The GiveWell Blog

I am not a flake

I said we would update this blog every Tuesday and Saturday. It says so right over there on the left. Today I am swamped, and I might not be able to give you the Tuesday masterpiece I’m sure you’re addicted to.

I have more pet peeves than anyone else I know, and one of the very biggest ones is what I call flakes: people who say they’ll do something, then back out without giving me the communication I need to adjust my plans. Anyone who’s ever stood me up, or even been very late to something without a heads-up phone call, or just forgotten to do something they knew I was counting on them to do, has felt my wrath … thanks to cellphones and email, there is just no excuse.

So this might be an extremely minor example – I doubt the number of people anxiously refreshing their reader for the latest GiveWell post exceeds 10,000 or so – but if I flaked out, I’d have to punch myself in the face, and I don’t want to do that. Here’s your heads-up. There will be a new blog entry late tonight or tomorrow morning.

The Holden Foundation: Serving obnoxious bloggers

You know what I wonder, late at night? I wonder whether if Bill Gates had gone the traditional route and created the Gates Foundation at the very end of his life, the Gates Foundation would have been devoted not primarily to education and health (as it is now), but to promoting computer literacy across the world. I think it could have happened, easily, if he’d been too old or too disengaged to be heavily involved: his philanthropic advisors and consultants could have asked “What does Bill Gates want?” and answered “Computer-related charity, because he was a computer guy.”

By thinking of themselves as “serving” him, they would have failed to do so – because they would have assumed his desires to revolve around “creating a legacy” and “fulfilling his personal values” in a narrow sense.

Instead, the Gates Foundation is just trying to help people as effectively as it can, however that is done. Gates is dealing with health and education because he thinks those are the biggest problems. The goal is broad and simple: make the world a better place. That’s what Bill Gates wants. Why wouldn’t it be?

I’m sure some people see charity as a way to please their vanity or create a legacy first, and a way to improve the world second. But is this as common as the world of nonprofit marketing seems to assume (and arguably, by assuming, to enforce)? The conversations I have about charity – including with wealthy people – invariably assume a common goal of helping people however that is best done. Unlike conversations about food or movies, these conversations really have almost nothing to do with personal (i.e., non-shared) values.

Anecdotally speaking, it seems that foundations whose funders are personally very involved (Omidyar, Skoll, Robin Hood, Google.org) are almost universally broad in their missions. Their mission statements have little to do with their founders’ biographies; instead, they’re just pursuing what they think are the most effective means to helping the world. It’s the foundations with dead or disengaged funders that have the narrow, “personal” missions, trying to improve life for 5’11” blue-eyed men or whatever. With no evidence, I blame consultants and marketers who tried to “listen to the donor,” when they would have gotten further by listening to themselves.

The customer is on your side

Crif-Dogs and I have different goals. They want my money; I want their delicious bacon-wrapped hot dog. They have to listen to me and cater to me to win my $4.50 (shut up – it’s well worth it). They might think I’m an idiot to want mustard with my bacon-dog, but they give it to me anyway because it’s what I want. That’s your standard customer-marketer relationship: the customer is always right.

That shouldn’t be how the donor-nonprofit relationship works.

The nonprofit sector is truly unique, because the charity “serving” me wants the same thing I do: to make the world a better place.

If I could just get the charities I work with to understand this, my life would be so much easier. But when I pick up the phone to get information, I run into a marketer (or “developer”). Marketers are taught to serve the customer; charm the customer; make the customer feel good; don’t contradict the customer. So I get salesy fact sheets; I get reassuring platitudes; I get thank-you notes; and when I ask questions that don’t make sense (it happens), I get answers that don’t either.

There’s no good reason for this. If the information I say I want isn’t relevant, tell me why. If helping people isn’t as simple as I’d like to think, explain. If the only way to get me to really understand your organization is to contradict my assumptions, isn’t that what you have to do? What’s holding you back?

Is it that you’re afraid the truth will make me donate somewhere else? If so, what are you doing working for this charity? You got into this business to help people, right?

