The GiveWell Blog

More or less pie?

(updated on: ) | by Holden

An objection to our project that I get occasionally goes something like this: sure, it would be great if people really understood the complexities involved in helping people and gave accordingly – but aren’t we worried that revealing these complexities will just make them want to give less? What happens when people learn that charity in Africa is more complicated than “5 cents saves a life,” that charity in the US is more complicated than “Check it out, an adorable child,” and finding a low Straw Ratio isn’t the same thing as finding the best use of your donation?

Well, let’s break it down. If we succeed in creating a public dialogue about how best to help people, and a website where any donor can get a picture of what charities do and whether it works, there will be some ways in which this might make the pie bigger (more total giving) and others in which it might make the pie smaller (less).

Pie bigger: some donors are too analytical for traditional fundraising to work on them; the only way they can have confidence in something is if they have real information. As I argued here, giving them that information is key to getting them to give.

Pie bigger: some donors simply do not know where to start. That’s the boat I was in when I started GiveWell, and it took seconds to find like-minded people. As I argued here, there’s a world of difference between a resource that gives a “checkup” on thousands of charities and one that gives them a fully thought out decision to start playing with.

Pie bigger: controversy and conflict aren’t always a bad thing. As I argued here, bringing out the complexity and difficulty of charity means turning it into something challenging and engaging, rather than sweet and boring.

Pie smaller: some donors honestly believe that the charities they donate to – unlike every organization in the world – have never made a debatable choice or (heavens forbid) a mistake. As soon as they get wind, it’s less charity and bigger houses for them.

Pie smaller: some donors don’t want to be bothered with the details. Giving them a lot of information will overwhelm them, and they’ll give up before they can ever get out their credit cards.

So it could go either way, in theory. A couple things, though.

First off, the balance is tilted quite a bit by the simple fact of life that people seek out what interests them. We all know how people behave when they don’t want to think too hard about their vote: they just vote, straight-ticket, and ignore all the debates and analysis going on around them. In the end, donors who either don’t recognize or don’t want to understand the complexity in charity will just ignore us, and listen to the fundraisers. That’s extremely easy to do – much easier than doing things our way. (If it ever isn’t, that means we must have gotten really big.) By the time someone reads our research, they’re already expressing (a) an active interest in giving (b) a willingness to put effort into understanding the whole story. It’s hard to do that while fitting the profile of someone who quits in the face of imperfection or complexity. Bottom line, it seems pretty farfetched to think that we’ll reach more people who don’t care about what we’re doing than people who do care.

Secondly, it doesn’t just matter how big the pie is, it matters what’s in it. The donors we’re in danger of “pushing out” (again, I find it hard to believe they will even be aware of us) are the least intelligent and/or least engaged ones. The donations we’re in danger of eliminating are the ones that are floating about almost at random, to whatever charity says “We’re perfect” first. Meanwhile, the donors we hope to bring in are the ones who care enough to want to put in some extra time and figure out how to do as much good as possible. They’re the ones who can contribute to the dialogue, and they’ll probably be contributing more money as well. Contrary to what you may have heard, there are worse things than a smaller pie. Like a half-baked one.

(To those of you who saw that ending coming 5 paragraphs ago, I apologize. The marketing dept made me do it.)

Why don’t people give more?

(updated on: ) | by Holden

Generally, I’m less interested in getting people to give more than I am in getting them to give well – I think of healing the world as a project that needs a better, smarter budget more than it needs a bigger one.

But here’s a very simple idea on the subject that I don’t believe most (any?) fundraisers understand. A lot of people don’t give as much as they could, because they have no idea what they’re paying for.

You call the page at this link transparency? Seriously? 5 disconnected and unsourced price quotes, and a fundraising/program expense breakdown? This is a joke. This is a smoke screen. So 5 pounds buys a mosquito net … who distributes it, who uses it, and how many of the children the net protects from dengue fever die the next day from diarrhea? 17 pounds buys a blackboard and 32/mo pays a teacher – what about the administrator? Who trains the teacher? What do they teach? What else do those children need to escape poverty? You think this gives me an idea of what you do, what I’m paying for, how I can expect the world to improve thanks to my donation? All this does is convince me that you think I’m a sucker.

Not everyone has my reaction, it could be pointed out. Some people feel like they’ve gotten the whole story from those meaningless numbers. Fine. But go back to my initial claim: some people aren’t falling for it. Some people are more analytical and less impulsive than others. Which group do you think has more disposable income?

I don’t believe I’m alone here. Not when so many of the people I talk to about charity in general say they don’t have any idea what their donations are paying for, and even explicitly cite misleading crap like what I’ve linked to above as a turn-off. Not when many of our donors tell me that their donation to The Clear Fund is in a completely different ballpark from any other gift they’ve ever made. There are people out there who would give more if they really understood what it was for; that’s money waiting to be raised.

