Three Cups of Tea scandal: why we had the right bottom line on the Central Asia Institute

There has been a lot of coverage of the scandals around the Central Asia Institute. The founder has been accused of fabricating inspiring stories, as well as of spending less than half of the millions of dollars he’s raised on building schools.

The Central Asia Institute receives four stars from Charity Navigator (archived) and had perfect ratings from Great Nonprofits prior to the scandal (archived), but GiveWell has declined to give this organization a recommendation or distinction (note that that page was published in mid-2009).

In a sense this doesn’t indicate impressive foresight on our part: nearly all charities we examine do not receive recommendations or distinctions, so it’s not as though we spotted the fabrications and financial mismanagement ourselves. Yet in the bigger picture, I see this incident as a vindication of our approach to giving: it’s a reminder that you shouldn’t give charities the benefit of the doubt.

Central Asia Institute is an education charity. Our questions for education charities are:

  • Is the goal to improve attendance or to improve school quality?

    • If the goal is to improve school attendance, what sorts of schools will beneficiaries be attending? What information is available on teacher attendance and quality of instruction? What evidence is available regarding the program’s effect on attendance?

    • If the goal is to improve school quality, is there evidence that similar activities have causally led to improved schools (in terms of attendance, test scores, graduation rates) in the past? Are indicators of school performance tracked over time, both before and after the interventions?
  • What evidence is available regarding the likely impact of any improved performance/attendance on later life outcomes? (For example – what are the economic opportunities that will be available to students and how do education levels relate to them?)
  • How would activities change if more revenue than expected was received? Would more revenue translate into more students served, and up to what point?

When we looked at Central Asia Institute’s website, we saw lots of stories but not a word to answer any of these questions substantively. So, as we usually do, we declined to give it a recommendation or distinction. As it turns out, the Central Asia Institute couldn’t have answered these questions well, because (a) it does appear to focus on school building rather than school quality, thus falling prey to one of our main concerns about education charities; (b) it apparently does not have strong monitoring and evaluation of its own schools. From the CBS story:

The IRS tax return Central Asia Institute filed last year included a list of 141 schools that it claimed to have built or supported in Pakistan and Afghanistan. Over the past six months, we visited or looked into nearly 30 of them. Some were performing well, but roughly half were empty, built by somebody else, or not receiving support at all. Some were being used to store spinach, or hay for livestock; others had not received any money from Mortenson’s charity in years.

If the Central Asia Institute had had anything on its website to indicate promise (such as an example study from a single school showing high-quality education), we would have opened a more in-depth investigation, including in-depth examination of the “What do they do?” and “Is there room for more funding?” questions, which would certainly have led us to the observation that the Central Asia Institute spends less than half its money on actually building and maintaining schools. (This point, raised by the CBS story, is easy to see from page 2 of the organization’s most recent tax return (PDF).) The fact that it still technically has a low “administrative expense ratio” is just a reminder of how easily manipulated, and ultimately meaningless, this metric is.

People frequently object to the fact that we recommend so few charities, and to our equating of “not enough evidence to evaluate” with “not recommended.” But the fact is that if a charity isn’t disclosing substantive information to answer the tough questions about its activities, you have no way of knowing whether it has the same kind of problems that the Central Asia Institute has. Certainly you can’t know from looking at its rating from other agencies.

We recommend very few charities, but we are able to stand behind those we do recommend. If you’re looking to do as much good as possible with your donation, consider choosing from a smaller menu to ensure that you get quality.

Comments

Three Cups of Tea scandal: why we had the right bottom line on the Central Asia Institute — 6 Comments

  1. I agree that the situation discussed provides a good example showing that the overhead ratio is a very poor metric and of how much money can be wasted in absence of internal monitoring and evaluation.

    On the other hand, I find the introduction and the conclusion of this post misleading; there’s an implicit suggestion that there’s a substantial chance that Central Asia Institute is representative of a given nontransparent charity, which is something that we can’t infer from the fact that there was a scandal with a single charity among the 404 charities that GiveWell didn’t recommend.

    I think that one is on more solid ground saying charities vary widely in cost-effectiveness and that that GiveWell’s top rated charities are probably among the best in their respective causes so that if you’re trying to do as much good as possible you’re much better off donating to one of GiveWell’s recommended charities than you are with donating to a generic charity in a given cause, independently of whether or not a given generic charity is a source of scandal. This is in line with your blog post from October 6th 2010.

  2. Jonah, I agree that we don’t have evidence that Central Asia Institute is representative of a given nontransparent charity. I don’t think our post suggests otherwise. What our post says is that our process is unlikely to recommend a charity with this sort of problem, and that other methodologies do not offer the same kind of protection.

  3. To say this is SO disappointing to me is a vast understatement. Three Cups of Tea is one of the most inspiring books I’ve ever read, I have bought the book for so many people, and the thought and principles behind it gave me hope. I rarely have such regard for a man; who values the education of women, and builds bridges and schools. Can’t there be one person who is incorruptible?

  4. Recycling facts echo’s my sentiments. However, Greg Mortenson, as a one man show, a braver, more determined man, one could not find. I more than appreciate the fact Give Well would not recommend Central Asia Institute. Doesn’t mean I wouldn’t support a man who goes to the ceiling of the world to build schools that may help even one person. For the many he has touched, saved and given the opportunity of education, I more than applaud his amazing efforts. Greg’s accomplishments have not gone away because he is a lousy book keeper and doesn’t meet the strictest criteria for recommendation. I applaud Give Well for doing their job! Well Done !! I also love Greg for his amazing magical feats, although not perfect, are fabulous none the less. So, I am not disappointed in Greg. I am relieved he is human after all. Just for the record…my donation to the Central Asia Institute is buying Greg’s books and tapes. I do listen to Give Well. They are a terrific group!

  5. Anybody catch this story on NPR a couple of weeks ago:

    http://www.npr.org/2011/05/06/136029810/can-you-know-where-charity-dollars-go-not-easily

    What was interesting here was the CEO of Charity Navigator stating that (in the wake of the Three Cups of Tea scandal), they are revamping Charity Navigator’s ratings to focus more on “actual impact” as opposed to purely financial measures.

    This was stated rather matter-of-factly, as if it were a straightforward thing to do.

    Anybody have any clue what they think they’re going to do to measure such?

  6. I also saw the NPR story and thought it was interesting. I think that Berger was referring to their plans for Charity Navigator 2.0, which you can see here or here.