Making sure donations are put to work
Picking the right charity for your donations can be complicated. The process also reveals how difficult it can be for even highly motivated, well-meaning organizations to do a perfect job of doing good.
The New York Times
What it is: GiveWell is a nonprofit company that researches charity organizations to help donors decide where to give.
Founded: In 2007 by Holden Karnofsky and Elie Hassenfeld, who are co-executive directors. They left the world of finance to set up the company.
Report card: In 2013, GiveWell tracked $17.36 million in money donated to its top charities; six donors gave at least $100,000. GiveDirectly received $10.5 million; Against Malaria Foundation, $2.5 million; Schistosomiasis Control Initiative, $2.2 million; and Deworm the World Initiative, $2.1 millions.
Each year, we file a report card on our financial lives. It tells us what we earned, a bit about what we saved, some details on what we own and often includes a tally of our generosity. True, most people don’t read their tax returns this way, but it’s helpful to think of them as a conversation starter and a guide to what we can do better next year.
This is particularly true when it comes to giving. For people who itemize deductions, filing taxes means making a list of every charitable contribution and adding them up. In late 2012, my wife and I looked at our list and decided to reallocate our giving. One big goal was to devote a higher percentage of our charitable budget to projects in the developing world, where additional dollars could materially change or save lives.
All roads on this quest led to an organization called GiveWell, where a couple of former hedge-fund analysts lead a small team of researchers who have spent years developing a short list of recommended charities. In January 2013, we gave money to GiveWell to transfer to their top pick, Against Malaria Foundation, an organization in London that distributes long-lasting insecticide-treated bed nets in Africa.
It seemed like a sure thing, but it didn’t turn out to be so easy. Our money didn’t even make it to London until September. By November, GiveWell had removed the organization from its list of recommended charities. And the reason was curious: Against Malaria Foundation had such meticulous standards for verifying that nets got where they were supposed to go and that recipients continued using them that it was having trouble finding worthy projects and spending donors’ money.
So did its patience amount to victory because of its lack of waste? Or was it failure, given that our money still has not been used to buy nets? There is no easy answer to that question.
Picking the right charity can be so complicated that it makes picking stocks look easy. The process also reveals how difficult it can be for even highly motivated, well-meaning organizations to do a perfect job of doing good.
GiveWell was born of the founders’ befuddlement over lack of data in the nonprofit world showing what organizations achieved for every dollar they spent. They found a kindred spirit in Rob Mather, who started Against Malaria Foundation after he successfully raised money for an English burn victim and wanted to help others in bigger ways.
His default instinct was to find the people in the world with the most need and assist them with the utmost efficiency and transparency. Buying and distributing bed nets for $5 or so each seemed like the best way to do that quickly.
When GiveWell started researching charities several years ago, many organizations didn’t have data on the impact of their programs or wouldn’t share it with GiveWell. Mather, by contrast, had no problem taking files full of email about his work and zapping them across the ocean to GiveWell’s offices. GiveWell eventually made Against Malaria its No. 1 choice.
Within a few years, Mather had gathered at least $9 million, thanks to GiveWell’s recommendations. With that bankroll, his organization could pay for larger distributions.
To do so, it would need to work directly with government organizations and much larger nonprofits rather than smaller organizations it had teamed up with in the past. But when Mather tried, he found that too much compromise was necessary with many such entities.
He has two main concerns about his projects. First, he wants to make sure that nobody steals the nets before they get to their intended recipients. Sometimes, entire containers disappear over national borders. Local health workers sometimes also take enough so that proceeds from selling them on the black market later ..
Once nets reach the people who need them, they don’t do much good if people stop using them. So Mather also wants to make sure that someone is coming around months later to check.
Persuading partners and government officials to verify deliveries and double back later isn’t always easy. That has its own modest cost, which has the potential to divert resources away from purchasing nets upfront, even if the verification creates a more effective overall system.
GiveWell, in an exhaustive analysis that it posed on its website, decided last year that the cost to seek the data may outweigh the benefits and that the data might not be all that reliable anyway.
GiveWell also wanted Against Malaria Foundation to pay for more distribution costs aside from the nets alone. It did not believe that more donations to Against Malaria Foundation would speed up any changes, so it removed the organization from its list of recommended charities. Mather posted his own update, effectively agreeing to disagree.
As for my family’s contribution and those of others, GiveWell now acknowledges that it should transfer money to the charities more quickly or explain why it isn’t doing so. (We’d given money through GiveWell and not directly to Against Malaria Foundation in part to allow GiveWell to track the impact of its recommendations; it does not keep a share of donations and covers its overhead through separate fundraising.)
But the delay isn’t the biggest issue here. Plenty of donations to all sorts of organizations end up in endowments or sit for a while before a charity allocates them. The disappointing thing is that despite appearances or assurances, no amount of research can guarantee that a single organization will put charitable dollars to work doing the most good the most quickly.
In a nod to this fact, GiveWell recently stopped referring to its chosen charities on its website as “proven, cost-effective and underfunded” and now uses the words “evidence-backed, thoroughly vetted and underfunded.” Proof in this world turns out to be ever-elusive.
“We felt like ‘proven’ implied a guarantee,” said Elie Hassenfeld, GiveWell’s co-founder. “A lot of the mindset that I can give $5 and definitely translate that into a net is not the way it works. Charity is a lot more complicated than that.”
Hassenfeld said that if he were to wager, he’d bet on Against Malaria Foundation being back on the GiveWell best-of list by the end of this year. GiveWell continues to track and report on the foundation as if it were still a recommended charity. And Mather holds no grudges against the organization.
“I am extremely supportive of what they’re doing,” he said. “Bringing transparency to charitable work is the single greatest factor in what I think will unlock an unbelievable amount of money if only people have trust in where it is going.”