“The earth is the Lord’s and all that is in it” (Psalm 24:1).
Lutheran World Relief’s core value of Stewardship calls us to employ the highest standards of responsible planning and management of resources.
To that end, LWR wisely and prudently invests our financial resources for growth, so that we may develop sustainable programs that make a lasting impact in the lives of more and more people experiencing poverty and marginalization around the world.
Ratings from External Charity Watchdogs
LWR’s Efficiency: 85.7%*
*Program Efficiency Ratio = (Total Program Expenses) / (Total Expenses)
What makes a healthy efficiency ratio?
Charity watchdog organizations, such as those listed above, use financial efficiency as one measure among many of a nonprofit’s health and accountability. What’s a healthy range?
- Charity Navigator recommendation: 75% or higher
- Better Business Bureau recommendation: 65% or higher
An efficiency ratio that is too low may indicate that an organization is under-investing in necessary management infrastructure.
What are non-program expenses?
Non-program expenses, often referred to as “overhead,” include many of the basic costs of doing business, including:
- Stewardship and accountability, including oversight, budgeting, general record keeping and financing
- Leadership and governance
- Staff hiring, retention and development
Interested in learning more about LWR’s financial stewardship? We publish all official tax documents and financial audits on our website.
What are others saying about efficiency?
In a historic move, the leaders of the country’s three leading sources of information on nonprofits — GuideStar, Charity Navigator, and BBB Wise Giving Alliance — penned an open letter to the donors of America denouncing the “overhead ratio” as a valid indicator of nonprofit performance.
At TED2013, activist and fundraiser Dan Pallotta calls out the double standard that drives our broken relationship to charities. Too many nonprofits, he says, are rewarded for how little they spend — not for what they get done. Instead of equating frugality with morality, he asks us to start rewarding charities for their big goals and big accomplishments (even if that comes with big expenses). In this bold talk, he says: Let’s change the way we think about changing the world.
Based on Saundra Schimmelpfennig’s own experience tracking aid in Thailand after the 2004 Indian Ocean tsunami, she reflects on examples where an emphasis on low administration costs did more harm than good.
Lauren Schmidt, at effectivism.net discusses three of the oldest and best known charity evaluators, all of which grade organizations in large part according to financial metrics. She also discusses the controversy over using such metrics, and the pros and cons of these sites.
LWR’s Framework for Organizational Impact
LWR’s Framework for Organizational Impact is based on a multi-level approach that spans from each individual project and partner, and bridges to strategic inquiry around agency-level impact at our highest strategic planning level. LWR’s Monitoring and Evaluation team, established in 2010, has instituted a series of initiatives which seek to tell a concrete and specific story about the breadth and depth of LWR’s work and the impact on the people we serve. Our work in this area stems from both a supportive mandate from LWR’s Board of Directors and senior leadership, as well as needs voiced by HQ and field staff, and partners.
Working with partners and staff, we are building strong, rigorous measurement systems into each project, to enable us to more objectively verify the successes of our programs. We examine patterns and common themes of sustainable change across sectors and sub-sectors, countries and regions. By creating minimum standards for measurement, we are able to regularly collate impact and outcome data for both internal learning and for public views. The use of impact data, combined with other complementary evaluation techniques, allows LWR to learn, plan, grow and improve our accountability to both program participants and the donors who support our work.
In particular, LWR’s Framework currently includes the following elements:
- Design, Monitoring, Evaluation and Learning Framework (DMEL) for Projects: our web-enabled set of tools, resources, templates and standards to help staff and partners design and measure for impact and learning.
- Staff and partner capacity building: LWR has invested heavily, with help from a private foundation grant, in both virtual and in-person capacity building of staff and partners to introduce, reinforce, refresh and coach our field teams on the tools.
- Program-level strategies by objective area, with a menu of common indicators: LWR has fully developed strategies for each of its core objective areas (agriculture, climate change and emergency operations), with a strong emphasis on results. A corresponding menu of indicators for each core program area helps field teams design their projects’ M&E systems, and will also allow LWR to better learn from impact and outcome information at a global level.
- Meta-Evaluations by objective area: Once every 2-3 years, LWR will conduct a Meta-Evaluation across all projects falling within an objective area, to collate impact and outcome data and analyze for learning within the sector. Our first “Agriculture Meta Review” was completed in 2013, and will be repeated again in 2016. Both a 5-page summary report, and a full, 30-page detailed report are available.
- Theme-based Evaluations and Primary Research: Looking ahead, LWR’s M&E priorities will also include collecting strategic data and evaluations around key results-oriented themes of our work, such as resilience, agriculture production and food security, partner capacity development, and specific commodities such as coffee and cocoa. Check out samples of our evaluation reports here.
Global and Strategic Level
- LWR by the Numbers: LWR annually produces organizational-level snapshot report about our work worldwide, including the number of countries we work in, budget breakdowns, and numbers of direct and indirect beneficiaries.
- External Strategic Plan Evaluation: LWR completed an external evaluation of our strategic plan in 2013, to ensure our strategic plan is strong and effective, and enables us to most effectively do our work.