The GiveWell Blog

The Money for Good study

The Money for Good study’s headline finding is that “few donors do research before they give, and those that do look to the nonprofit itself to provide simple information about efficiency and effectiveness.”

That conclusion syncs up with our own experience talking to donors, but we aren’t discouraged by the results. That’s because where the Money for Good study answered the question “how do most donors behave?” we’re interested in answering a different question: is there a market for giving based on evidence of impact and how big is that market?

Hope Consulting shared their raw survey data with us, and we’ve done a rough estimate of the size of the potential “GiveWell market” by extrapolating the percentages in the survey to the size of the overall giving market. We estimate:

  • $4.1 billion from donors who report having done research to compare and evaluate multiple organizations (as opposed to researching a single organization or researching how much to give).
  • $3.8 billion if we further narrow the above set by looking at what factors are important to them, and eliminate any donors that rank what we consider “factors irrelevant to impact” (e.g., “ability to get involved with the organization” or “public recognition of my donation”) higher than what we consider “factors relevant to impact” (e.g., “organizational effectiveness”)
  • $554 million from donors who both did research to compare organizations (i.e., fit in the first group above) and reported that “amount of good organization is accomplish” was the most important piece of information sought in their research.

We still don’t have a great sense of the potential market size for GiveWell-style research, but it certainly hasn’t been established that the market is small.

Ultimately, we think it’s important to take the study’s conclusions with a grain of salt. If you polled all TV watchers on what they want, you’d conclude that only a very small percentage want something like The Wire, yet that show wasn’t exactly a failure. In fact, for most successful businesses I can think of, it’s still the case that most people aren’t customers of them.

Our goal isn’t to create a product that the majority of people like; it’s to create a product that some minority market loves. From what we’re seeing now, it’s still possible that the minority of donors interested in impact-focused research is quite large.

Comments

  • Ian Turner on July 21, 2010 at 11:39 am said:

    This study is really exciting. Props to the funders for making it happen.

  • Michael Dickens on June 12, 2011 at 12:35 pm said:

    The Money for Good study may indicate the size of the current potential market for GiveWell; but this says nothing about the future potential market. Right now most donors are not interested in maximizing their impact, but there is no reason why it should stay this way. The market for trying to maximize impact (rather than simply wanting to do good, or wanting to support some particular cause) is a lot bigger than it was thirty years ago, thanks to the work of people like Peter Singer, and there is no reason to think that this market will not continue to expand.

    Of course, it will expand more readily if there are organizations like GiveWell actively working to expand it. If more people were aware of the lack of accountability in so many organizations, they would probably be more judicious with their donations.

Comments are closed.