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ImpactMatters is an American charity assessment organization that rates charitable organizations based on their impact. ImpactMatters issues Impact Ratings on a five-star scale based on a charity’s cost-effectiveness rather than historically used metrics like overhead ratios. ImpactMatters operates as a 501(c)(3) nonprofit organization.

History
Economist Dean Karlan and Elijah Goldberg, Karlan’s former student at Yale University, founded ImpactMatters in 2015 to assess charities based on how much good they achieve per dollar. Most existing charity assessment organizations issued ratings based on financial ratios like the percentage of a charity’s expenses that go toward overhead costs. Karlan and Goldberg instead focused on cost-effectiveness analysis.

ImpactMatters was initially incubated at Innovations for Poverty Action, a research organization founded by Karlan in 2002 to conduct randomized controlled trials of poverty alleviation programs. Though randomized trials are often considered the 'gold standard' in impact evaluation, Karlan and board member Paul Brest intended for ImpactMatters to encourage the production of more flexible and appropriate types of evidence among nonprofit organizations.

Michael M. Weinstein, formerly of Robin Hood Foundation, began serving as ImpactMatters’ president in 2017. During this period, ImpactMatters conducted "impact audits" of nonprofit organizations. Modeled after financial audits, each impact audit included an estimate of the nonprofit’s cost-effectiveness as well as assessments of the nonprofit's evidence of impact, monitoring systems, and learning and iteration.

In 2019, ImpactMatters switched from impact audits and began producing "Impact Ratings." Instead of one-on-one analysis with nonprofits, it switched to gathering publicly available data on nonprofits and developing models to estimate their cost-effectiveness. Nonprofits that are found to be highly cost-effective are rated 5 stars.

In November 2019, ImpactMatters released Impact Ratings of 1,000 charities and published giving guides by U.S. city and cause area. Since 2018, ImpactMatters’ charity assessments can also be viewed on Charity Navigator.

Impact Rating Standard
ImpactMatters rates nonprofits according to its Impact Rating Standard, which defines impact as a nonprofit’s observed success minus counterfactual success, relative to cost. Impact Ratings are then assigned based on a nonprofit’s level of cost-effectiveness compared to outcome- and geography-specific benchmarks. The methodology does not apply to membership, religious, advocacy or research charities.

The Impact Rating Standard is similar to GiveWell’s methodology for assessing charities, but whereas GiveWell recommends developing-country nonprofits that achieve the most good per dollar, ImpactMatters issues ratings for a wider set of nonprofits. ImpactMatters’ methodology has raised concern that it may not sufficiently accommodate direct service organizations that also spend on systems change efforts.

History
Economist Dean Karlan and Elijah Goldberg, Karlan’s former student at Yale University, founded ImpactMatters in 2015 to assess charities based on how much good they achieve per dollar. Most existing charity assessment organizations issued ratings based on financial ratios like the percentage of a charity’s expenses that go toward overhead costs. Karlan and Goldberg instead focused on cost-effectiveness analysis.

ImpactMatters was initially incubated at Innovations for Poverty Action, a research organization founded by Karlan in 2002 to conduct randomized controlled trials of poverty alleviation programs. Though randomized trials are often considered the 'gold standard' in impact evaluation, Karlan and board member Paul Brest intended for ImpactMatters to encourage the production of more flexible and appropriate types of evidence among nonprofit organizations.

Michael M. Weinstein, formerly of Robin Hood Foundation, began serving as ImpactMatters’ president in 2017. During this period, ImpactMatters conducted "impact audits" of nonprofit organizations. Modeled after financial audits, each impact audit included an estimate of the nonprofit’s cost-effectiveness as well as assessments of the nonprofit's evidence of impact, monitoring systems, and learning and iteration.

In 2019, ImpactMatters switched from impact audits and began producing "Impact Ratings." Instead of one-on-one analysis with nonprofits, it switched to gathering publicly available data on nonprofits and developing models to estimate their cost-effectiveness. Nonprofits that are found to be highly cost-effective are rated 5 stars.

In November 2019, ImpactMatters released Impact Ratings of 1,000 charities and published giving guides by U.S. city and cause areas. Since 2018, ImpactMatters’ charity assessments can also be viewed on Charity Navigator.

Impact Rating Standard
ImpactMatters rates nonprofits according to its Impact Rating Standard, which defines impact as a nonprofit’s observed success minus counterfactual success, relative to cost. Impact Ratings are then assigned based on a nonprofit’s level of cost-effectiveness compared to outcome- and geography-specific benchmarks. The methodology does not apply to membership, religious, advocacy or research charities.

The Impact Rating Standard is similar to GiveWell’s methodology for assessing charities, but whereas GiveWell recommends developing-country nonprofits that achieve the most good per dollar, ImpactMatters issues ratings for a wider set of nonprofits. ImpactMatters’ methodology has raised concern that it may not sufficiently accommodate direct service organizations that also spend on systems change efforts.