We’ve been working on a lot of changes and additions to the main GiveWell website and at this point have gone live with all of the following:

New research and recommendations on U.S. education and early childhood care. We did some work on these causes in our first year, but we’ve now gone back with our improved and more thorough research methodology.

• We’ve systematically reviewed literature on effective social programs from ChildTrends, Campbell Collaboration, Coalition for Evidence-Based Policy and MDRC.
• We’ve conducted a systematic search for charities focused on programs with strong evidence behind them.
• Our top recommendations in this cause are still Nurse-Family Partnership and KIPP, the only organizations we’ve found with both strong evidence of impact and ongoing reporting on performance. We also now recommend Invest in Kids, a small group in Colorado, and have a few more potential recommended charities under investigation.

Do-It-Yourself Charity Evaluation. If you’re looking to do your own due diligence, examining a charity or cause we haven’t covered, check out our DIY guide for suggested critical questions you can ask. We’ve covered every charitable cause we can find or think of.

This is the first donor guide we’re aware of that asks different questions for charities in different causes, rather than taking a “one-size-fits-all” approach. While it means some extra overhead in classifying your charity, it also means we’ve been able to make the questions much more concrete, specific and meaningful.

This is very much “beta” content, with room for improvement in the questions themselves and in the guide’s usability, and we are very interested in your feedback. (Note that Tactical Philanthropy and Chronicle of Philanthropy Online have already discussed this new feature.)

New ratings system. We wrote back in October that we were preparing to scrap out quantitative ratings system for charities. We have now done so. We still give marks of distinction to our top-rated charities, and we still discuss the charities that don’t get these marks of distinction, but we no longer have a “zero-to-three-star rating” for each charity. See the new details of our ratings system.

Charity downgrades. We’ve completed our annual review of our recommended charities, in which we request updated performance information, sometimes request more detailed information than we did in the first place, and rethink our evaluation in general. Three of these charities have received downgrades:

• Stop Tuberculosis Partnership remains a recommended charity, but no longer has our highest (”Gold Medal”) distinction due to some concerns about the ongoing vigilance of its monitoring and evaluation. We are still in conversations with Stop TB and may update the review again soon if and when we receive more information.
• Partners in Health has not provided us with updated and expanded information on its activities. We no longer consider it a recommended (Silver or Gold medal) organization, though we still give it the distinction of being Notable for its promising approach (and stand behind our recommendation in the context of the Haiti earthquake specifically).
• We have done some additional analysis on The Global Fund to Fight AIDS, Tuberculosis, and Malaria and no longer consider it a recommended (Silver or Gold medal) organization. It was previously the lowest-rated of our recommended organizations (on the bubble of being recommended), and our more in-depth look at its monitoring and evaluation reports has left us with too many questions about its evidence of effectiveness. We still give this organization the distinction of being Notable for its transparency, and in fact we still feel that it is a model of exceptional transparency for an organization of its size.

Part of what’s going on here is a gradual raising of our bar, as we have capacity for more analysis and a substantially higher opinion of our top-rated charity VillageReach than we had last year. (In addition to a site visit that involved a lot of time spent discussing and improving our understanding of the organization, we also have updated, concrete, encouraging information on the group’s expansion plans / room for more funding.)

New external evaluations of GiveWell’s work. We have begun accumulating formal reviews of our research from non-staff members; some are scholars in relevant fields while others are simply willing volunteers. We have published the reviews we have so far and intend to add more at a faster pace from here, now that we’ve nailed down the basic ground rules of how to do external reviews of different parts of our work. Note that we have also begun collecting endorsements as a quick sign of our credibility for website visitors.

What’s next: within the next few months we will be publishing

• Extensive notes from our several months in India, including site visits to over 15 organizations.
• Research and recommendations on the general cause of disaster relief/reconstruction.
• Our annual self-evaluation.

An anonymous donor got some buzz a few weeks ago with its call on Innocentive for “extraordinary and unorthodox” philanthropic opportunities. It seeks a project that “holds the potential for a transformational impact,” “is unlikely to attract funding elsewhere due to its risky, unorthodox, and/or neglected profile,” and will be able to “attract additional capital from other sources” after the initial “catalytic” funding.

Perhaps ironically, this RFP sounded very familiar to me. In fact, it’s hard for me to see a big difference between it and the $100 million Gates Grand Challenges Explorations, “a unique initiative that supports innovative research of unorthodox ideas” in global health (though the Innocentive proposal above does not explicitly specify a sector, all three of its examples are in global health as well).

Speaking more informally, I’ve heard similar concepts emphasized by most major funders I’ve spoken with. Anyone who has dealt with major foundations should recognize the desire to find a completely new, revolutionary, neglected opportunity that just needs some seed funding to explode.

I do believe that the best opportunities are the under-funded ones. Yet I’m not sure that tiny, neglected innovations are the best places to look for these opportunities - precisely because that’s where all the major funders seem to be looking. I submit that the better place to look for neglected opportunities is the “valley of death” between proof of concept and large-scale rollout.

