The GiveWell Blog

Don’t talk to me about the Form 990

(updated on: ) | by Holden

I already knew the Form 990 was useless, but sheesh. Elie and I are currently going through 990s of hundreds of charities, trying to find the ones that might be eligible for Clear Fund grants – we’re currently working on the International category, looking for charities that work in Africa – and I can say that a solid 95% of the time, the 990s of these international charities (including the “Purpose” and “Program Accomplishments” fields) DO NOT SAY WHAT COUNTRIES THEY WORK IN.

As a reminder, the Form 990 is the only information that is publicly available for every public charity. It is where everyone has referred us for “substantive information about charities.” It is the only piece of information used by most charity evaluators, including Charity Navigator. And not only won’t it tell you what a charity does, it won’t tell you where it does it. So please, don’t tell me to look at a Form 990 until you’ve looked at one yourself. Thanks.

I just bought a printer

(updated on: ) | by Holden

Like most people who work in an office, I’ve never dealt with buying a printer before, so today I had to start from scratch. An hour ago, I knew nothing about ink vs. laser or HP vs. Lexmark; now, I’ve settled on a Samsung SCX-4200 and I’m feeling pretty good about it.

Why am I telling you this? Because that’s exactly how things should have gone the first time I decided to give to charity, years ago. Within an hour (or maybe a few, since it was a larger and more significant purchase than a printer), I should have gone from “What’s malaria?” to feeling pretty good about my choice of charity. If that had happened, of course, GiveWell wouldn’t exist and you wouldn’t have this awesome blog to read, so maybe everything happens for a reason.

But let’s break this down. Below is how I chose my printer, and how I failed to choose my charity.

1. Starting from nothing: the Google search. Printer: I typed “printer” into Google, scanned down through a few results, and recognized CNet, a big-name review site that I’ve had good experiences with the past. I clicked CNet. Charity: I typed “charity” into Google and clicked the first result, Charity Navigator. So far so good.

2. Broad overview of my options. Printer: Boom. Right on the front page, a link to a printer buying guide that gives me an overview of the pros and cons of different kinds of printers. I read it through and decided that I don’t need color and quality as much as I need speed and convenience – so I’m going with a budget laser. Charity: A bewildering list of mind-bogglingly broad categories; click one and you’ll get pages of results, even if you restrict yourself to the highest-rated ones. The equivalent for printers would be if CNet offered to let me search for the exact printer I wanted, or view its full list of hundreds of “CNet approved” printers. Yech. And keep in mind that the irrelevant criteria Charity Navigator uses are probably most equivalent to a “height of printer divided by smelliness of ink” metric.

I defy you to find anything on the web that does for malaria (for example) what CNet’s review does for printers: succinctly summarize the different approaches and their pros and cons. This doesn’t count.

3. Getting a short list of recommended options. I don’t have time to go through 400 different printer reviews, but I also don’t want the “one size fits all” option just dumped on me. Fortunately, CNet provides its Editors’ picks, with a few specs and a quick overview of each. I picked “personal laser”, scanned the options, and noticed that the Samsung SCX-4200 is cheap and includes a scanner. Sounds great. Charity: nothing (this doesn’t count). Every trusted reviewer or foundation is so committed to “neutrality” that it refuses to narrow the field subjectively – with the result that the consumer is left with hundreds of options, to grind through (not likely) or ignore and end up back where they started (quite likely).

4. Examining a single choice in depth. The Samsung caught my eye, so I checked out CNet’s review. It’s opinionated and honest, giving the pros and cons. It’s a couple pages, with the highlights right at the top. And most importantly, it includes comments from users. I wouldn’t use these comments exclusively – I want to read a systematic weighing of pros and cons from someone who’s taken the time, rather than rely on a few random vague impressions – but I also want a sanity check from people who’ve actually used the thing. Everything checks out, the people complaining about the Samsung seem crazy … so I’m ready to buy. Charity: this doesn’t count.

5. Growing increasingly frustrated with the difficulty of finding good information; asking friends to help me; realizing that there is a giant unmet need that I have to devote myself to attacking. Printer: I skipped this step. Charity: I imagine you know the story.

In the end, I’m not 100% confident that I’ve found the best printer. But I feel pretty confident that I’ve found one of the best ones. Not bad for an hour’s work. Imagine if an uninformed donor could do the same.

Is giving just like buying a printer? No. It’s higher-stakes, and it’s more complex. Creating a guide that’s both fair and usable would be harder than what CNet has done (and what CNet has done isn’t easy).

