[nagdu] Putting Charities to the Test

Ginger Kutsch GingerKutsch at yahoo.com
Sun Dec 9 12:29:29 UTC 2012


Putting Charities to the Test

By TINA ROSENBERG

December 5, 2012

New York Times Fixes Series  

(Fixes looks at solutions to social problems and why they work.)

http://opinionator.blogs.nytimes.com/2012/12/05/putting-charities-to-the-tes
t/

 

December is giving season. According to Charity Navigator, charities
surveyed reported that 41 percent of their annual contributions from
individuals arrives between Thanksgiving and New Year.

 

How do you decide where to give? People want to give where their money will
be used effectively, of course. For many, that means researching on Charity
Navigator or the Better Business Bureau's Web site to see which charities
are well run and take only a small percentage of donations for
administration or fund-raising needs.

 

Calculating efficiency is important, but some charities do useful things the
numbers can't capture.

 

Overhead does matter. But it is dwarfed by a different question: Is this
group's work effective?

 

"When people think of giving, they look at the issue of whether a charity
has a 10 or 20 percent administration cost, and that makes the difference
for them," said Toby Ord, a researcher in moral philosophy at Oxford
University and founder of an organization based there called Giving What We
Can. "But in reality some things they could be funding are hundreds or
thousands of times more effective than other things. People never guess
there could be such large discrepancies. Instead of a 20 percent difference,
there can be a 1,000 percent difference."

In an essay called "The Moral Imperative Towards Cost Effectiveness," Ord
poses the example of helping the blind. Surely everyone would agree that a
charity that trains guide dogs for the blind is a worthy charity. According
to Guide Dogs of America, the cost of training a dog is around $42,000. So
if you had $42,000 to give, you could greatly improve the life of one blind
person.

 

But what if instead, you spent that $42,000 on eye surgeries for people with
trachoma in Africa? Helen Keller International, which works to prevent
blindness, says trachoma surgery costs as little as $25 per person and is 80
percent effective. That same money, then, could restore the sight of 1,344
people. If you value all lives equally - and in a minute I'll get to the
fact that we certainly don't - then if you are training a guide dog, you
might as well be giving to a charity that wastes 99.93 percent of its money.
(Actually even more, as a guide dog does not restore sight.)

 

Ord's point is that if we care about what our money is doing, we should look
for the most effective charities. (His group asks people to pledge to give
10 percent of income to the places where it will be most effective. He has
decided he can live comfortably on $18,000 pounds (a little less than
$30,000) per year and will give away everything he earns above that.)

 

What are the "most effective charities?" Ones that:

 

- Aim to solve the most serious problems (in the normal calculus, this means
that providing bed nets to save children from malaria ranks above helping
public radio stations or art museums).

 

- Use interventions that work.

 

- Employ cost-effective strategies (trachoma surgeries, rather than training
guide dogs, to help the blind).

 

- Are competent and honest. The percentage of donations spent on overhead is
one measure of these qualities.

 

- Can make good use of each additional dollar. This is the hardest point to
assess, but it asks whether the group has the program on the ground to use
your money well, and whether your donation will make something happen that
otherwise wouldn't.

 

Most individual donors lack the resources or training to determine which
charities meet these requirements. So does Ord, for that matter, so he
relies heavily on the research of a like-minded Brooklyn-based organization
called GiveWell.

 

GiveWell was started by a couple of hedge fund masters of the universe who
wanted to apply their skills in quantitative analysis to figure out how best
to give their money away. Its researchers look at hundreds of charities to
identify the most effective ones. GiveWell is part of a new and very welcome
trend toward rigorous evaluation of social change programs. Most such
evaluations are led by academics - two institutions leading this work are
the Abdul Latif Jameel Poverty Action Lab at M.I.T. and Innovations for
Poverty Action, founded by the Yale professor Dean Karlan.

 

Evaluating a program with randomized controlled trials is expensive but
straightforward - we know how to do it. But GiveWell's evolution since its
founding in 2007 shows how complicated it is to put that information to use.
"Our early concept was to go out there getting a lot of data from charities
- spreadsheets with outcome data - crunching a lot of numbers," said
Alexander Berger, a research analyst at GiveWell. (Berger can match Ord on
the Extreme Altruism scale - a year ago he donated a kidney to a stranger,
starting a chain of donations that ended with six people getting kidneys. He
was 21.) "But we found that charities don't have a lot of information
available about the impact of their work. Over time we've come to rely on
academic evidence for basic case outcome work, and then basic data from the
charity to indicate they are carrying out the intervention correctly."

