Normally, we focus on identifying outstanding charities, and minimize the time spent on opaque or otherwise lackluster ones. But lately, we’ve gone into a bit more detail about our take on several of the best-known and most appealing charities out there.
What all of the charities below have in common is that (a) we have major questions and concerns about their activities; (b) the information necessary to see how serious these concerns are does not seem to be available. (In most cases our assessment is based on significant back-and-forth with the charities themselves, though in some cases we are going off their website.)
- Kiva: commonly perceived as a way to (a) make interest-free loans to (b) entrepreneurs you personally select. In fact, it is neither. (See GiveWell Board member Tim Ogden’s summary of the recent discussion/controversy.)
We ultimately see a Kiva “loan” as a gift to a microfinance institution, and we have major concerns about supporting any but the most outstanding microfinance institutions as well as concerns about Kiva’s due diligence process specifically.
- Grameen Foundation and other large U.S. microfinance charities: in addition to our general concerns about microfinance charities (and the fact that these charities have not provided the information that would address them), we find that these organizations are rarely even clear about what their value-added is. Also see the disappointing (and eye-opening) evaluation of the Village Phone program.
- Heifer International: commonly perceived as a way to “give a cow to a poor family as a gift,” but this is in fact a donor illusion -donations support Heifer International’s general “agricultural assistance” activities. We have concerns about this general area and concerns about giving livestock specifically. Neither Heifer’s website nor its grant application have provided the kind of information needed to address these concerns.
- Smile Train: Prof. Steven Levitt of Freakonomics sees it as using an innovative model to deliver cleft surgeries for $250 apiece. Our analysis suggests that it has “more money than doctors” and that it is therefore out of room for more funding. Smile Train’s recent removal of the charts we questioned and its own explanation of why it is giving grants to other major charities appear to support our analysis. In addition, we have major concerns about surgery charities that Smile Train has not provided enough information to address.
- UNICEF offers donors the chance to “buy” vaccines and other items. We suspect that this offer is a donor illusion, but the larger issue is that UNICEF provides almost no information at all about its huge variety of activities and how they are going. Most giant international aid charities (Save the Children, World Vision, etc.) are similarly complex and opaque, with CARE coming the closest to meaningful transparency.
- The Acumen Fund stresses its metrics-driven approach to “patient capital,” investing in businesses that aim for long-term sustainability (i.e., profitability) and social impact. As of now, we see no substantive available information about its track record.
- The Robin Hood Foundation also stresses its emphasis on metrics, quantification, and analytical thinking. But we have found that it is unwilling to share any information about the results of its grantmaking. (Note that it also pushes the “0% overhead” donor illusion.)
- The Millennium Villages project states that it is “demonstrating that it’s possible to escape … extreme poverty” (front page of its website). As far as we can tell, very few results have been demonstrated to date, with a few boosts in crop yields as its main evidence of impact - evidence we feel is highly questionable.
- The Worldwide Fistula Fund has been praised by Nicholas Kristof as “giving new life to the pariahs.” Our assessment is that the Fund is pushing a debatable agenda whose effectiveness has yet to be shown.
- The Carter Center is, in our view, by far the “best bet” (for an individual donor, our focus) of the charities listed in this post. It has achieved substantial, demonstrable impact in the past through its work on guinea worm eradication, and unlike all of the charities listed above, it publicly discloses substantive technical information on the impact of its past activities.
However, there is a crucial piece of information missing: how it allocates its budget between programs (in particular, how much it spends on its stronger and better-documented vs. more questionable programs). It has declined to share this (basic, in our view) information in repeated exchanges.
We think the above charities are fairly representative of “average” charities in international aid. Some tell better stories than others and some have more disclosure than others. But in almost all cases, international aid charities are (a) carrying out complex projects that can fail to do good (or even do harm) in a variety of ways, and (b) not systematically sharing the information that would make it possible to assess how their work is going.