I would add that charity is more subjective, but that really isn’t true – 90% of what I was looking for in buying a printer was the subjective, unquantifiable stuff, like whether the thing is smooth or buggy and whether it’s easy to use or generally a pain in the neck. I used editors’ and users’ opinions, opinions that are highly general, unprovable, far from ironclad. These opinions aren’t perfect, they’re just helpful.

And, I would add that charity is more emotional … but, I think the opposite is more often true. I think the reason information on printers is so available is because the demand is there, and the demand is there because people really care about getting a good printer. They don’t just want to find one that’s “approved” or “four stars” and leave it at that – they want to get one of the best deals they can. They don’t just want to know that their printer means well – they need the thing to work, so they demand good information.

GiveWell isn’t just for hyper-active donors who need every bit of information; it’s also for time-strapped donors who want to quickly check out their options and come to a pretty good conclusion. That’s what I was, once upon a time. Really, within the causes we cover, the only donors GiveWell can’t help are the donors who don’t care as much about giving a good donation as they care about getting a good printer.

If we create a useful donor resource, and you choose to ignore it in favor of a whim or a compelling picture or a pet cause, don’t tell me it’s because you’re being “emotional.” I say it’s because you’re being lazy, and laziness comes from lack of passion. If you really care whether your printer works, you’re willing to put in some time and read some boring stuff before you buy, and that’s why there’s demand for what CNet supplies. If you really care about helping others, don’t demand any less.

Healing the world: What’s the rush?

(updated on: ) | by Holden

I’d like to welcome myself back with a simple question: why do foundations spend their money so slowly?

A couple quick numbers from 2005, according to the Foundation Center Yearbook:

  • Total amount of money held by U.S. foundations: $510.5 billion
  • Total amount of money granted by U.S. foundations: $33.6 billion
  • 33.6 billion divided by 510.5 billion: 6.6%

6.6%. Assuming that most foundations invest their assets at a moderate level of risk, this means that at this rate, all those assets will be given away by around … never.

Now, I know there are good reasons for foundations to give away their money gradually, not all in their first year. They need to gain experience and administrative capacity; they need to get to know their sectors and partners and options; they need to support charities over time rather than dumping their money on them, because this helps to ensure accountability.

All of this would justify foundations’ aiming to stay in business for up to around 10-20 years. Any more than that, and we’re looking at a staff and even generational turnover that would render these benefits moot. So why is it big news that the Gates Foundation is aiming to give it all away this century? Why, honestly, are the Carnegie Corporation and Ford Foundation still around, long past the point where anyone can reasonably claim to represent the founding funders’ wishes? Why are foundations in aggregate giving away money at a pace that indicates they expect to last longer than any U.S. company ever could – indeed, longer than the U.S. itself is likely to?

Is it because they think the returns from holding stocks and bonds are greater than the returns from enabling more people to help each other?

Is it because the law only requires that 5% of assets be given away each year? The law doesn’t require me to give anything to charity, but I still do it because it’s right (and presumably a foundation exists to do what’s right). And if I had to give 1% of my income to charity every year, I’d still give more than that.

Is it because they can’t find enough work to fund? In that case, what’s with all the kashmillions of charities bombarding the general public by phone every day, begging for more money so they can fund what presumably are currently possible but unfunded activities?

Are those charities all doing useless or fraudulent work? Have the foundations checked them out? If so, wouldn’t it be nice of them to let the rest of us (the general population opening our meager checkbooks year in and year out) know? On one hand, I think everyone should give – on the other, you have to ask how much sense it makes that charities have all come begging to Joe and Jane Sixpack while $500 billion (enough to fund the country’s 200 largest charities 6 times over) of money specifically earmarked for giving away sits in bank and broker accounts.

I would really appreciate if people in the know could weigh in on this question because this situation makes no sense to me. My personal best guess would attribute foundations’ sitting on their hands to two factors:

1. Excessively narrow mission statements. Not only are foundations generally obsessed with “innovation” and “attacking root causes” rather than “helping people as much as possible” (something I’ll complain about more later), but they tend to spec out extremely specific, narrow guidelines, and thus force themselves into a position where very few existing world-improving efforts qualify for funding. This forces charities to design new programs around their funding guidelines; end result is that we have a huge need for funds and a huge glut of funds that can’t clear, because foundations have pre-articulated their priorities and thus stopped them from syncing with the problems actually experienced by the world. I’d call this a tragic mess.

