same as doing the most good.
2. Outputs aren’t outcomes.
It’s not enough to count activities. Without measuring actual impact, we’re flying blind. Yes, outcomes can be hard to measure—but that’s not a reason to give up. It’s a reason to try harder.
3. Not all outcomes matter.
Even when we do measure outcomes, we may be measuring the wrong ones. Some commonly used metrics don’t reflect how much people’s lives actually improve. If your outcome doesn’t relate to wellbeing, are you really helping?
How to fix the charity sector
1.Applaud moral courage.
The sector needs to celebrate leaders who are willing to pivot—or shut down—when the evidence doesn’t support their work. That kind of humility and integrity should be the norm, not the exception. See examples like No Lean Season, Maternal Health Initiative.
2. Measure what matters.
Every organisation should ask: What are we ultimately trying to achieve? If the goal is to improve lives, then metrics should reflect life as it’s actually lived—not just what’s easy to report.
3. Ask for evaluations.
You don’t need to be the most cost-effective charity in the world. But the world will be better if every organisation tries to get closer to that ideal. Funders should require more meaningful evaluation. Charities should embrace it. Even in large, complex NGOs (the MANGOs), better evaluation is still possible—and necessary, even if perfect measurement isn’t.
We’d love to say we know what works best. But often, we just don’t know. The only way forward is to be honest, evaluate rigorously, and stay focused on helping others—not ourselves.
It’s time to raise the bar for effectiveness in the charity sector—not by asking everyone to be perfect, but by asking everyone to keep trying to be better.
How you can contribute to creating a better charity sector
If this approach resonates with you, if you want to make the world happier, not just healthier or wealthier, we’d love for you to join us. Donate to the Happier Lives Institute to help us continue with our research to find the best charities for improving global wellbeing and happiness.
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