GiveWell is devoted to finding charities in which we can have more confidence. We’ll be discussing our two top-rated charities working internationally in forthcoming posts.
Holden:
Your declaration that the gift of a cow or a goat or other livestock to Heifer International is “donor illusion” is inaccurate. Certainly not every gift goes to provide geographically appropriate animals or plants to families gripped by poverty, but Heifer makes that fact clear in all of its publications, collateral and material.
Committed as Heifer is to transparency, potential donors are informed that:
“As a donor, you are given the opportunity to designate gifts to specific country programs or for specific animals. Gifts are deposited into various animal accounts, such as “llama/alpaca,” “tree seedlings” or “bees.” We have different accounts for every type of Heifer International animal. When any animal fund becomes depleted and there is still a need, monies from any other animal fund can be used where needed most. Meeting the needs of hungry families always comes first, but we do our best to accommodate your wishes, too.”
“Every gift to Heifer International represents a gift to our total mission of purchasing and transporting food and income-producing animals, as well as providing intensive training in animal husbandry; environmentally sound, sustainable farming; community development and global education. Again, gifts that are designated for a particular project or animal are used as requested until that need is fully met. Any remaining money is put to use where it is needed most.”
Additionally, you express concerns about Heifer’s livestock model and its impact. Heifer is about much more than animals. Heifer is about education and training and building communities as much as it is about the living loan of livestock. Before a project participant ever receives an animal, he or she goes through training to learn how to care for the animal, how to provide safe and secure shelter, how to feed and water the animal in ways that don’t conflict with food and water for the family as they pull themselves out of poverty.
Additionally, families agree to Pass on the Gift, too, by passing on offspring of the animal as well as the education and training they received to others, multiplying the initial gift. These lessons are about more than livestock as well. They include enhanced farming techniques, animal well being, agro-ecology and gender equity—ensuring that all project participants, especially women who throughout much of the world are denied many opportunities that men take for granted, such as land ownership.
Sustainable agriculture, which includes animals, is at the heart of everything Heifer does with project participants and families.
For greater detail about Heifer’s impact, I encourage a visit Heifer’s Web site, www.heifer.org, to read the results of five years of evaluations by the Evaluation Center at Western Michigan University.
This independent review, led by Dr. Michael Scriven, found that, “It is beyond doubt that in all 20 of the countries we have examined, Heifer has brought large overall benefits to very large numbers of low income rural families.”
Evaluators cited, “The ‘Heifer edge’ in the organization’s cost-effective crusade against poverty has always been the built-in sustainability of the commitment to ‘Passing on the Gift’ of livestock, and of skills in (i) their care, and in (ii) respect for the Twelve Cornerstone Values (guiding principles of all the organization’s programs),” evaluators noted. “Our evaluation convinced us of the importance of continuing with this core feature.”
Evaluators witnessed improvements around the world. In Thailand, for example, evaluators found Heifer’s work helped villagers access greater amounts and varieties of food, helped increase their knowledge and skills in livestock care, and that extra income for livestock and food helped villagers send their children to school for more years.
In Tanzania, evaluators found most partner families were initially undernourished, but within a couple years after receiving an animal, were able to maintain a healthy diet. Many started to accumulate livestock and other assets, and soon could better afford medical expenses and keep their children in school longer and more consistently (particularly girls).
In Lithuania, Latvia and Estonia, evaluators cited Heifer’s effectiveness and impact as “nothing less than impressive,” and in Asia, evaluators said, “It was evident that Heifer China has the strongest system we have seen so far, not only to provide livestock care training and management support, but also to effectively influence other agencies to adopt Heifer values and work strategies.”
We encourage you and your readers to visit the Heifer Web site to review this report and its findings.
Thank you for letting us share this information with your readers.
Joedy Isert
Heifer International
Joedy, thanks for the comments.