Fundraisers, you have your choice: you can use manipulative marketing and go for the easy kill; you can tell the truth and go after the donors who won’t be suckered; or you can do both. Why does the first approach seem like the only one you’ve even tried?

Cooperation “versus” conflict

(updated on: ) | by Holden

This comment struck me. It makes me wonder how many people get their “nonprofit niceness” (the bane of my existence nowadays) from a determination to act as though “we’re all on the same side.” The thing is, I do think we’re all on the same side – at least, those of us who are in this sector to help people, and not just to draw salary – and that’s exactly why I’m so adamant that conflict and competition be encouraged.

When different people are working toward the same goal, one of the most valuable things they can share with each other is their intelligence. Because they come from different perspectives and have different ways of thinking, they will have different opinions. That isn’t to be hidden or lamented, it’s to be celebrated. And when it comes to sharing different opinions, cooperation is conflict. I don’t know of any way for my mind to benefit from someone else’s, except through examining the differences.

Sometimes, simple examination and conflict will leave us all on the same page; but when intelligent people continue to disagree on the best course of action, one way or another they must compete – whether by making their case to the person who makes the ultimate decisions (the funder), or by each getting their own funding and letting reality provide the final test. Again, that isn’t unfortunate – it just means trying more than one tactic to get to the same end.

Conflict doesn’t just happen between armies; it happens between generals, precisely because those generals are so determined to win. Competition doesn’t just happen between two football teams; it happens between the players on the team, because letting Rex Grossman and Kyle Orton compete to play quarterback is what’s best for the Chicago Bears. Conflict and competition aren’t just things I want to see in massive marketplaces and nations; I also want to see them within families, companies, and communities. The people I challenge and criticize most are the ones who are most on my side, because that’s how we’re going to get our best shot at accomplishing our collective goal. If you think Elie and I are nice to each other, you haven’t met either of us.

When one charity hesitates to criticize another in the same field, that doesn’t tell me they’re cooperating; it tells me they aren’t working as hard as they can toward what’s supposed to be their common goal. My vision for the nonprofit sector is one of constant debate, conflict, and competition. Then, and only then, will the sector truly be like one giant family.

Alternative visions

(updated on: ) | by Holden

Last week, I shared my ideal vision for where we’re ultimately headed. Many of GiveWell’s biggest fans and supporters – including Jason – think it’s totally unrealistic. That’s OK. I’d be happy with about a hundred other possible chains of events, including:

  1. Donors give directly to charities rather than through clear funds, but they still pay a lot of attention to what organizations such as ours recommend. Consequently, the GiveWell seal of approval (and others, in other sectors) becomes desirable enough that charities volunteer their information, and our job no longer requires nearly as much money or time. Thus, reviews can continue to happen despite smaller budgets; reviewers that do a bad job get ignored, while reviewers that do a good job have tremendous impact; end result, the question of how to donate is still a public and informed discussion. (Jason outlined something like this in his comment.)
  2. Or, once donors start to demand the level of understanding we do, charities start voluntarily putting it on their own websites. At that point the role of a “watchdog” becomes much easier – verifying the claims that are made, rather than trying to figure out and assess what’s going on in the first place – and since all the information is easily available, all you need to have a dialogue about it is a discussion board. In that case, The Clear Fund would become completely unnecessary and obsolete.
  3. Or, the Clear Fund begins to compete for fundraising dollars with United Ways, philanthropic advisors, and other “charitable money managers.” Once they see that our transparency makes us more trustworthy and thus more appealing, they open their own doors in order to compete. They do it better and blow us out of the water.
  4. Or, existing foundations begin to make grants with the same transparency as The Clear Fund (whether because they realize it makes sense or because they’re pressured by public outrage with their locking their taxpayer-subsidized information behind a vault). They do our job better than we do and we get destroyed.

There are a lot of differences between these scenarios, including the continued role of The Clear Fund: it could become anything from a huge grantmaker to a lean-budget reviewer to a distant memory. That’s OK with me – as my past life decisions have shown, I place no premium on job security, and I’m ready to do whatever makes me most valuable, even if that eventually means bringing Bill Gates coffee.

But what these scenarios have in common is what’s important. Rather than a world in which the flow of money to charities has practically nothing to do with their ability to help people, we have a world in which the best ideas and approaches get the most funding. Rather than a world in which every attempt to make things better has to reinvent the wheel, there is a constant, global dialogue and debate over what works and what should be done next. Rather than throwing money at our problems, we solve them.

