effektiv-spenden.org is an effective giving platform in Germany and Switzerland that was founded in 2019. To reflect on our past impact, we examine Effektiv Spenden’s cost-effectiveness as a "giving multiplier" from 2019 to 2022 in terms of how much money is directed to highly effective charities due to our work. We have two primary reasons for this analysis:
- To provide past and future donors with transparent information about our cost-effectiveness;
- To hold ourselves accountable, particularly in a situation where we are investing in further growth of our platform.
We provide both a simple multiple (or “leverage ratio”) of donations raised for highly effective charities compared to our operating costs, as well as an analysis of the counterfactual (i.e. what would have happened had we never existed).
Our analysis complements our Annual Review 2022 (in German) and builds on previous updates and annual reviews, such as, amongst others, our reviews of 2021 and 2019. In both instances, we also included initial perspectives on our counterfactual impact. Since then, the investigation of Founders Pledge into giving multipliers as well as Giving What We Can (GWWC)’s recent impact evaluation have provided further methodological refinements. In line with GWWC's approach, we shift to 3-year time horizons, which we feel better represents our impact over time and avoids short-term distortions.
However, our attempt to quantify our “giving multiplier” deviates in some parts from the methodologies and assumptions applied by Founders Pledge and GWWC and is an initial, shallow analysis only that we intend to develop further in the future.
Below, we share the key results of our analysis. We invite you to share any comments or takeaways you may have, either by directly commenting or by reaching out to email@example.com
- In 2022, we moved €15.3 million to highly effective charities, amounting to
€37 million in total donations raised since Effektiv Spenden was founded in 2019.
- Our leverage ratio, i.e. the money moved to highly effective charities per €1 spent on our operations was 55.7 and 40.8 for the 2019-2021 and 2020-2022 time periods respectively.
- Our best-guess counterfactual giving multiplier is 17.9 and 13.0 for those two time periods, robustly exceeding 10x. This means that for every €1 spent on Effektiv Spenden between 2019-2022, we are confident to have facilitated more than €10 to support highly effective charities which would not have materialized had Effektiv Spenden not existed.
- Our conservative counterfactual giving multiplier is 10.4 for 2019-2021, and 7.5 for 2020-2022.
- The decline of our multiplier over time is driven by the investment into our team. Over the last year, our team has grown substantially to enable further growth. While this negatively impacts our giving multiplier in the short term, we consider it a necessary prerequisite for further growth.
- Our ambition is to return to a best-guess counterfactual multiplier of at least 15x in the coming years. That said, ultimately our goal is not to maximize the multiplier, but to maximize counterfactually raised funds for highly effective charities. (As long as our work remains above a reasonable cost-effectiveness bar.)
How to interpret our results
We consider our analysis an important stocktake of our impact, and a further contribution to the growing body of giving multiplier analyses in the effective giving space. That said, we also recognize the limitations of our approach and want to call out some caveats to guide interpretation of these results.
- Our analysis is largely retrospective, i.e. it compares our past money moved with operating costs during the same. As mentioned above, current investments into future growth lower our giving multiplier, but will pay off in the medium to longer term.
- We look at average rather than marginal impact, i.e. we are dividing all donations received by all of our costs of operation. We expect our marginal cost-effectiveness to be lower as a result of diminishing returns. That said, we consider the investment into our team in 2022 a necessary step to enable further growth, i.e. with high marginal impact.
- Accounting for the counterfactual is difficult. We try to account for donations to high-impact charities that would also have happened, had Effektiv Spenden never existed. We largely rely on post-donation surveys of our donors, but recognize that this approach has many limitations and hope to be able to further refine our approach in the future.
- We currently only account for our direct impact, i.e. donations received on our platform. We do not include donations towards our recommended charities that were either made directly to them or through other channels based on our recommendation. This ignores some part of our impact and thus conservatively lowers our impact multiplier. We intend to include some indirect donations in future assessments, particularly large donations that are transferred directly to the recommended charities by the donors, but that we can directly tie to the philanthropic advice we have been giving.
To calculate our leverage ratio and multiplier, results are adjusted for inflation and reported in 2022-equivalent EUR.