Re: “donor illusion.” We use the term “donor illusion” to refer to any case where donors are getting something very different from what they imagined, even if the charity in question has fully transparent disclosures. We agree that Heifer International discloses all relevant information, and is not “hiding” anything – the question, though, is what impression donors come away with.
Re: evidence of impact. I have seen the Western Michigan University evaluation you cite. Heifer representatives shared the Africa sections with me as part of our grant application process. I sent detailed comments on the evaluation back to Heifer representatives.
However, I signed a nondisclosure agreement with Heifer that requires me not to disclose the contents of the evaluation. Therefore, I cannot discuss the specifics of the study with you here on the blog.
If you believe that the Western Michigan University evaluation represents good outward-facing evidence of Heifer’s impact, I encourage you to make it publicly available.
A summary of the evaluations can be found at: http://www.heifer.org/site/c.edJRKQNiFiG/b.5647733/?msource=XS2M090001&utm_source=Heifer&utm_medium=Website_Banner&utm_campaign=ImpactStudy
Joedy,
Summaries aren’t worth much. Would you expect a doctor to recommend a cancer drug based on reading an abstract? Only by reviewing a complete study, which is never perfect, can one understand the methodology and its implications and limitations.
Why are the WMU evaluations confidential, anyway?
–Ian Turner
Thank God someone is doing this homework, at last! There is a profound lack of supervision (with teeth) in the charity sector. It is clear that donations primarily fund charities’ (salary) overheads to an average of 80% of all funds raised. This is wholly unacceptable if not pernicious. Cull ‘good intentions’ of useless self serving operations going round in circles of their own PR importance!
Keep up this excellent work!
Joedy, thanks for the link. However, this summary appears to say next to nothing about the methods used to reach the conclusions described. In other words, it simply states that the evaluators had a positive view of Heifer.
I encourage Heifer to make the full study public, as is done with (for example) Poverty Action Lab evaluations.
Mary, what is your source for the “80% overhead” figure? It doesn’t sound right to me, and I also believe the “overhead ratio” issue is usually a distraction. I feel that raising questions like the ones we raise above is more productive.
I think the question that Mary raised about CEO salaries is very relevant given the stated missions of the organizations that they are leading. The charitynavigator.org site provides that information about every charity listed. In fact, their advanced search feature allows you to use that as a search criteria. The salary information given is very revealing and, in some cases, seemingly incongruous with the organizations’ stated missions and the dire needs that they are addressing.
Bill
Bill, charity’s executive compensation is often high because they must compete for talent with the private sector, where executive compensation is outrageously high. Executives in the nonprofit sector, like all workers in the nonprofit sector, typically take a pay cut compared to what they could earn in the public sector. Paying a lot for a great leader — even a third of your budget — could be justified if it results in efficient programs or effective fundraising.
See this article from the American Institute of Philanthropy for more on this topic: http://www.charitywatch.org/articles/salaries.html
Investors in the private sector may consider executive pay when deciding whether or not to invest in a firm, but they are far more likely to consider the revenue of the business and its future prospects for profitability. Likewise, donors should focus on a charity’s evidence of impact, rather than micromanaging their spending on executive pay or office supplies.
I don’t agree that the rules for executive compensation in the private sector - which themselves have come under considerable scrutiny in the past year - should apply to the nonprofit sector. Considering how many talented, experienced and capable people are seeking employment these days, for no fault of their own, it seems to me that it should be possible to find very capable and caring people willing and able to lead these organizations for far less than the “hundreds of thousands of dollars” that the article you referred to seems to think is reasonable. Those dollars should be going to where they are most needed. I think the average donor is probably very unaware of what some of these salaries are (I was myself until recently), but, as I indicated earlier, that information is easily obtained. The article goes to great lengths to try to justify these salaries but I would rather see greater “moral imagination” applied to solving these problems a different way. If the world is “flat,” that opens up many possibilities for doing things differently.