Is the reasoning a Machiavellian “Get the money to the right place, for the wrong reasons?” You might want to re-examine your assumptions about your donors. How sure are you that they’re really so stupid and myopic? Might the gains you make by babying your donors be offset by the potential donors you’re losing, people who just want to be treated like adults and told what they’re actually paying for? Hint: people who are smart and thoughtful – and hesitant to spend money when they don’t truly understand where it’s going – often end up with lots of disposable income.

Or is the reason you don’t answer our questions that you don’t know what the answers are? Do you really understand what your organization does? Do you really believe that you work for the best charity in the world? If not, why on earth are you spending your life marketing for it?

For-profit marketing might be soulless and salesy, full of people persuading others of what they don’t believe themselves. But nonprofit marketing should be just the opposite. Marketers shouldn’t want to “serve” the donor; they should want the same thing the donor wants. As a nonprofit employee, you’re presumably sacrificing some income to help the particular organization you’ve chosen – that makes you the donor.

The first step to becoming a great nonprofit marketer should be to do great donor-side research, because when you find the organization you believe in with your heart and soul, marketing and transparency are one and the same.

Every time I tried to tell you, the words just came out wrong …

The latest Blog Carnival asks what donors wish nonprofits knew about them, and vice versa. In a way it’s a strange question: the idea of “wishing” knowledge on someone makes me think of forbidden love, or 8th-grade crushes, or at least Jim Croce. It doesn’t seem relevant when discussing two groups of adults that are supposed to communicate.

But while I’m certainly not too shy to tell nonprofits what I want them to know about me, I find too often that they still don’t know it. Here I’ve written out the claims I make that are most often ignored. And I’m glad I have, because I’m seeing a pattern.

1. I see you as competing with other charities.

All charities are trying to help the world, but they’re trying to do it in different ways. It isn’t enough for me to accomplish some good with my donation – I want to accomplish as much good as possible. That means you’re in competition, and that’s why I need so much information. It isn’t because I question your competence; it isn’t because I want to micromanage you (every donation I’ve ever made has been unrestricted); it’s because I have so many problems – and solutions – to choose from.

And if you think your only competitors are the charities “in your space,” think again. I’m not committed to addressing malaria, or diarrhea, or education. I’m just committed to helping the world. Anyone who does that better than you can win my donation away. And they will. Most importantly, they should.

2. I want to know what you’re doing with my money.

I’m deciding where to give $X, so I want to know what that $X is going to pay for. That means I want to see a budget – and at a higher level of detail than “Program expenses, administration, fundraising.” I don’t just want to know that you’re trying to help underprivileged children – I want to know how you’re trying to help them, how much it costs you, how much weight you’re placing on each of your programs, and what my $X is going to allow you to do that you couldn’t have otherwise.

Even the best organizations often can’t produce the kind of budget I’m talking about … and that just shocks me. Knowing how much you spend on each program – and what you’re purchasing (people? materials?) for those programs – is just common sense. For-profit companies can ask, “How much did we spend on airfare this year?” and conclude, “We should start flying coach.” Why do I have to drag a nonprofit kicking and screaming into telling me how much of its funds went to each continent?

3. No, listen. I want to know what you’re ACTUALLY doing with my money.

“You want numbers? I’ll give you numbers! 5c will save a child! $100 will vaccinate a village! $1000 will disband Al Qaeda!”

Sometimes I’m able to find out where these numbers are coming from. When I do, they invariably leave out necessary administrative expenses, ignore labor bottlenecks, and who knows what else. These gimmicks might fool a lot of people, but they turn off a lot of people too. When I talk to my non-giving friends, the most common reasoning I hear is “What’s my money really going to do? Those numbers in the pamphlets can’t be right.”

Administrative expenses are necessary and important. So is stability – the fact is that sometimes my money is just going to sit in a fund, helping to allow long-term planning. The truth about what my dollar allows isn’t as romantic as “20 children saved from death” … but it’s still worth a dollar.

4. I want the truth more than I want reassurance.

An extension of #3. I’ve come to your nonprofit because I want to do good; if I wanted to feel good, I’d go to a massage parlor. If you don’t think the truth is enough to convince me to give, either you think I’m a much worse person than you, or you don’t really believe in your organization. Neither of those is going to lead to great fundraising.

