This week, Giving USA released their 2007 estimate of U.S. charitable giving.

Its data forms one of our favorite figures, and one of the biggest factors behind our decision to start GiveWell. Taken together, individuals account for 75% of total US giving; that’s 6x as much as all foundations combined. (In fact, it makes more sense to count “Bequests” as individuals, and many “Foundations” are in fact family foundations that have little to no staff, and have a similar lack of access to the information they need.)

When I talk about this chart, many ask: “Sure, individual donors give a lot, but doesn’t most of it go to religious institutions and universities? Is it really going to the types of charities GiveWell focuses on: humanitarian organizations focused on providing for people’s needs?”

A paper released last year by The Center on Philanthropy at Indiana University examines precisely that question, using survey data to estimate how much giving is “focused on the needs of the poor” (including an estimate for how much of the money given to “multipurpose organizations,” including churches, has this focus). Note that this report gives a higher total for individual giving than Giving USA, possibly because it is from reported data rather than IRS data, and may therefore include gifts that weren’t taken as deductions. The researchers found that:

When summed, the giving to help meet basic needs and other estimated giving that is focused on the poor come to $77.30 billion, or about 30.6 percent of total estimated household contributions of $252.55.

However you slice it, individual donors are the largest philanthropist in the United States.

Would you rather hear about a good charity or a bad one?

When I’m explaining GiveWell to someone, there often comes a moment where his/her eyes suddenly light up, and s/he says something like, “So you bust the bad guys, eh? Can you tell me about a really bad one you’ve nailed?” (Paraphrased.)

This sort of person is usually pretty disappointed if and when they look at our actual reviews. “I don’t get it - you said you didn’t grant this organization because you didn’t have enough evidence to assess them. So you don’t KNOW that they’re bad …”

Finding bad charities is a fundamentally different endeavor from finding good ones. In some ways, it’s more fun and more exciting to find bad ones. Scandals are juicy; qualified statements that an organization appears to be improving lives, though many factors remain unexplored, are less so. “Good vs. evil” makes headlines and produces adrenaline in a way that “Proven vs. unproven” doesn’t.

But if you’re looking to accomplish as much good as possible with your donation, and you’re looking for an organization that you can be confident is changing lives for the better, I submit that you’re much better off focusing your energies on the few charities that might be able to convincingly document their effectiveness. Evaluating well-documented charities is more than enough work. Trying to nail down the effects of charities that don’t have strong self-documentation is an enormous undertaking, one that I think is worth your time only if you have a personal connection or other strong reason to believe you’re already dealing with an exceptional organization. Spending any time on organizations that don’t stand out in any way - and bothering to make distinctions between “bad” and “worst” - doesn’t seem like a good use of time at all. The question is, are you trying to make a good story or make a donation?

From 2004-2006, I gave all my donations to organizations focused on helping inner-city youth (particularly academically). Equality of opportunity was my favorite cause, and I assumed (without having time to really look into it) that inequality stemmed from the gap in quality between different grade schools. I now believe that this assumption was badly wrong, and that as a result, my donations were mistargeted.

The most surprising thing I’ve learned about the achievement gap between black and white / low-income and high-income students is how early in life the gap is present. Every source I’ve looked at is consistent in this regard: children from different socioeconomic and ethnic backgrounds have large, systematic differences in academic performance in kindergarten, and these differences grow only slightly as children get older. In other words, most of the systematic academic inequality we observe is present by age 5. There is a good deal of literature on this subject, but the paper I’d recommend for starting to take a look is “Understanding Trends in the Black-White Achievement Gaps during the First Years of School” by Murnane, Willet, Bub, and McCartney (Brookings-Wharton Papers on Urban Affairs, 2006).

This is a relatively simple observation, but it completely changes the way I think about promoting equality of opportunity in the U.S.

• It makes me much more interested in interventions that focus on early childhood, the period during which most of the “achievement gap” appears.
• It makes me much more skeptical of the idea that equalizing children’s schools will equalize their educations, something that once seemed obvious to me. It makes me much less optimistic about what one can accomplish with “small schools” (a Gates-backed initiative that has produced disappointing results), private-school scholarships, etc. (The Murnane paper also references research on disappointing results from programs in this category.)
• It makes me especially skeptical of low-intensity grade-school or high-school interventions such as after-school tutoring. I find it very possible that a few hours of extra help a week just aren’t enough to make a dent in deep-rooted disadvantages.

I think it’s interesting that this extremely basic, fundamental, and important fact about the achievement gap - how much of the gap is present by age 5 - has not come up in any of our conversations with (or applications from) charities themselves. That includes both education charities and child-care charities. It seems to me that most development and fundraising professionals are focused on reinforcing and serving donors’ existing assumptions; if you want to challenge your assumptions to get the best understanding possible, you have to look elsewhere.

A new study sponsored by several major foundations (Gates, Packard, Hewlett, Irvine, and Robert Wood Johnson) found that among “engaged”* Americans, only:

• 43% can name a foundation on their first try
• 15% can cite an example of a foundation’s impact in their community
• 11% can cite an example of a foundation’s impact on an issue they care about

Individuals - who don’t have access to information about how well charitable programs are working - donate over $220 billion dollars to charity every year. Foundations retain expert staff to evaluate programs and make grant decisions. If foundations want to increase their relevance to individual citizens (and those citizens’ awareness of them), one good start might be addressing this information gap: using their expertise to help donors make more informed giving decisions.

* U.S. adults aged 18 and older who have held a leadership, committee or board level role in a group or organization working on a community or social issue within the past year.