About 8 months ago I did a post about World Food Day where I mentioned microfinance (especially Kiva.org) as a great way of doing more useful things with donor funds.
Skeptical fail: I applied an abysmal level of critical thinking to the area of charities/development. This was probably because of a deeper [common] pathology I had about the nature of charity. I retract that endorsement in its entirety, replacing it with a provisional question mark. As penance, I will go through my journey from the dark side, so that my idiocy can serve as an example.
Charity is often seen in terms of self-fulfilment. As a quick example, a friend of mine volunteers at a homeless shelter and was asking for friends to volunteer on Facebook. Her short status post ended with “very rewarding!” as the drawcard. I’m sure she wasn’t implying that the actual help you might do is not more important, it was probably too obvious even to mention. But it probably is affected by belonging to a culture which sees charities from almost a self-indulgent perspective.
If your goal is to feel good about yourself then all you need to do is hand over some money. It doesn’t matter too much who it’s to — only a handful of charities raise obvious red flags (eg. ones run by cults) but most have missions we’d largely agree with. It’s also not incumbent on the giver to be skeptical about the fact-claims that each charity presents. Of course if the most thing is actual help then you should be as skeptical for a $100 donation as you would be when buying a $100 gift for yourself.
And so I urge you to check out two sites: GiveWell and Good Intentions Are Not Enough. GiveWell is particularly eye-opening. It was started by former hedge fund managers who were used to doing due dilligence on companies before they’d invest. Wanting to make a difference, they decided to apply this to the charity world. Out of about 400 reviewed charities, based on the same principles, they only recommend 11. Kiva is certainly not one of them, here is a detailed list of posts about Kiva (that I’ve yet to read).
The vast majority of charities (ie. probably thousands that GiveWell looked at) do not provide nearly enough info to even be rated, so it was even an achievement to end up as one of the 400 charities that weren’t recommended but actually gave enough data. I’ll post a bit later about the specific issues involved, but GiveWell is the horse’s mouth.
The bottom line is that there are a lot of systemic problems with Kiva and the vast majority of charitable organisations. But I think the biggest systemic problem is with us as the donors. We do not expect charities to prove (1) that what they do works and (2) that any additional funds we provide will actually scale up. And so they don’t.
By giving to the wrong charity you are making the world far worse. The biggest thing you can do is to be doubly-careful to avoid the thought that the money you give magically translates into goodness and is proportional for it. The best ones are orders of magnitude better in terms of this efficiency. But even they have numbers that are different to the marketing pitches. The top-rated VillageReach has a cost of just under $1000 per infant death averted. Since most charities are much much less efficient, if you give modest sums over a few years to a random charity, you might well have not saved a single life or made a single bit of positive difference.
4 comments ↓
Congratulations.
It is great to hear people hold their hands up when they’ve made a mistake, especially for something as self-righteous as charity.
I have had arguments with friends over it (well, discussions since they see me as a contrarian – I’m not really) but the best one was a charity person in the street*: they wanted bank details and a contribution of £10, which the small print said would be taken every month unless I cancelled but they never mentioned that! I asked if they were getting paid (yes), who by (the charity), and if they were on commission from my donation[s] (yes). I then followed up with questions about the charity that they were unwilling/unable to answer like how much of my donation goes on administration, advertising, staff like themselves and other non-front line services?
Unless you know this kind of information you may simply be paying for an organisation that spends your money growing itself and advertising, thus taking extra money away from better-run charities and, ultimately, the people who need it.
Your donation may result in less charity being done.
There is also an argument that individual giving reduces government spending on charity and development, but I haven’t done that research, it’s simply a gut feeling.
*Chuggers – charity muggers.
Whilst I agree that charity is self-righteous in a lot of instances, you seemed to imply that it was intrinsically self-righteous which I don’t see at all. But yes, there is a lot of social signalling around charities so it might feel strange to object to a particular act of giving. OTOH, there’s some social signalling around being a contrarian too!
The case you described seems to be a plain scam or dishonest marketing. I think most people aren’t too bad at avoiding those, the more systemic cases is where communication with the donor is honest and the charity is doing its best BUT the methodology itself isn’t working well because of a conceptual flaw.
Also as I’ve learnt from the GiveWill blog, things like the % of overheads and how much money is being spent on “front line” services is not that good a measure of how much the charity is helping. Of course some charities are plain scams but beyond that, one that spends 40% on admin could easily be helping more than one that spends 10% (in fact things like self-evaluations are parts of admin costs so a very lean charity is probably just pumping out whatever it does without stepping back and looking ad the bigger picture).
As for reduction of govt spending my gut feeling is that it’s unlikely to have a negative effect. If anything there might be positive effects, eg. if a cause attracts a lot of private charity this normalises the cause as something for public attention so govts might spend more.
However even if it did reduce govt spending, given your previous comments isn’t this something you’d be in favour of?
Some fair points Michael.
Firstly though, charitable giving is an admirable act. People should be lauded for such an unselfish act, however to do so makes it cease to be unselfish… Anonymous donations are the ultimate act of humanity (too much?)
What the front line actually is is much more important than the amount spent on it. A charity spending 99% of donations on curing small pox is pointless.
While making the public aware of a problem is a good start, since politicians take more notice too, actually helping to resolve the issue must play a part at some stage.
Of course, just to be contrary
, giving aid to some causes simply put in place the foundations for a much bigger tragedy later. e.g. donating food to a famine will temporarily solve the issue but by not enabling the people to feed themselves it simply enables an unsustainable population boom that will ultimately lead to a much larger problem later. Not that I advocate letting humans starve but we have to be aware of the consequences of our actions.
A reduction in government spending is to be sought, but no way would a government reducing overseas aid give that money back to the people, they’d spend it on some project for the good of the people – which it may well be, but the people should be free to make that decision themselves.
I’m guessing there’s always a grey area — after all humans are social animals so most people will feel good after charitable gifts anyway, but then to call all charitable giving selfish because of this seems pointless (because then everything is selfish even self-sacrifice that stimulates your sense of duty).
Of course every act of aid has consequences some of which may be negative — but that might be getting close to the extreme environmentalist view that any form of saving lives is bad since it just drives the population up. I prefer to think of these things as separate problems. But given that I don’t really see anyone saying that things like disaster/famine relief are anything more than band-aids. However to those people dying from tsunamis, droughts etc, a band aid will work just fine.
Not sure what you mean by government spending — overseas aid is such a small % of most countries’ budgets there’s really no justification even for those who want a large spending reduction to focus on that as anything but a last priority. Plus in terms of actual “good of the people” per dollar spend I would think o/s aid is actually thousands or tens of thousands of times more cost-effective than almost any domestic program.
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