Bill,
I’m not saying that salaries are justified in every case. I am saying that it’s not a very useful question to ask. There any plenty of organizations who pay short salaries and fail to create any impact. There are also organizations that pay substantial salaries and make a difference. (I believe that Givewell is one of them). Rather than focusing on executive pay, which is more likely to create self-righteousness than anything else, it is more productive to focus on impact and cost-effectiveness. Pay is but one of thousands of ways in which a charity can waste money; rather than focusing on it, take the charity’s total costs into account and find out how much impact you are getting for those costs. If a charity has high pay but is also generating demonstrable cost-effective impact, then it’s worth giving to, no matter how unjust you may feel the salaries are.
Ian,
The two giving criteria - executive compensation and cost-effective impact - are not mutually exclusive. They can be applied together. So, for example, I would consider an organization’s rating by GiveWell, then use Charity Navigator to evaluate what it pays its executives. You run it through both filters. I wouldn’t rely on just one filter (either one). Although the “impact” question is complex and not easily answered, the bottom line is that one can find organizations that have both a good record on impact and do not pay its executives excessive amounts. That isn’t the issue I was raising.
The issue is that - apart from the question of impact - there appears to be a deep and perhaps systemic issue with excessive executive compensation in the nonprofit sector which is most troubling as it relates to charitable organizations (because of the missions they have and who they serve). And I was trying to argue that such compensation is unnecessary and therefore the issue itself need not exist at all. But it does exist, and that is unfortunate.
Bill,
I disagree. If you have to choose between two organizations with slightly different cost effectiveness and far different executive pay, you’d still do better to choose the one with higher cost effectiveness. Just as if you have to choose between two investments with slightly different future profit prospects, you should ignore executive pay and choose the one with better prospects. The Charity Navigator rating isn’t just less useful than a GiveWell-style analysis — it’s nearly useless if your goal is to actually help people with your donation.
Given the number of organizations out there with evidence of impact (I’m aware of only a small handful), I take issue with the idea that “one can find organizations that have both a good record on impact and do not pay its executives excessive amounts.” It’s hard enough to satisfy the first criterion without adding the second one in.
Ian,
I don’t think it is difficult to satisfy both criteria at once. Without citing specific organizations, you would first look at who GiveWell (or whichever rating service you choose to use) recommends, then consider the executive compensation question. I would go in that order. That is pretty simple and straightforward, I think. The impact question is certainly complex, but that is why organizations like GiveWell are helpful to individual donors who don’t have the time or the expertise to make those judgments.
Holden —
Quick question about donor illusions: How different are they from the “illusions” that for profit organizations use to sell products?
Isn’t a donor who believes that the success stories they see on a non-profits website are the rule rather than the exception as naive as a consumer who thinks Nike shoes will actually make them play basketball like Lebron James?
From my perspective, I think we have to be careful about blaming the non-profits here and place more responsibility on the funders (especially large funders, since smaller funders often follow their lead).
Interested to hear your opinion
Re: executive compensation. In concept, I strongly agree with Ian. I think it is essential to judge charities by their impact and not by their inputs. When you say that a high executive salary is not necessary, you are making a judgment about how an organization can or cannot be run, and I think that is a mistake. Better to look for the most impactful organizations and assume that they know more than you do about how to allocate expenses and what an appropriate salary is.
I do think that Bill happens to be right about the options. For example, our top-rated charity (VillageReach) doesn’t appear (based on its Form 990) to pay anyone more than $65,000/yr. Still, I would happily donate to a charity with high executive compensation over one with low executive compensation, if the former had more impressive social impact.
James E.D., we may be discussing this topic more in a future post, but briefly -
Hey I find UNICEF advertising a lot on websites. I doubt they use the full donations but instead use them on things which they shouldnt be doing.. they have to improve
I was led to your web site by an article in Whole Living magazine. I think accountability for charities is really important. I’m impressed by the intelligent, respectful and thoughtful conversation found here. I will be directing people to this site. Nice job!