2. Plain old bureaucracy, inertia, crappiness, and crap. It’s easier, simpler, and more job-sustaining to give away 5% a year than it is to pour yourself into improving the world. (Note to foundation funders: if the people you’ve hired to staff your foundations prefer the former to the latter, you should be ashamed of yourself for the horrendous job you did in hiring.)

Others, please weigh in. I will be surprised if you can convince me that a world this needy, a charitable sector this underfunded, and $500 billion sitting in savings don’t add up to a broken system and a tragedy for those in need. But I’m listening.

BRB

(updated on: ) | by Holden

This is my first chance in a while, and my last chance for a while, to take a vacation. Technically, I’m still unemployed, so any Straw Ratio-minded donors should take comfort in the fact that they aren’t paying for this.

I will return to the GiveWell Blog on Saturday, May 19.

In the meantime, here’s a summary of what we’ve talked about so far.

Greatest hits: the 12 posts that I and the random people I’ve talked to like the most

Down with the Straw Ratio, or, “How much of my donation goes to administrative expenses, and who cares?”

If you’ve ever used Charity Navigator or had a conversation about charity, chances are you’ve discussed the wildly popular metric for evaluating charities: how much of their money goes to “program expenses” vs. “administrative and fundraising expenses.” I’m here to tell you that this metric is about as useful for figuring out how to help people as an old shoe.

The Straw Man opened the series, dubbing “% of expenses that go to programs” as “the Straw Ratio.” I then proceeded (after grudgingly conceding a tiny bit of value in this metric) to rip him apart. I started with the obvious: even if the Straw Ratio were useful, there would be a lot more to do to find the best charities. I then argued that administrative expenses are valuable in running a charity (or anything) well, and pointed out that the obsession with penny-pinching has consequences for the quality of the sector’s people, technology, and evaluation capacity. The Straw Ratio isn’t just a silly number: it’s a mentality that has infected everything from the Internet to donors’ brains, and it’s a mentality that GiveWell exists to fight.

What GiveWell looks for in a charity

So how do we intend to evaluate charities? Let’s start with two simple questions you won’t find on Charity Navigator: what do they do, and what’s the evidence that it works? We’re looking for charities that can already answer these questions well, demonstrating proven, scalable, and cost-effective approaches to helping people in the ways we care about. And for those of you who love to warn about the pitfalls of extremes, rest assured that we neither intend to accept evidence-free generalizations nor reduce everything to a formula.

The customer is on your side, or, why fundraisers should stop treating donors like 5-year-olds

Once you start focusing on the questions that matter, you find that they’re complicated. That’s OK – helping people is still worth money, and presumably the fundraisers trying to get mine agree. So why can’t we seem to communicate? Why is charity constantly oversimplified, reduced to pictures, and treated as something that donors must be cajoled and even tricked into? If fundraisers truly believe in what they’re doing, they must believe that donors don’t – and their assumptions about what donors value are keeping us from the relationship we should have: that of equals and teammates in the pursuit of improving the world.

Getting personal: altruism is real and it is spectacular

Well, there may be a lot of donors out there who are giving for the wrong reasons, but I (like other members of GiveWell) am a hard-core, straight-up, card-carrying altruist, and I don’t think we’re alone. My wish for a better world is no more insincere, exotic or “irrational” than the emotions felt by a video gamer or sports fan (and in the end it’s way more awesome). Altruism isn’t my only value, but it’s a passion that has taken over my life, and I’m devoting myself to it right now, not waiting until I’m filthy rich.

In short, I’m a charity nerd. And while some believe GiveWell to be over-intellectualizing giving, I’d say our attitude comes from caring more, not less, than traditional “Show me a picture and I’ll write you a check” donors.

“Nonprofit niceness” and how we hate it

I view criticism as the best road to improvement, and I hate the “everything is wonderful” attitude we see in the nonprofit sector. By focusing on how great people’s ideas and intentions are, too many people in this sector let themselves off the hook when it comes to actually getting results. I’d much rather they went harder on themselves and each other, benefiting the people who really need help.