“Valley of death” is a term from both the investment and research communities. In both cases, broadly speaking, it refers to the difficulty of getting funding between the earliest stages of a project and the latest stages of a project, where investors have neither a sure thing nor a “lottery ticket” for the glory of being “first.”

I believe that the world of philanthropy suffers from its own “valley of death.”

Programs that have enough traction often aim for funding by the government (for example, the Nurse-Family Partnership program has had some success with this). Programs in their earliest stages appeal to foundations’ hunger for bragging rights. But what about VillageReach, which had a single successful “proof of concept” pilot project (initially funded by the Gates and Skoll foundations and the World Bank Development Award) and now needs transitional funding to roll out its model across Mozambique? Large foundations have, to date, declined to fund the rollout, in some cases specifically citing their preference for establishing models rather than rolling them out.

There’s no glory in funding the VillageReach rollout. VillageReach already has shown that what it’s doing has worked; nobody can claim to be brilliant for spotting it. And VillageReach doesn’t need help designing its program (this has been cited to me explicitly as a drawback from the perspective of some major funders).

But if it doesn’t get funded, it isn’t going to happen. If it does, it could change the world. It is, in fact, a fantastic opportunity.

If you asked me which funders are going to have the greatest impact over the next decade or so, I’d bet on the funders extraordinary and unorthodox enough to forget about being “extraordinary and unorthodox” - and instead put in a bid for the Smart Money Award.

We’ve written a lot about our top-rated charity, VillageReach (in particular, see our official review and our 2009 blog post). Consistent with our focus on individual/casual donors, we generally emphasize effectiveness over ambition, and so we have mostly focused on VillageReach’s fit with our criteria: its strong case for effectveness, cost-effectiveness, and room for more funding.

However, VillageReach has some other major strengths as well - strengths that make it a good fit not just for individual donors looking to help people cost-effectively, but also for more ambitious donors hoping to contribute to transformative change.

Health system strengthening - with tangible results

One of the ongoing debates/discussions over health aid involves “vertical” vs. “horizontal” interventions. I recommend William Easterly’s Can The West Save Africa? (start on page 57) for an overview of the issue, but briefly:

• “Vertical” programs focus on global large-scale campaigns addressing a particular health condition, often focusing on the supply of appropriate medical materials (for example, vaccines and antiretroviral drugs for treating HIV/AIDS) while “horizontal” aid tries to strengthen the health system in general in a particular region.
• “Vertical” programs have had some major demonstrable successes (for example, most of the cases in Millions Saved). However, many believe that once the major opportunities have been capitalized on, these sorts of initiatives hit diminishing returns, as medical supplies outstrip the health system’s ability to deliver them. Over-funding a particular campaign may even get in the way and undermine other health efforts.
• “Horizontal” programs have the worthy goal of making the health system stronger as a whole, including reaching those who are hardest to reach. However, perhaps because these programs often involve more complex goals and more leeway for the funded, these programs do not have the same track record of demonstrable success, and arguably have inferior mechanisms for accountability (i.e., making sure that money is spent well and produces actual results). See this Aid Watch post for more on these problems.

VillageReach’s program, focused on health system logistics, is fundamentally more “horizontal” than “vertical” - it’s focused on improving health system capacity. For example, one of the major changes its pilot project brought about was creating a specialized team for delivery of vaccines, which relieved local health system personnel of the responsibility to collect their own vaccines. The aim was not only to get supplies out to the villages in a more reliable way, but to reduce demands and constraints on the many local health system personnel. In the future it may expand this model to other health supplies. It’s not just using donations to purchase supplies - it’s reorganizing the system to improve overall efficiency and even reduce total costs.

Yet unlike many “health system strengthening” initiatives, VillageReach’s program holds itself accountable with specific deliverables, promising - for example - a drastic drop in the frequency with which health centers run out of vaccines. It has run surveys of vaccination rates, comparing the province it worked in to a nearby province. Looking at vaccination rates cannot capture all of the benefits VillageReach aims to provide, but it provides a strong reality check on the model and suggestive evidence for whether it is indeed improving efficiency.

The program thus addresses one of the thornier, and difficult-to-evaluate, areas of global health, while maintaining strong accountability and demonstrable results.

Ambitions of transformation and sustainability - with tangible results in the meantime

Two other constant tensions we perceive in health initiatives are between (a) short- and long-term impact; (b) tangible and transformative impact. In neither case are the two goals clearly contradictory, yet in practice there often seem to be tradeoffs.

For our part, we have focused on short-term, tangible impact. As we lay out in our process overview, we are focused on serving individual/casual donors, and we feel these donors should look first and foremost for accountability and results. A chance at “hitting the jackpot” (creating a permanent and/or far-reaching change) ought to be considered a bonus, not a requirement, especially when the short-term tangible impacts are as good as saving a life for every $1,000 (or less) spent.

Yet the best charity we’ve found for these short-term, tangible impacts turns out to be very ambitious, with very high upside should they succeed. As detailed in our review, VillageReach isn’t just implementing a new health system - it’s advocating for this system as a new approach to health logistics all across the country of Mozambique. It has produced cost analysis concluding that the government will save money, long-term, by adopting its model; with this analysis and its superior results in hand, it has won the endorsement of the national Ministry of Health. It appears to have as good a chance at a lasting impact on how the government operates as any other charity we’ve seen.

