One of the goals we do not have is the goal of being “fair” to charities, in the sense expressed in this comment:

You are right on in your focus on provable results, but some areas are much easier to evaluate than others … A bad charity to me is one that is misleading, not transparent, or ineffective in comparison to its peers.

It seems common that people wish to be “fair” to charities, focusing on merit (how well they do what they do) rather than results. (Objections that our process favors large charities often come from a similar place.) How do people trade off merit vs. results in other domains?

• Investing: if company A looks more likely to be profitable than company B, most people will invest in company A. They won’t give a second’s thought to considerations like “But company B is in a more difficult sector.”
• Consuming. If you’re buying an iPad, I doubt you’ve worried much about how unfortunate Notion Ink is for not having the brand name, marketing budget and sheer size to compete for your dollars.
• Sports. Here we take significant steps to “level the playing field.” We are very careful about which advantages (strength, speed) we allow and which (equipment, performance-enhancing drugs) we do not.

We feel strongly that charity evaluation should not be seen as a contest, bringing glory to meritorious charities and dishonor to scams. Instead, it should be seen as a pragmatic way to get money to where it can do as much good as possible. “Merit,” “A good attempt given the difficulty of the problem,” etc. should be left out of the picture.

That’s why we’ve always taken more care to eliminate “false positives” than “false negatives” in our recommendations. If there’s an ineffective charity we recommend, that’s a real problem. If there’s a good one that our process has failed to identify, that may be bad from a “fairness” perspective, but it’s not nearly so problematic for the goal of helping donors accomplish good. Evaluators that are more inclined to give charities the benefit of the doubt probably “wrong,” and anger, fewer charities – but they’re less effective in directing funding to where it will accomplish a great deal of good.

And that’s why we’re unapologetic about our bias toward charities working on tangible, measurable goals. Health is an “easier” sector than economic empowerment for clearly defining goals, tracking progress toward them, learning from mistakes, and ultimately making a positive difference. That’s a reason to prefer health charities, not a reason to “handicap” them. (Note that we do think there can be good reasons to give to “less measurable” causes, including philosophical preferences; more on this in a future post.)

When we spend money on ourselves (investing or consuming), we think exclusively about meeting our own needs and wants. It’s only fair that when we spend money on others (charity), we should think exclusively about meeting theirs.

GiveWell has teamed up with Saundra Schimmelpfenig of Good Intentions Are Not Enough to produce Think Before You Give, a podcast aimed at helping to empower and educate donors. We enjoy Saundra’s work and are happy to be working with her on this.

The Think Before You Give website now has the first podcast available. The topic is the use of “administrative costs” in rating charities (an idea that has come under fire lately). The next episode will have an interview with the author of Tales from the Hood.

Also see Saundra’s announcement. We’re interested in feedback & suggestions for the podcast.

We are thrilled to announce a partnership with GuideStar via its new feature, TakeAction @ GuideStar.

TakeAction allows donors to select a cause that interests them and see general information as well as recommended charities, with content provided by GiveWell, Philanthropedia, and Great Nonprofits.

To date, GuideStar has provided only basic information, and only information at the level of “charities,” not “causes.” A donor searching for a particular charity could find financial information and (in some cases) open-participation reviews from Great Nonprofits, but could not find (a) information about the charities’ likely effectiveness & impact; (b) information to help get basic grounding in a cause, and choose the best charities within it.

We are particularly excited about the latter change. We believe strongly in “active giving” (finding the best charity possible in your cause of interest) as opposed to “passive giving” (starting with a particular charity in mind and giving as long as it raises no red flags). We believe that GuideStar’s new content is a major and important step toward helping its users give to the best possible organizations, and create healthier incentives in the sector.

TakeAction is new, and we expect that it has a lot of progress yet to make. (We believe that all three of the partner organizations have a lot of progress of our own to make, hopefully leading to coverage of more causes among other things). Today’s launch is only a preliminary step. GuideStar recognizes this and is eager for feedback, so please send it using the “Feedback” links on their various pages.

But for a sector that has been dominated by flawed, superficial metrics and giving focused on donors’ needs, rather than recipients’, this is an enormously encouraging development. One of the oldest, best-established donor resources is partnering with new ventures so that it can make real progress in what it enables donors to do. We hope this is just the beginning.

