The (non-)sense of seals of approval for donations

At effektiv-spenden.org, we try to provide concrete answers to the question of how to achieve the greatest possible impact with your donation, i.e. where you can help the most per euro.

When I talk about this mission, I often hear: surely something like this must already exist. Unfortunately, this is not the case in Germany. Although there are the German Central Institute for Social Issues (DZI) and PHINEO , two institutions that evaluate charities, but there are fundamental differences in the approach to effektiv-spenden.org (the same applies to the Swiss Zewo-Seal of approval and the Austrian seal of approval for donations).

Founded in 1893, the DZI has been awarding the DZI-seal of approval for donations. To receive this, an organization must undergo an annual audit. If the DZI standards are met, the organization receives the DZI-seal of approval for donations for the next 4 quarters. The following 3 points are the most important:

  • The donation advertisement is true, clear and factual.
  • The donations are used for their intended purpose, sparingly and economically.
  • The organization has functioning planning and control.

Without question, these are criteria that must necessarily be met by an organization that wants to provide highly effective aid in the long term. However, they are not sufficient. A prerequisite for this would be to examine the impact achieved by the respective charity and to put this in relation not only to the costs, but also to other organizations. Neither of which the DZI does. This becomes clear not least when you look at the information available online about the organizations with DZI-seals of approval. On the profile of the organization World Vision, whose total revenue in 2021 amounted to more than 140 million euros, the full paragraph on the use of funds reads as follows

"The proportion of advertising and administrative expenditure to total expenditure is appropriate according to DZI standards ("appropriate" = 10% to less than 20%). The effectiveness of the use of funds is reviewed and the results are documented and published."

An examination of the effect achieved by the DZI itself does not take place. Overall, the publicly available information is very scarce, with less than 500 words per audited organization. By way of comparison, the evaluations of GiveWell on which the recommendations of effektiv-spenden.org are based. Here are even some of the often more than 100 footnotes are longer than the complete organization profiles on the website of the DZI.

Due to this superficial view and the large number of organizations with DZI-donation seal, most recently well over 200, interested donors are only given limited guidance. The designation of the DZI as a "Donation MOT" may be appropriate, but one should be aware that the task of the MOT is to exclude unroadworthy vehicles from road traffic and not to judge what is the best car in relation to its cost.

Image of the DZI donation seal and the Phineo Wirkt seal.
The DZI and PHINEO donation seals. (Source: PHINEO / CC)

The situation is different at 2009 founded consulting firm PHINEO. Since 2010, this has been awarding the so-called Wirkt-Siegel(It-works-seal) which, according to its own statement, differs from the DZI seal primarily in that it is a "Differentiated assessment of the impact potential and quality of the project". Despite this focus on the potential impact (not the actual impact!), PHINEO also helps private donors to a limited extent in deciding where they can make the greatest impact with their donation. On the one hand, PHINEO exclusively focuses on projects that are active in Germany. As a result, the projects that Effektiv Spenden rates as the most effective approaches are excluded from the outset. This is because we are convinced that more can be achieved with every euro in very poor countries than here in Germany. On the other hand, PHINEO does not compare the audited organizations amongst each other. The consultancy therefore makes no clear recommendation as to which of the current 251 projects with the Wirkt-Siegel should be considered when making a donation.

In 2013, it became clear that there were also major differences within the organizations with impact potential. At that time, the main sponsor of the mentoring program, Big Brothers Big Sisters Germany decided to discontinue this program and instead focus on promoting another mentoring program, Balu und Du. The reason for this was that the latter could, for only a fraction of the cost of provide the same services. However, both organizations had previously been awarded the Wirkt-Siegel. Presumably, both were effective. However, donors who are not satisfied with contributing to positive change in the first place, but who want to do as much as possible with as little as possible, will find little support in the Wirkt-Siegel.

This is not to say that we at effektiv-spenden.org do not make mistakes, or that our recommendations can claim to be scientifically objective. But we firmly believe that, ceterus paribus, it is better to help more people than fewer. To do that, you have to start by asking the right question, which is: Who should I support to maximize my impact? So far, nobody in Germany has done this. We want to change that!

About the author

Sebastian Schwiecker Avatar

Co-Managing Director

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