Its impact need not even end within Mozambique. Getting supplies to hard-to-reach areas is a challenge that applies throughout the world of global health (and indeed VillageReach has been retained as a contractor in Senegal, Malawi and India).

If you’re hoping your donation has a chance to be a part of a new innovation with global impact, VillageReach gives you that chance. Of course, many other charities have equal or grander ambitions. The difference is that VillageReach is (from what we’ve seen) holding itself far more accountable, producing tangible - and cost-effective - impact as it goes.

What’s not to like?

Our process has been accused of over-focusing on tangible impact and evaluation, and thus favoring larger, more conservative organizations. This accusation has some truth to it (and we accept this bias in view of what kind of donor we’re serving). And yet, the organization we’ve found that performs best on our criteria is in fact relatively small, and highly innovative. Indeed, of all the organizations out there with big ambitions, we believe VillageReach - with its high accountability and its focus on producing results, not just hopes, in the meantime - to be the best bet to actually deliver.

GiveWell attended the Microfinance Innovation & Impact Conference via Board member Tim Ogden and part-time employee Stephanie Wykstra. (Our full-time staff could not attend as we are all in India). Our main takeaways:

• The people involved with this conference, and the nonprofits working with them, are producing a lot of promising, interesting, rigorous and informative work on how microfinance affects the poor and how these effects might be improved.
• While microlending is the form of microfinance that has been most funded, celebrated and scaled up over the decades, it appears to be the least proven and least-well understood in terms of its impact on the poor. In many ways it seems that good information on how (and to what extent) it’s helpful is just starting to become available.

There is much abstract agreement about the importance of learning from good research, but we feel that there are few concrete examples of groups actually doing it. A high concentration of those examples could be found at this conference. We have written before about how impressed we are with the work of the Poverty Action Lab and Innovations for Poverty Action (groups behind this conference), and that continues to be the case.

The research has already been summarized in a large number of posts by others (see the roundup by GiveWell Board member Tim Ogden). Our quick take:

Microsavings, microinsurance, and “ultrapoor programs” are clearly promising. High-quality studies found significant improvements on metrics like income, food security, and children’s ability to attend school when these programs - which differ markedly from the loans most people associate with “microfinance” - were rolled out. Programs included accounts intended to help people pre-commit to saving (more); intensive promotion of difficult-to-sell insurance products (more), and “ultra-poor programs” that target people with extremely low incomes and offer direct benefits such as cash/asset transfers and education, rather than financial products (more).

Unfortunately, we know of no clear vehicles through which individual donors can fund these sorts of programs. We’ve written before about the frustrating situation of seeing a good program without a good funding vehicle, and called for major funders to consider this problem. There do appear to be similarities between the “ultrapoor program” and the work of GiveWell-recommended charity Village Enterprise Fund.

The impact of microlending is, at this point, not very well understood. A new high-quality study in Morocco found no positive social impact overall, though it did find that people with existing agricultural businesses appeared to invest more/differently in their businesses (more). These results were similar to those observed in the only previous high-quality study of traditional microlending, which took place in a very different environment (Hyderabad, India) and was summarized last year by David Roodman.

There was significant discussion of the risks that people might be overborrowing (something we are quite concerned about, and something that there is apparently still little information to assess). And new data from the Philippines reinforced a point we have emphasized in the past - that microloans are more likely to finance consumption, and less likely to finance entrepreneurial investment, than most donors suppose. From Philanthropy Action’s summary:

Around 46 percent of clients used new debt to pay down old debt, and 28 percent used funds for a single large household purchase. In all, 39 percent of the money goes unaccounted for, 15 percent is used to pay down other loans, 9 percent goes into the household and 37 percent is invested in the business. Curiously, Karlan’s study got at these results by asking clients the same questions in a number of different ways. Not surprisingly, when the banks ask clients why they want the funds only 2 percent of clients admit potential uses other than the business, even after the funds are given. Only when an independent surveyor asks indirectly do any relevant percentage of people admit to non-entrepreneurial uses for credit.

Studies are finding interesting potential ways to improve the impact of microlending. One possibility is better targeting (as discussed above, microlending appears to affect different people differently). Two other possibilities raised at the conference, both with encouraging preliminary evidence behind them, were the implementation of grace periods for repayment (more) and financial education focusing on “rules of thumb” rather than formal accounting (more).

It appears to us that an enormous amount of philanthropic capital has gone into microfinance. Last year we looked at data from 2008 and found that $11.7 billion had gone to microfinance funding of some kind, with $2.2 billion being grants. For context, total official aid earmarked for health was about $3 billion disbursed / $8 billion committed in the same year (data from Aid Data).

My greatest fear about microfinance is that all (or nearly all) of that money is chasing a good story rather than a good program.

In this context, it’s hard for us to see how one can argue that good evaluation is too expensive. The total budget of Innovations for Poverty Action that year was just under $6 million (data from NCCS).