Proxies for Trust: Rethinking How We Evaluate Charities

There are over 86,000 registered charities in Canada. No funder can evaluate them all deeply. So we rely on proxies -- shortcuts for trust that help us decide, quickly and at a distance, whether an organization is credible, capable, and worth a closer look.

We need these shortcuts. The question is whether the ones we're using are actually working.

The Proxies We Have

The dominant shortcuts in philanthropy tend to reward organizations that are good at asking for money or branding rather than organizations that are good at deploying it. Fundraising sophistication, personal networks, name recognition, a polished pitch -- these signals tell you something about an organization's communications capacity. They tell you very little about its governance, financial health, or program effectiveness.

Seth Godin put it well: we judge books by their covers because we're not allowed to read them first. In philanthropy, the "cover" is often the quality of the ask. And the organizations with the most resources to invest in that cover are, unsurprisingly, the ones that tend to receive the most funding. Until recently, going beyond the cover was costly and time consuming.

This creates a self-reinforcing cycle. Well-funded organizations invest in better fundraising infrastructure, which attracts more funding. The organizations that most need investment -- early-stage, community-rooted, BIPOC-led, grassroots -- are often the least equipped to compete on these terms. Not because their work is less impactful, but because they lack the fundraising machinery.

The Evidence

This isn't theoretical. The data is clear:

• Candid's research shows the median revenue for majority white-led organizations is 54% higher than that of BIPOC-led nonprofits
• About 70% of nonprofits are led by people who identify as white
• Only about 4% of grant dollars go to BIPOC-led organizations
• Larger nonprofits are growing at roughly 20% annually while smaller ones shrink at the same rate -- not because of better impact, but because of stronger fundraising infrastructure
• Significant research shows that smaller nonprofits, particularly those serving minority communities, often outperform larger ones on the measures that matter most

The system looks democratic on the surface. In practice, it correlates funding with existing wealth and connections more than with program effectiveness.

What Better Proxies Look Like

If the current proxies reward the wrong things, what would better ones reward? A few principles:

• Evaluate what a charity does, not how it asks. Governance practices, financial health, program approach, leadership depth, transparency -- these are observable, comparable, and relevant to whether an organization will use funding well.
• Standardize the lens. A grassroots organization serving a rural Indigenous community should be evaluated on the same dimensions as a well-established national charity. The playing field should be level by design.
• Reduce the burden. Charities shouldn't need to fill out 50-page applications to be considered. The evaluation process itself consumes resources better spent on mission delivery.
• Inform, don't rank. A good proxy presents findings with context and lets funders draw their own conclusions. It doesn't reduce a complex organization to a single number.

One Step: WellCheck

WellCheck is our contribution toward better proxies, not the whole answer.

It's AI-powered due diligence that evaluates Canadian charities across nine dimensions -- governance, financial health, leadership, impact, communications, accreditations, peer benchmarking, and more -- drawing on CRA T3010 filings, organizational disclosures, and third-party data. A professional-grade assessment in minutes, with no lengthy questionnaire burden on the charity.

The design philosophy matters. WellCheck doesn't produce a score or a rating. It produces findings with context. Where data is incomplete, it notes the gap and suggests what to ask about -- it doesn't assume negative intent. It defaults to charitable interpretation. The goal is to inform, not to judge.

That's a fundamentally different proxy than most of what exists today. Instead of asking "how well does this charity present itself?", it asks "what has this charity actually done?"

WellCheck won't fix every inequity in how philanthropic capital flows. But it's one step toward a system where a small, community-rooted charity with strong governance and clear impact has the same chance of being discovered as a large, well-connected one.

Our time, our money, and the good we're all trying to create are too important to get wrong on false proxies.

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*WellCheck is available to DAF providers, foundations, and wealth advisors. Book a demo to see a sample report.*