 

In other words, GiveWell examines academic research and finds, for example,
that there is excellent evidence that giving out insecticide-treated bed
nets prevents malaria. Then it looks for organizations that can prove
through an independent evaluation that they do this work well. Its top
overall rating goes to the Against Malaria Foundation, which finances the
purchase and distribution of bed nets.

 

This is hardly surprising, given GiveWell's criteria. It will always choose
charities that work in the poorest places, as money goes further there. A
tiny amount can do a lot (try getting eye surgery for $25 in the United
States) and basic interventions are still desperately needed. "Nobody in the
West needs a bed net," notes Berger. "We've eradicated malaria. But a lot of
problems we've solved continue to exist in other places."

 

GiveWell also emphasizes health charities. Health work is indisputably
important, and it's also relatively easy to measure. Ord uses a metric
called QALY - Quality Adjusted Life Years. (If you do something that allows
someone to have a full year of good health, or two years of 50 percent
health - whatever that is - you've provided one QALY.) Because health gains
are measurable, health programs are easier to evaluate. Independent
evaluation can cost a lot of money, and it's not something donors like to
finance. So very few programs can provide credible evidence of success - but
that's another requirement for GiveWell. In addition, when we do health
projects we usually know what we are doing. We've had huge successes, such
as smallpox eradication, vaccination, malaria control, AIDS therapy.

 

Following the numbers, however, is not always wise. The numbers measure
service delivery, but charities sometimes do very useful things the numbers
can't capture. Partners in Health, for example, piloted the use of
accompagnateurs in Haiti - community members hired to help people on AIDS
therapy to take their medicines. That system is now being used all over the
world, producing value that goes far beyond its measurable impact on the
Haitian patients. And sometimes charities invest a lot of money and time in
creating a system that will eventually become self-sustaining. Early failure
is often part of the process. The Grameen Bank, the famed microcredit
pioneer, took nearly two decades to become a self-sustaining business. Early
on, it probably didn't look very cost-effective - but it still would have
been a great investment.

 

GiveWell is feeling its way through this. Its No. 3 charity this year is
another group that works on children's health in Africa, the Schistosomiasis
Control Initiative. (It's not a United States tax-deductible charity, but
you can get a deduction by giving through GiveWell.) But in between malaria
and schistosomiasis on GiveWell's list is a peculiar surprise: GiveDirectly,
a new charity with the radical mission of simply giving away cash to poor
people in Kenya (GiveWell's argument for why it considers GiveDirectly to be
the second most effective charity it studies - which is too complicated to
get into - is here.)

 

Even if you define effectiveness very broadly, it's far from the only
consideration in choosing a charity. "People care about what they care
about," said Katherina Rosqueta, the executive director of the Center for
High-Impact Philanthropy at the University of Pennsylvania, which helps
philanthropists make more effective donations. "If someone cares deeply
about closing the achievement gap in the U.S., they won't be convinced to
finance health care in the third world. It would be foolish to think that
the only way a donor can do good is to go to the top-ranked, most efficient
nonprofits."

 

Some people use charity as a way to increase their social standing - for
example, to get onto the board of a prestigious cultural institution. Some
give as repayment - to an alma mater, for example. Some give to
organizations that we benefit from, such as our churches and our kids'
schools. Fine, but don't count it toward your real charitable giving, wrote
GiveWell's co-founder and co-executive director Holden Karnofsky. (Before
you write that angry comment, yes, many churches do use the money for
helping the poor.)

 

When we do give completely altruistically, we often give nearby - to our
local soup kitchens or to help the victims of disasters like Hurricane
Sandy. It is normal to value what happens near us more than what happens
across the world. But Ord has an interesting response: how much more value
do we put on a neighbor's life than that of someone in Kenya or India? Is it
worth 10 times more? Twenty? It's surely not worth 1,000 times more - so put
your money into bed nets.

 

Perhaps the most relevant point for most people is that whatever cause moves
us, we should be looking for effectiveness. Rosqueta argues, for example,
that if you want to help the hungry in America, don't give to canned food
drives. Instead, give money. Food banks can use it to buy in bulk - they can
pay 10 cents a pound for food you'd pay $2 a pound for in a can. (And
someone has to pay to ship the can.) Charities are often complicit - they
will sometimes choose ineffective strategies like canned food drives because
they are more attractive to donors. The solution is to be an educated donor.
Charities now publish the percentage of donations they spend on fulfilling
their mission. We should demand evidence that they're spending it right.

 

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Tina Rosenberg won a Pulitzer Prize for her book "The Haunted Land: Facing
Europe's Ghosts After Communism." She is a former editorial writer for The
Times and the author of, most recently, "Join the Club: How Peer Pressure
Can Transform the World" and the World War II spy story e-book "D for
Deception." 

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