Factsheet: Understanding charity impact

What is charity impact?

Every charity has a mission that is associated with producing a public benefit. As this mission is pursued, the changes produced in individuals and their communities can be referred to as the charity’s ‘impact’. If you are donating to a charity, you may wish to make sure that your donation is creating the greatest impact possible.

There are steps you can take to maximise the impact of a charity’s work. The first step is to make sure you are donating to a legitimate organisation. The second step is to choose a charity that will deliver the most positive impact it can with your donation.

There is nothing wrong with giving to a charity you know and trust, but sometimes you will want to look at other factors to help you decide who to help.

Factors that affect confidence in your donation

Personal connection with a charity

Many donors have a personal connection with the charity they are giving to. They may have received services themselves, knows someone who has, or they may have volunteered or worked for the charity. First-hand information gives donors confidence that their donation will do what they want it to.

Your own bias and awareness of charities

You will be more aware of larger charities that have a greater media presence and charities in your local area that you have seen. While you may have more confidence supporting organisations that you know, consider spending a little time discovering smaller charities in communities where donations are not plentiful or who assist people who may not always get media or other public attention.

How you interpret a charity’s information

You can find out information about a registered charity’s charitable purpose, who it helps, where it operates, and more information by looking at its entry page on the ACNC Register. Many charities also have information on their websites. This may include links to evaluations, research papers and annual reports. Information on impact is often included in annual reports or newsletters.

Registered charities must answer financial questions when reporting to the ACNC, through the Annual Information Statement. Medium and large charities must provide more detailed financial statements. If you are familiar with reading financial statements, these may provide some insight into a charity. However, don’t rely on a single factor like administration costs – these might be relevant to working out how much it costs the charity to do its work, but are no indicator of the impact of that work. If the charity is small, it may not have much information online. If the information on the ACNC Register is not detailed enough consider calling the charity and ask if they have an annual report and or any other information for donors they could send you.

When looking at an annual report or evaluation of results, ask yourself the following questions:

  1. Is it clear what the charity was trying to achieve and how its activities worked towards its objectives? Would you like your money to support these objectives?
  2. Did the charity collect and communicate useful information about how well it is achieving these objectives? Do you have enough information and do you understand it?
  3. Does it seem like this charity is responding to the information and feedback they are receiving? Have they told you how they are going to improve?

Where you wish to target your donation

Some donors want to safeguard their donation by specifying exactly what it will be spent on. For example, instead of giving directly to a school, they may provide funds to support a student scholarship. Other donors may want to speak to the chief executive officer (CEO) or require some reporting to make sure they know what their money will be used for. You should ask a charity what kind of information they provide donors and how regularly this information is distributed. However, be aware that resources spent catering to your needs are resources that could be otherwise spent on charitable activity.

More information

Read more about donating and volunteering. For more information about charity research, please contact our Research team.

A factsheet jointly produced by the ACNC and Emma Tomkinson, social impact analyst.