Thoughts on specific charities and causes – getting down and dirty

Once our operations are up and running, we expect most blog entries to be devoted to specific charities and causes. We haven’t done so much of this to date because we started the blog after our initial (part-time) project, and we’ve been focused on forming a business plan to expand our project (more on that here). But, we’ve shared some casual thoughts on what you can do with your money. Elie and I had a back and forth about what it means to save a life with your donation; I announced the lucky charities that got a piece of my 2006 donations, and Elie endorsed his own charity of choice (although he has since flaked out and not finished the full official review – well, honestly, we’ve had other priorities). We also shared our notes from meetings with Children’s Aid Society and New Visions for Public Schools, and Elie was kind enough to mock people who donate to animal causes. (Note: all blog posts represent the opinions of the individual who made the post, not the official views of GiveWell.)

GiveWell milestones

We launched this blog, started getting attention (after making a stink about credit card processing costs), announced the Clear Fund (our large-scale project to accomplish our goal of promoting transparency and good information for donors), gave a valiant though futile try at making the NetSquared conference (maybe the problem is that we aren’t actually a “Web 2.0” project), and recently revealed our identities.

Other stuff

I got involved in the debate on “responsible investing,” or whether foundations should try to align their investing with their grantmaking (i.e., not hold stocks that work against the values they exist to promote). My position is that it isn’t worth the effort and that too much is made of this issue, but that didn’t stop me from posting a whopping four times on the topic: one, two, three, four. When I get back, I intend to raise more of a stink about the issue I asked about in the second of that series: why are foundations investing (rather than giving away) such a high proportion of their assets in the first place?

I started posting FAQs here, but either the release of our business plan answered most of them or I just got bored with the idea, not sure which. Anyway, here are the three FAQs I wrote up:

And finally, if you’re looking to complete your collection of GiveWell posts, don’t miss these basically pointless updates and notices I wrote!

Can charity be cool?

(updated on: ) | by Holden

Trent Stamp says charity can never be cool. He appears to have history on his side, given (a) the number of powerful people who would love charity to be cool, and the amount of effort and the number of campaigns they’ve devoted to it; (b) the fact that charity isn’t cool, and has never been as far as I (the authority on these matters) know.

Is it a lost cause? I hope not, because it would be awesome if charity were cool. Imagine if people were as voluntarily, proactively, and obsessively interested in fighting diarrhea as they are in poker, fantasy football, Second Life, sudoku, or any of the kaschmillions of other dumb things that people spend ungodly amounts of time and money on. Why isn’t this happening? Can it ever happen?

Consider the following observations, backed by nothing except my supreme coolness:

  • Things that are cool are generally controversial. It’s fun to be part of a group that opposes / makes fun of another group. Well, if you’re pro-charity, who are you against? No one, as long as charity is conventionally thought of as something that never involves any disagreement of any kind – the current attitude (and the attitude promoted by these campaigns) is that all charities are wonderful and that the more you give to any charity, the better. When’s the last time you heard someone slam a particular charitable cause? (This blog doesn’t count.) What “cool” things can you think of that you’ve never heard anyone slam?
  • Hobbies and other obsessions generally have a competitive element. At the very least, they require some sort of skill beyond spending money (even fashion requires taste). Yet the conventional attitude in charity is that all donors are winners, end of story. If two people spend the same amount, there’s no consideration of who spent it better. Can you think of something people do for fun that works like that? I can’t.
  • Hobbies are time-consuming. Of course, a large part of the reason people want to make charity cool is because they hope it will encourage people to spend more time on it. But … what is there to spend time on, as long as donating consists of writing a check?

Here’s something to chew on. I would say about half of the original eight members of GiveWell had never had much interest in charity before the project started. That includes me and Elie. We initially saw our research as a chore. But once we discovered that donating well takes brains, not just money, well … we love using our brains. Once we realized that there is such a thing as a bad donation decision, and we can criticize and argue with and oppose ourselves to those who make them … let’s admit it, that’s fun. Once we dropped the conventional notion of charity, and realized that we were doing something that takes hard work and smart thinking, our interest level went way up. Elie and I are now as addicted/obsessed as any poker player I know of. What no PR campaign has done for us, the realization that charity is something we can argue about has.

Unlike sports or fashion, this hobby is all about hard work and brains. It doesn’t involve our athletic abilities (thank God) or our sense of style (amen). So I’m not sure that our attitude has the potential to make charity specifically “cool.” But it does have the potential to make people spend time and effort in a way that they hadn’t before. In other words, I think our attitude toward giving can make it possible to be a charity geek … and that’s not a bad start.

Post delayed

| by Holden

The next few weeks will be hectic for me and GiveWell. Today, I don’t have time for a post, but I promise you one by midnight (EST) tomorrow.