Charity Impact: 13% More Value with Outsourcing
- When donors have access to data about a charity's impact, their donations become more effective, according to a recent study.
- Mitchell, a professor researching nonprofits, along with Chengxin Xu and Huafang li, examined how information costs influence donor choices.The research involved nearly 2,000 U.S.adults and estimated the potential...
- Participants in the experiment chose one of 10 hypothetical charities with the same mission: "to save lives." They could obtain data about each institution's impact per dollar, either...
A groundbreaking study reveals that when donors have charity impact data, donations become considerably more efficient. Researchers show donations can increase by approximately 13% when information costs are covered. The study, involving thousands of participants, underscores the power of accessible data in the philanthropic arena. Researchers estimate billions in charitable impact are waiting with improved data access, potentially influencing how we approach effective altruism.Discover how smarter donations can transform the non-profit ecosystem. News Directory 3 keeps you updated on the latest philanthropic trends and insights.Discover what’s next for charities and donors.
Data on Charity Impact Boosts Smarter Donations, Study Finds
Updated June 21, 2025
When donors have access to data about a charity’s impact, their donations become more effective, according to a recent study. Researchers found that covering the cost of this information leads to a notable increase in donation efficiency.
The study, conducted in 2023 by George E. Mitchell, a professor researching nonprofits, along with Chengxin Xu and Huafang li, examined how information costs influence donor choices.The research involved nearly 2,000 U.S.adults and estimated the potential impact lost when donors bear information costs themselves.
Participants in the experiment chose one of 10 hypothetical charities with the same mission: “to save lives.” They could obtain data about each institution’s impact per dollar, either paying for it themselves or having a fictitious partner pay. The study revealed that when someone else covered the information costs, donations were directed toward more efficient charities, increasing the average impact by approximately 13%.
In 2023, Americans donated over $550 billion to charity. Researchers suggest that improving access to charity impact data could unlock an additional $7 billion in impact, even if applied to just 10% of total giving. Effective altruists and large foundations are particularly interested in using data to maximize impact.
While most Americans express a desire for data on charity impact, the funding source for this information remains unclear. Charities covering the cost may face resistance from donors who prefer their contributions to directly fund program delivery.
However, questions remain about how these findings translate to real-world giving. Donors may hesitate to prioritize data over direct services, even if it enhances overall impact. Relying solely on impact-per-dollar data could also favor easily measured outcomes,potentially discouraging valuable but harder-to-assess efforts.
What’s next
Platforms like Candid and Charity Navigator are expanding data access for philanthropists.Organizations such as GiveWell offer charity recommendations based on data analysis. Further research will explore opportunities to enhance the impact of charitable giving through better-informed donors.