Continued from Part I, these are my thoughts from my recent visit to two of our top charities in Africa.

Diverting skilled labor looks like a real concern.

The COO of SEF stressed that one of SEF’s biggest challenges is human resources (i.e., continually finding good people to staff it). I can easily see how this would be. As I mentioned in Part I, I found that the nonprofits I visited were employing capable, impressive people with a combination of local background and well-above-average educational credentials and command of English.

On one hand, seeing these staffers made me feel good about the organizations we were recommending. At the same time, it highlighted one of the most universal and hardest to evaluate concerns we have about nonprofit work: diversion of skilled labor from other potentially productive pursuits.

Adding to this concern was a general impression I got (reinforced by Leah from VillageReach) that nonprofit jobs are among the best-paying and most prestigious jobs for African locals. It looks like we have a situation where:

• Many of the people hired by nonprofits could also be potentially very helpful to their communities if they were doing for-profit work.
• They work instead for nonprofits, partly because nonprofits are out-bidding the for-profits for their services.
• Within a for-profit framework, there is often (not always and never perfectly) a connection between the value of a job and the salary, which creates a (imperfect) tendency for talented people to end up in roles where they can do more good.
• I have no sense of how (or whether) nonprofits are attempting to calibrate salaries and value, and I fear that they could be “overpaying for” (and thus misusing) local talent simply because they want the best people available and they have the donor-supplied funds to get them.

More on this idea in a future post. Though we have no great methods for quantifying the losses from “diversion of labor,” we do believe that this concern reinforces the importance of demanding that nonprofits be accomplishing as much good as possible and not merely some good.

Getting basic info about people’s standard of living seemed fairly straightforward.

I understand that estimating people’s incomes can be a very complex endeavor, but in the areas I visited, it seemed possible to get a sense very quickly for how “poor” one area was relative to another. I asked basic questions at the village level: where the nearest water source was, who was responsible for maintaining it, where the nearest school was, what the school fees were, etc. I walked around and observed how many of the dwellings were made of mud vs. concrete . And when talking to individual clients, I asked straightforward questions like “Do you have a TV?”, “Do you have electricity?”, “What do you eat?” and “When was the last time you had a fever and what did you do about it?” Answers were fairly consistent in a given area, but varied dramatically across charities (more below).

Throughout our investigations into international aid, I’ve been frustrated by the fact that most charities seem either unable or unwilling to produce data on clients’ standards of living. Because I don’t tend to trust stylized stories, and I haven’t had what I consider credible data on standards of living, I’ve constantly felt very unclear on who is being helped and how. I now find it less likely that this problem stems from prohibitive costs of data collection; I find it more likely that it stems from (a) the fact that donors rarely (if ever) ask for data on clients’ standards of living; (b) the possibility that some charities may not want to reveal that their clients are anyone but the “poorest of the poor” (even when their clients are still quite poor).

The three areas I visited were very different in terms of standards of living.

• Small Enterprise Foundation (SEF) clients: I visited two villages, one in the Microcredit program (SEF’s original program) and one in the Tšhomišano Credit Program (targeted more directly at the poorer people in a village). In both villages, at least half the buildings I saw were made of concrete, and everyone I spoke to reported convenient access to running water, electricity, a fairly well-stocked local market, and public transportation to larger cities. Living spaces appeared fairly cramped (they were larger than in the other areas I visited, but when I asked who slept where it quickly became clear that there wasn’t much space per person); clients reported eating meat “only when they could afford it.”
• VillageReach clients: infrastructure was much, much worse in these areas. The town of Macomia, where we spent the night, had no running water and no electricity except for generators; it took hours to reach (in a truck) from Pemba, which I believe was the closest area with reliable electricity and running water. The one village we visited took over an hour (of alert driving on very bad roads) to reach from Macomia, and the only concrete structures I saw there were the health center, a closed shop, and the school. I was told that other nearby villages were even harder to reach (in some cases impossible in a truck) and that access to water was a major problem. In terms of both standard of living and life opportunities, these areas appeared fundamentally worse than SEF areas.
• Soweto: I took a quick tour through a poor area of Soweto (urban). It was generally filthy (literally strewn with trash) and extremely crowded, with tiny steel shacks next to each other. It seemed to me like a much more unpleasant place to live than either of the other two areas, although on the flip side, people in Soweto appeared to have access to public transportation, electricity, good schools, etc. as they were very close to much wealthier residences.

One of the reasons Small Enterprise Foundation stood out to us is that it appears more diligent about targeting the poor than other organizations. Even so, its clients - while poor - appear to be substantially better off (in fundamental infrastructure-related ways, not ways that can be attributed to program effects) than VillageReach’s clients. This doesn’t make me less supportive of SEF (it’s largely consistent with my existing suspicion that microfinance clients are rarely if ever the poorest of the poor), but it’s an important thing to keep in mind that I feel better informed about now than before.

Are you looking to help people in the worst situation, and with the most basic needs, possible? Or are you interested in helping people who are better off to begin with, in the hopes that a little assistance might go a longer way with them? To me there’s no clear right answer, but it’s a decision donors are likely making constantly without knowing it.

More thoughts coming in Part III.