I previously expressed concerns about diversion of skilled labor: the possibility that nonprofits are outbidding the local private sector for top local talent. John de Wit of the Small Enterprise Foundation emailed us with a response:

On the question of whether we divert skilled labour from other potentially productive pursuits let me try to comment on this by referring to our actual practice:

• At the moment I can only think of two staff members, both current or past, who were working with any other agency which focussed on poverty alleviation or microcredit or some other development field … Both worked for different NGOs which did water provision. Neither came to us because of better pay. The one came because of being somewhat frustrated at the former employer and we wanted them to do work which was more in line with their personal professional interests. The other came because they were keen to work more on a part-time basis.
• The vast majority of our employees were unemployed when they came to work for SEF and it is only in the “professional” posts that we have employed people who already had employment. These worked for general commercial companies e.g. a producer of canned goods, a commercial farm, a legal firm etc.
• In general we are only able to pay at the 25-percentile level versus the general market. i.e. we grade all posts in the organisation using a standard grading system which is employed by commercial firms, non-profits and some government agencies. We then obtain national survey data for what employers are paying at each grade level. We try to pay at least at the 25-percentile level. This means that 75% of employers pay more than us and 25% pay less than us. (Paying at this level is not a good position to be in.) To illustrate this please see the attached file [confidential]
• Generally when a job candidate is already employed then we offer about 10% more than their current package.
• Besides from pay and our location another major challenge we have in attracting and retaining good people is that most people would rather work for a large, high profile company than some small “unknown” NGO in a small “unknown” town. The big companies have a very good public image and appear to offer extensive career opportunities.

I asked for clarification on what he meant by “unemployed” (chronic or transitional?) and “professional positions.” He sent me a complete breakdown of what he knew about the previous employment of major staff. I am not sharing the breakdown (due to the presence of individual names and salary information), but here is a summary:

The question of “diversion of skilled labor” is one that we haven’t even asked charities, because we’ve felt it is so unlikely that they will have substantive information to address it. SEF’s email suggests otherwise for at least one case.

I was talking with a friend of mine recently about how he decides which charities to support, and he said:

I really like the GiveWell approach, but there are two reasons it’s not practical for me to base most of my charitable decisions on it. First, you just haven’t covered a lot of the areas I care about. I want to give to support food banks, but you haven’t covered food banks. Second, a lot of the time, I get requests from friends or solicitations from charities (referred by friends), and I need information on a specific charity — that’s not something GiveWell provides.

These two issues — GiveWell’s lack of breadth in coverage of different causes and specific charities — are probably the most common points a lot of donors make when they think about using our research.

Here, I want to make a proposal that I think solves the problem for donors like my friend. If you agree with GiveWell’s philosophy about giving, do the following:

• First, when a charity (or friend) solicits you to support their cause, list a set of important questions you’d need them to answer to give your confidence that their approach is working. This is the approach GiveWell generally takes. (For example, see our questions for surgery charities, water charities and microlending charities.)

  If you need help creating a list of questions, email us and we’ll send you our thoughts. If you have your own, send them to us, so we can publish the questions that donors are using, and others can rely on the questions that have already been created.

• If they can answer your questions compellingly, and using specifics and facts rather than generalities and stories, great! Write them a check. (Unfortunately, this result has been unusual in my experience.)
• If they can’t answer your questions, write a check to a donor-advised fund and tell them that when they can answer your questions, you’ll recommend a grant to them from your account.

Here’s an example of how this would work.

A charity approaches you and asks for a donation. Let’s say it’s a food bank. The charity says, “People are hungry. Giving to us will help provide poor individuals with the food they need to survive. And, our approach is to pick up food that’s going to be thrown out by local stores and restaurants, so your donation is leveraged and will help a lot of people.”

Instead of just writing a check, ask the charity the following (these are just a few questions that come to mind when thinking about this issue):

1. Is using donations to pick up food the only program you run, or do you run other programs as well? What portion of your overall budget does each program account for?
2. Who are the people that your food bank serves? What type of food-needs do they have? (You may be surprised.)
3. Is money, specifically, a bottleneck to providing more people more food? (This is part of the room-for-more-funding question that we think is essential to investigate.) That is, it seems plausible that the bottleneck to providing more food is the supply of “leftover food,” not funds.
4. How much more food can you commit to provide if you receive another $100,000? $1 million?
5. Is the food you’re providing safe? Healthy? What type of food do you provide? Have you ever needed to discard food because it had spoiled? What rules do you follow to make decisions to discard food? How does your organization’s senior management know that the food delivered is high quality?

The beauty of this approach is that (a) you force yourself to give charitably when asked — you’re not just ignoring charities or friends; (b) you help to create good incentives for charities by only rewarding those that can make a convincing case for strong results; (c) you’ll help us create a repository of questions to ask charities working on different causes; and (d) you’ll still get a tax deduction.