GiveWell recently recommended a grant of up to $750,000 to Malengo, an educational migration program. Malengo supports students from low-income countries in moving to high-income countries for university. The goal is to enable them to earn a higher income over time, benefiting both the students and their families.

GiveWell is co-funding the grant with Open Philanthropy, which is contributing an equal amount, for a total of up to $1.5 million over three years. We expect the GiveWell portion of the grant to be funded in part by individual donors and in part by the All Grants Fund.

One of our Program Officers, Erin Crossett, recommended this grant based on the belief that it could be a highly cost-effective opportunity. As a small discretionary grant, it received less scrutiny than our standard grants.

This grant provides an interesting learning opportunity for us, and it may support Malengo through a particularly challenging financial period.

The rest of this post shares why we think Malengo’s program could be cost-effective, how filling this specific funding gap might enable Malengo’s program to become more financially sustainable, and what we hope to learn next. You can read more about the full rationale for this grant on our grant page.

A small discretionary grant

Our senior grantmakers can collectively recommend a total of up to $10 million in “small discretionary grants” each year (more details here). We believe that we can increase our expected impact by occasionally funding small, promising opportunities like this one without investing a lot of time in evaluating them.

We’re writing a post about this grant because we think it’s interesting and different from our usual recommendations. But almost by definition, it’s not representative of most of our grantmaking work. Most of our funding goes to programs we’ve researched more deeply in our key focus areas of malaria, vaccines, nutrition, and water quality. However, we’re always excited to look into new areas that could be promising, including programs like Malengo’s.

Malengo’s migration program: A promising way to increase incomes

The income someone can expect to earn varies widely based on where they live. Around the world, millions of people move from lower-wage to higher-wage areas, either within their home countries or outside them, in hopes of making a better living for themselves and their families.

Many students from lower-income countries would like to go to universities in high-income countries, but can’t afford to do so. They may also lack the non-financial support and mentorship they would need to successfully complete a degree in a foreign country. Malengo’s flagship program enables Ugandan students to attend university in Germany. It provides support including:

• Tutoring and funding to apply for university
• Assistance in obtaining a student visa
• Funding for first-year housing, living expenses, and travel to and from Germany
• Mentorship and other support for students’ well-being and personal development
• Connection to the Malengo community of students

We believe attending university in Germany gives participants a substantial income boost relative to what most could expect to earn if they stayed in Uganda. The funding from GiveWell and Open Philanthropy will contribute to approximately one hundred more students taking advantage of that opportunity.

Some evidence also suggests that migration generates positive spillover effects in migrants’ home countries. For example, migrants might send remittance payments back to family members and inspire increased educational attainment among their family members.. Malengo shares its view of the evidence for returns to educational migration on this page; we haven’t reviewed this material in-depth.

Our central cost-effectiveness estimate places Malengo below our cost-effectiveness bar, but under optimistic-yet-reasonable assumptions, it could exceed our bar. This analysis is preliminary and shouldn’t be directly compared to more well-developed estimates like those for our top charities, but developing it helped us get a sense of Malengo’s potential impact and the most important drivers of its cost-effectiveness.

Malengo’s financial sustainability

Malengo is currently at a tricky stage in its development: several cohorts of students have begun attending school in Germany, but none have yet graduated. Malengo hopes to become financially sustainable with minimal philanthropic support once students from its earlier cohorts graduate and begin earning incomes.

Students who graduate and earn a relatively high income will give a portion of their earnings back to Malengo, up to a certain amount, via an income-sharing agreement. That way, former students would “pay it forward” and enable Malengo to support future students. Malengo expects it will have an easier time attracting private investors once students start to contribute to Malengo via this agreement.

Providing funding at this stage seemed especially promising because it may help support Malengo through this period, thereby helping the program survive and support more cohorts of students even after the grant period ends.

We wouldn’t want to see Malengo shut down before it has a chance to test out its theory of change, so we decided to take advantage of the opportunity to fund these critical years. If Malengo does become financially sustainable, this would be a leveraged opportunity by which our funding enables impact for years to come.

Co-funding with Open Philanthropy

We and Open Philanthropy decided to co-fund this grant (each contributing up to $750,000). We were both in conversation with Malengo, and since we were both interested in supporting it, we decided to split the funding opportunity equally. Co-funding with Open Philanthropy provides an opportunity for us to learn more about each other’s approaches to grantmaking and home in on key areas of disagreement. We compared our rough initial estimates of Malengo’s cost-effectiveness and noted that we had different subjective assessments of the probability that Malengo scholars would work in Germany or another high-income country after graduation, which is a key driver of benefits. Over the course of this grant, we will update this parameter as Malengo cohorts begin to graduate.

What we hope to learn next

We think Malengo’s program is promising, but it’s a relatively new program and we don’t know as much about it as we’d like to. In order to determine whether to fund it at a higher level (if it continued to need philanthropic funding), we’d want to form a more confident view about its impact. Malengo is running a randomized trial comparing students who enroll in the program to equally qualified students who did not receive a slot via the lottery system Malengo uses. The trial should provide rigorous estimates of Malengo’s effect on outcomes like income, remittances, and psychological well-being.

By supporting the program over the next few years, we hope to learn about a number of key questions, including:

• How many students stay in Germany after graduation? As mentioned above, this is key to the cost-effectiveness of the program, as we expect graduates who remain in Germany will have much higher incomes, on average, than those who return to lower-income countries. It’s also uncertain: when we compared estimates at the time we made the grant, we estimated that 50% of students will stay in Germany, Open Philanthropy estimated 70%, and Malengo estimated 87%.
• Is Malengo able to become financially sustainable? As discussed in the section above, this is key to Malengo’s theory of change, and will affect how cost-effective our funding ultimately is. Over the next three years, we expect to learn about Malengo’s ability to raise additional philanthropic funding to field larger cohorts, and to observe the income-sharing agreement repayment rates of Malengo students who graduate.
• How much does Malengo’s program cost per person? Malengo has high fixed costs. In addition to providing financial support to individual scholars, Malengo has retained the necessary services to provide legal assistance, psychological support, and mentoring to its participants. Since Malengo is operating at a relatively small scale, these fixed costs are distributed over a smaller number of students, which means that the program is expensive on a per-student basis. Our hypothesis is that an organization like Malengo needs to provide these services regardless of scale (i.e., they need to have legal services on-site to handle immigration issues whether they field a cohort of five students or five hundred students). If Malengo is able to meaningfully increase its average cohort size, it will likely seem substantially more cost-effective.

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We’re looking forward to learning more about Malengo’s impact over the next few years, and we’re excited for the Ugandan students we expect will be able to pursue an education in Germany as a result of this support.