5. I want to help people more than I want good customer service.

The big one – really, the only one, since #1 through #4 are all ultimately motivated by #5.

As I scour the web looking to read about charity, I find myself reading a lot about marketing. (I’m not sure why this is – are marketers such a high proportion of every industry?) I’ve read a lot about making the customer feel listened to, feel important, and feel appreciated. This customer would prefer that you interrupt me, take weeks to get back to me, and call me a poop face, then demonstrate why your organization is a better avenue for improving the world than any other.

If what I say I want (say, minimal administrative expenses) doesn’t make sense, I want you to tell me why, not say you’re working on it. If my questions are based on bad assumptions, I want you to tell me so, not answer them narrowly. I’m not here for the “total experience” – I will trade 10,000 thank-you notes and 450,000 respectful compliments for a tiny bit of extra good accomplished. That’s what I’m here to do. And I’m concerned that the determination to please me is getting in my way.

Wait till next year

I’ve talked a fair amount about the question of what a foundation should do with all the money it has left over, after giving all the money it can give for a year. Now Jon B raises an interesting alternative to both investing it traditionally and to investing it in “responsible companies”: loan it to another charity.

There is a version of this idea that could be good – loaning the money to a charity that uses loaned funds only for liquidity (immediate access to capital), not in order to take the interest as donations (directly or indirectly).

A perfect example would be a microfinance organization that just needs to borrow money (to lend to the impoverished), and doesn’t have enough collateral and/or credit to do all its borrowing at a reasonable interest rate. If a foundation has money it won’t be using until next year, it can lend that money to this organization, and plan on getting paid back with a reasonably low interest rate (as though the borrowing organization had solid credit/collateral). There is, of course, a risk of default. In this case the foundation is essentially donating not its money, but its tolerance for risk and its ability to postpone spending. You could think of it like donating shoes: you could sell the shoes and give the proceeds to charity, but if the charity actually needs shoes, giving the shoes directly saves a little bit of transaction cost. That would make sense. If I’m being dumb, I hope my hedge fund friends correct me.

Charity Bank, the site Jon links to, appears to be a confusing blend of this idea and the less compelling idea of donating your interest to charity – which seems to me like just a fancy way of making a direct grant. Opening a (UK) Charity Bank account, you choose between 0% and 2% interest per year – all well below UK market rates – which makes me think that a lot of the value is in effectively donated interest payments. In addition, I can’t find any details about what charities it is investing in. Without this, it is really hard for me to picture whether there is really a need in the nonprofit sector for credit/liquidity, as opposed to good old money.

I still think the whole topic of “responsible investing” or “aligned investing” is overblown, and now I’m writing more about it. Bad Holden.

Hello, world

Other charity bloggers have been noticing us, and there have been some good discussions going on about GiveWell in other places. There really should be a better system for blog-to-blog communication, such that you can see all the conversations relevant to your blog of choice just by reading that blog’s feed … this is what the trackback system is supposed to do, I think, but it doesn’t work. Internet entrepreneurs, you’re welcome for the business idea. In its absence, here’s a quick roundup.

First off, the discussion over Network for Good’s processing fees caused a mini-stir. Some found our approach obnoxious and “suck[y].” Others defended us. Katya, of Network for Good, wraps up with her thoughts on dealing with customer complaints, which demonstrate an attitude we wish we saw more of.

Then there are those who looked beyond the dispute to check out our actual project. Other bloggers are confirming what we suspected: that no one else seems to be doing what we’re doing. We had some discussion about why that is on the Tactical Philanthropy blog. Of course, we hope others will feel the same needs we do, and enter the ring to address them – though now that we’re rolling, I hope that anyone who wants to put their time into a project like this will find out about us and end up shooting me an email to make sure there’s no time wasted on outright duplication. Meanwhile, Lucy Bernholz, who seems to generate catchy phrases in her sleep, calls us “community-driven, transparent analysis for donors by donors.” I really hope she didn’t pull a Pat Riley and trademark that phrase – we may have to steal it.