We’re not predicting or deciding anything we don’t have to. What we know is how much better the world would be if there were a public, thorough discussion of how to help people as well as possible. The first step in getting there is to find out as much as we can on the subject, and be the first people to share it. The Clear Fund is our best existing tactic for doing this, but the broader purpose of GiveWell is to get the information out in the open however we can, and get others to use it and add to it. That’s the only goal we’re wedded to.

We will be the most criticized grantmaker of all time

| by Holden

Getting there won’t be easy. Our registration form for nonprofits includes a question asking how we can improve the form, and I’ve gotten a lot of useful feedback from it (which I’m incorporating as we speak), but I’ve also gotten some ludicrously enthusiastic praise for what is, in fact, a series of about 10 checkboxes.

I read a lot about the power imbalance between funders and funded, and how the funded can’t speak their minds. I believe this is a real problem, because in private, personal conversations, I hear all kinds of horrible things about large foundations – yet public criticism of them is unbelievably rare considering that they are (a) huge (b) constantly making controversial and debatable decisions that affect us all.

Maybe the Gates Foundation feels good about dodging criticism and maintaining a pretty squeaky-clean image. But that isn’t our goal; our goal is just to help the world as much as we can, and given how difficult that is, that means getting criticized. A lot. On our process, our decisions, our logo, you name it. The more feedback we get, the better we’ll be. I’m already brainstorming about all the ways I can induce our applicants to give constant, totally honest feedback about how we’re running the process and how we can do better. (Any ideas? Comment.) Mark my words: we’re going to catch a world-record amount of flak.

My vision

(updated on: ) | by Holden

This seems like a good time to spell out my vision for how the nonprofit sector would ideally work (i.e., where we’re trying to help it get). This is important because a lot of people seem to think that we have a “hyperintellectual” idea of charity, and are hoping that all donors will eventually become charity nerds just like us – throwing emotion to the winds, and madly doing research before every donation. That isn’t the case. What I do picture is a world in which every tactical giving decision is publicly explained, and those who wish to can challenge it.

Part of every giving decision is an expression of personal values that will never be reconciled to others’. But when donors give, they aren’t just making these decisions – they’re also deciding on who can best accomplish their ends and how. They have to simultaneously figure out whether to improve education or fight disease (philosophical), whether to promote extracurricular activities or charter schools (tactical), and who runs the best charter schools (also tactical). That’s a lot to ask at once for someone who just wants to do their part in making the world a better place, and call it a Christmas.

Donors currently deal with this problem in one of two ways. Casual donors write a check essentially at random – usually by being passive and donating to whoever proactively reaches them. Serious donors may start to try figuring things out – but they have to start from scratch every time, since neither charities nor foundations publish thorough information on what works and what doesn’t (as we discuss at length in our business plan). And even serious donors don’t have time to really do all the necessary due diligence. It’s a full-time job, as we’ve discovered.

We aren’t trying to turn casual donors into serious donors, or serious donors into full-time program officers – we just want the three groups to help each other. To facilitate this, I picture a set of what I’ll call clear funds: organizations that pool money, make extremely large and extremely well-researched grants, and publicly publish everything they do. Different clear funds focus on different causes: ours will always be humanitarian-centric, but I hope to see not only direct competitors but also clear funds that focus on particular regions, religions, diseases, you name it. True charity nerds work for grantmakers, as they do now; serious donors pore over the different clear funds and carefully choose the best ones; and casual donors leverage serious donors’ opinions and comments to quickly pick good clear funds that line up with their values.

In this setup, everyone is putting in the amount of time they have to give – and using it in a way that is reasonable and realistic. Serious donors can’t reasonably evaluate charities – they can’t do that much due diligence – but they can read what clear funds come up with, and evaluate those clear funds’ ability to reason logically, explain themselves well, and (eventually) pick grantees that are able to get things done. And once they do, their opinions become worth something. Then, we can build all the great social networking tools in the world to help donors aggregate their opinions, find the recommendations of people who think like them, etc. Then, and only then, will personal recommendations and big-name endorsements indicate something other than flashy fundraising.

And what happens to personal choice under this scenario? Absolutely nothing. Donors still choose the causes that are most meaningful to them, which is the decision that was most personal in the first place; they leave the lower-level decisions to professionals, although those professionals remain accountable and criticizable by anyone who wants to poke around (a key missing piece now, as foundations don’t share anything that goes into their decisions).

Donors still support the causes that matter the most to them. Donors still use personal recommendations and referrals as essential parts of their decision-making. What’s new is that the final grants are far more concentrated, and far more carefully allocated; meanwhile, a debate rages in public that involves all of the world’s most interested minds. We don’t go from emotional to intellectual, but we go from throwing money at the world’s problems to putting our collective minds together – dividing up the labor by who has how much time – and solving them. That’s a huge change, and it isn’t one that has to take centuries. We have started the world’s first clear fund; here’s hoping others join us.