We constantly emphasize the huge amount of money that is given by individuals. However, the figures we usually point to refer to all giving; people often, correctly, point out to us that many individual gifts are made to support churches, alma maters, public goods, etc., rather than to help those in need.

A study by Google.org and the Center for Philanthropy at Indiana University provides some analysis on exactly this point. It uses survey data to examine how much of individuals’ giving is actually intended to help those in need. It estimates both the amount given directly to humanitarian organizations (3rd column) and the amount given “indirectly” to help those in need – for example, donations to churches that use some of their funds for humanitarian programs (4th column). The summary table is below, taken from page 29.

Note that individuals making less than $1 million per year account for ~$66 billion of giving focused on the needs of the poor, $17 billion of which is given directly to relevant organizations. These numbers are smaller than the headline number of $223 billion, but they’re still huge (and still dwarf the giving of Gates and other foundations).

(This study has been around for a while and we cited it in our original business plan, but we’ve never made this point directly on our website.)

The last blog post shares general thoughts on Money Well Spent. Specifically, though, this bit really struck me (page 12):

In our personal lives, we regularly make year-end gifts to organizations for which we have warm feelings. These gifts make us feel good, and doubtless they help good organizations. But this isn’t the way to change the world, and it certainly is not a responsible way to give away someone else’s money.

Why give away your own money in a way that would be “irresponsible” with someone else’s?

Why be smart, disciplined and strategic when giving large grants, and then drop all of these principles for your individual gifts?

Especially when individual gifts collectively dwarf foundations’ grants?

I just finished reading Money Well Spent. (Disclosure: I was sent an advance copy.) The book gives a clear and public picture of how the authors conduct their grantmaking, something I believe is relatively rare in the sector; I’d like to see more people in this area laying out their approach and their positions on key debates (summarized below), as Brest and Harvey have.

Concise and example-backed arguments are given for many principles that we agree are important, including:

• The importance of forming a clear theory of change (i.e., laying out where a given program fits in the causal chain necessary to achieve desired outcomes, and what evidence there is that each link in the chain works as hypothesized).
• The case for providing general operating support (Brest and Harvey concede that there are times for restricted funding, but on balance feel that more gifts ought to be unrestricted).
• The importance (and meaning) of rigorous evaluation, citing two of our favorite organizations – the Poverty Action Lab and KIPP – as examples.
• Why “charity” can be as good a use of funds as “philanthropy” (something we discussed here and here).
• The case for quantifying “cost-effectiveness” of different approaches (although we disagree with the authors’ emphasis on “social return on investment” as measured in dollars, for many of the same reasons that we take issue with the Disability Adjusted Life-Year metric).
• Most importantly, a plea to “consider how failure can contribute to the knowledge base,” and publicly publish impact studies even of failed projects. (Good examples of such studies are scattered throughout the book.)

The authors also discuss many topics of more interest to larger funders; their emphasis is very much on creating and driving initiatives, rather than finding already-strong programs that just need more funds.

Overall, I recommend this book to grantmakers interested in an overview of good general practices in grantmaking. There are many interesting examples throughout the book, but its focus is general (grantmaking strategy in the abstract) rather than on specific issues (i.e., what the most promising programs are). We’d like to see more public discussion of the latter, even more than the former, but welcome both.

We’re currently working to find vehicles for donors to fund certain highly appealing program-based interventions. It’s not a simple task, because when dealing with large organizations, it’s rarely clear just how an individual donor’s “drop in the bucket” fits in.

Large organizations like UNICEF run a huge variety of programs – including programs such as iodine fortification (something we’re very positive about) and programs such as water infrastructure construction (which we are less excited about). From conversations with such organizations, we feel that a donor has the following options:

1. Gain confidence in the entire organization by getting a bird’s-eye view of its strategy, priorities, and activities; then give unrestricted.

In my view, this is the ideal way to donate: it means finding a charity that shares your vision (not just one capable of carrying it out) and avoiding micromanagement. However, getting a decent bird’s-eye view of a large international aid organization can be extremely difficult.

2. Mark your donation for a particular ongoing program, or even for a particular piece of a program (as outlined in this post).

This is the possibility most often raised by the organizations we talk to. For example, when asking how a donor could contribute to expanding micronutrient coverage, one organization offered a chance to participate in an existing program that distributes fortified biscuits, such that “each $X could buy one biscuit.”

The drawbacks of this approach are discussed in our earlier post: often such a donation essentially amounts to an unrestricted donation.

3. Fund the entire budget of a large-scale project (for example, bringing iodization to a new region).

This approach involves giving funds in exchange for a new project’s being carried out, giving the donor true control (not just attribution, as in #2). The obvious problem is that it requires enough funds to pay for an entire large-scale project, and is therefore outside the reach of many individual donors.

#3 might become an option if individual donors coordinated with each other, pooling their money to fund a particular sort of project. We are considering trying to facilitate this sort of coordination sometime in the future.

For now, though, we feel that the only way we can satisfactorily answer this question is through approach #1: finding organizations that are either “simple” enough (focusing overwhelmingly on a particular kind of project) or well documented enough that we can understand, and endorse, unrestricted donations to them.

Iodine deficiency has been linked with child mortality as well as permanent cognitive debilitation. Some references are on page 25 of the 2004 Copenhagen Consensus report on malnutrition; a WHO report paints a more vivid qualitative picture (page 6):

In areas of iodine deficiency, where thyroid hormone levels are low, brain development is impaired. In its most extreme form, this results in cretinism, but of much greater public health importance are the more subtle degrees of brain damage and reduced cognitive capacity … the mental ability of ostensibly normal children and adults living in areas of iodine deficiency is reduced … there is little chance of achievement and underdevelopment is perpetuated. Indeed, in an iodine-deficient population, everybody may seem to be slow and rather sleepy.

How do you and I avoid these disorders? The answer isn’t as simple as you might think. Within the last century, iodine deficiency was common in the U.S., and it has been combated using an explicit and sustained public health effort. The following is taken from the Micronutrient initiative’s global progress report:

The element iodine was discovered in 1811, but almost a century passed before it was established that lack of iodine caused the swelling of the thyroid gland commonly known as goitre … In the United States, the alarm was first raised in Michigan in 1918 when it was revealed that over 30% of men medically examined for war service had been found to have an enlarged thyroid. Many were declared unfit for service. By 1923 an Iodised Salt Committee had been formed, including physicians and representatives of the Salt Producers Association …. Later that same year, the Morton salt company began marketing iodised table salt nation-wide … by 1932 iodised salt accounted for 90% to 95% of all sales.

Iodine deficiency disorder is now extremely rare in the U.S., but it is still common in many other parts of the world (see the WHO 2004 report on iodine status worldwide). The effects on cognition and economic growth are widely unknown but potentially disastrous – and this is a problem that isn’t necessarily going away by itself, or going away as soon as wealth increases. (Especially if there’s a direct link between iodine deficiency and productivity.)

Iodizing salt may not have the same visceral appeal as water-related programs, but it’s a proven way to solve a truly debilitating problem and reduce both death and poverty. And it’s an area where there’s arguably no substitute for large-scale public health programs. Note that the Copenhagen Consensus rates it as the 3rd most cost-effective use of funds.