The GiveWell Blog

The Straw Ratio: Closing thoughts (for now)

I’ve done an arguably excessive amount of ranting on what I’ve dubbed the “Straw Ratio”: the idea that we can find the best charities by seeing what percentage of their total expenses goes to program expenses, or, in Straw Man parlance, goes “straight to the people who need it.” It’s about time for me to stop devoting every post to this, but before I do, I want to wrap up with why I’m so obsessed with this issue.

To me, the Straw Ratio is more than a bad metric: it’s an emblem of the biggest single problem with charitable giving today. The problem is the fallacy – specific to charity – that how much you spend is more important than how you spend it. That, in the end, is the fallacy behind the Straw Ratio: that what matters about a donation is not what it pays for, but how much it pays for.

It’s the same problem that sits behind the success of “microcharity” sites such as DonorsChoose and GlobalGiving and Kiva, which I will complain about more later – the attitude that getting your money straight to where it’s needed, bypassing administration and planning, is an exciting and intelligent way to give it.

It’s the same problem that sits behind some of the excessive restriction/designation of donations, both by individuals and foundations, which I will also complain more about later. Too many donors feel that if “someone else” pays for all the planning, evaluating, and administration (or if they simply aren’t paid for at all?), they’ve gotten more bang for their buck.

It might be the same problem that makes charities so reluctant to embrace transparency and admit that not everything they do is perfect – the obvious benefits of global dialogue, in terms of figuring out how to spend money, are offset by a fear that there will be less money to spend.

And in the end, it is probably the same problem that explains why donors are not smart about their giving, and nobody aside from GiveWell seems interested in helping them to become more so. From the (RED) campaign to the “Don’t Almost Give” campaign to, well, everything, “being charitable” is identified with “giving a lot.” The nonprofit sector is naturally obsessed with getting people to give more, and donors think that the only thing that determines how good you are at giving is how wealthy you are. That’s wrong.

The world’s needy don’t just need your dollars, they need your thoughts. If your friend gives more than you but gives it worse, this is pretty much the equivalent of their having a vastly superior tennis racket and being a vastly inferior tennis player. You are better. Why does that make so much sense in every context except charity, but sound so foreign here?

In all, I can think of a whopping two activities where money alone will buy you success. 1. Arcade games (the ones where you can continue as long as you have more quarters). 2. Strip clubs. Nothing else comes to mind.

Money can’t buy you a great movie. Money can’t buy you a great product. Money can’t buy you love. It can’t buy you a better world either.

Anyone who has ever had a job knows that throwing money at a problem is worthless, and that a single great idea can dwarf the impact of a bigger budget. Anyone who has ever watched a tiny startup business take down a Goliath knows the same thing. Anyone who has ever had a hobby knows that how much you spend is going to account for half, at most, of how good you are.

Anyone who has ever had 5 minutes of consciousness knows that intelligent thoughts are gold, and that next to them, money is cheap. So next time you give, expect your donation to help pay for salaries and self-evaluations. And when it comes to choosing where to donate, don’t use the Forbes list or the first slickster who sends you a picture of a baby. Put in some time, and donate some of your own intelligence as well. The world needs it.


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