The GiveWell Blog

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.

Where should we donate?

(updated on: ) | by Holden

We need your help. We’re about to contact all the charities we’ve identified as being potential Clear Fund grant recipients. We’ve mostly found these organizations through a systematic search through a gigantic stack of Form 990s (let me know if you want more details – they’re fantastically boring), and have found a few others in one-off ways. We don’t want to miss anyone good. So If you know of a charity that would be great to donate to, now is the time to plug them.

What we’re looking for: broadly, we want organizations with proven, effective, scalable ways of helping people. That means they reliably can turn more money into more lives affected. Innovative and totally untested experiments, research organizations, etc. certainly have value to society – but that isn’t what we’re looking for. Ditto for small organizations where we can’t predict what would result from an influx of funding. Ditto for political advocacy. We want to buy better lives for others, as cheaply and confidently as we can.

More narrowly, for our first year, we are focusing on New York City and Africa. Global or national organizations are fine, if their scope includes these areas – we just don’t want to evaluate organizations who don’t do any work in the areas we’re going to be able to see in person. For New York City, we are looking for organizations that help children get better opportunities to succeed in life (whether through education, child care, or addressing basic needs) and that help adults get out of poverty for good (supportive housing, job training, etc.) For Africa, we are focusing more on reducing suffering: fighting disease, malnutrition, extreme poverty, etc.

As our regular readers know, we couldn’t possibly care less how much a charity spends on overhead or what watchdogs including Charity Navigator and the Better Business Bureau think of them. We want organizations that are great at helping people, no matter how good they are at accounting.

Finally, we’re looking for organizations that want to share what they do. Charities that are afraid to tell the unfiltered truth about their strategies, achievements and shortcomings (and let’s face it, there are always shortcomings) simply won’t get anywhere with us. I don’t care if Bill Gates, Bill Clinton, Britney Spears and Mona Lisa have all given the thumbs up – we’re not spending money without an idea of what it’s going to buy.

I know I’ve been very vague and broad, and that’s because the goal is vague and broad: help people. We will ultimately divide charities up by category so they can be more reasonably compared to each other, and we will firm up our categories (already drafted) when we know how many interested charities are in each category. For now, we’re trying to cast the net wide. So hit me. Tell me who’s good.

Nonprofits and for-profits: Similar or different? Part MCLXXVII

(updated on: ) | by Holden

There has been a whole lot of discussion and confusion over whether nonprofits are like for-profits. To be honest, it seems pretty simple to me:

How they’re similar: both are organizations trying to accomplish difficult things as well as they can.

How they’re different: Nonprofits take donations; for-profits don’t.

When people draw analogies that have to do with the former, they’re usually valid analogies. Saying that some nonprofits are bad at what they do seems pretty common sense. So does saying that it’s important to figure out which ones these are. So does saying that effectiveness doesn’t always mean low overhead.

On the other hand, anyone who says nonprofits must be “economically sustainable” in the sense of having non-donation revenues greater than costs is simply confused. I won’t go into all the mechanics of why and how it’s possible to provide a service and be worthy of existence while still not turning a profit. Honestly, I don’t think anyone reading this blog needs help understanding that.

Analogies are analogies. They compare two things that are similar in some ways, yet are different things. You have to evaluate each analogy as it comes, and ask whether the things being compared are similar in the way that is being claimed. Otherwise, you’re liable to just start rambling about all the ways in which they’re similar and different. I guess what I’m saying is that I could go for a touch less of that.

An open letter to crybabies

(updated on: ) | by Holden

I think that funders should be blunt, honest, and public in their feedback to nonprofits, including those who get rejected. The benefits in terms of allowing public dialogue and giving nonprofits the feedback they need to improve are obvious – yet every foundation I’ve called agrees that publicly criticizing rejectees is unacceptable. Why? The answer, according to many – most recently Mark Petersen and Daniel Ben Horin – is that doing this would discourage and demoralize the people who work so hard to make the world a better place.

I think in many cases this is simply wrong – I and the other members of GiveWell always prefer honest feedback to “nice” feedback – but I suppose there are some people who would rather miss out on feedback than have their feelings hurt. My short hand term for these people is crybabies, and what follows is a letter to them. I don’t mean the term “crybaby” to be offensive or negative – just saving space. Really.


Dear crybaby,

First off, I don’t want to hurt your feelings, so please read the following standard “nonprofit niceness” disclaimers:

I really admire your work. From all I’ve seen of you, I think you are the greatest human being in the universe: compassionate, kind, and brilliant. What you’re doing is so amazing. You are the best and you rock. Everything I’m about to say is only because I care so much about you and it’s all just nitpicks, so don’t take it too seriously, and when you’re done reading it, forget that you ever got criticized and focus on the big picture: that you are about 3/4 of the way between person and god.

OK. Now let’s get rolling. As a nonprofit person, you have presumably given up a good deal of money, security, and comfort. The question is, why?

I hope the answer is that you care more about making the world a better place than just about anything else. If that’s right, then consider how helpful criticism – all criticism, regardless of tone – can be to your mission. Unfiltered criticism is the best way to get others’ perspectives on what you’re doing, which unless you’re already omniscient is hugely valuable information. If you get offended by criticism to the point where you fail to learn from it – or worse, get demoralized – this is hurting the people you’re trying to help. So don’t.

Working out can be painful and unpleasant (granted, I’m largely speculating here), but any aspiring athlete who skipped it would be a joke. The mental equivalent is learning from criticism, and if you’re putting yourself forward as a person who can use others’ money to improve the world, you’d better be ready to put learning and improving first, and your feelings second (or twelfth). So here’s my advice to you: seek out as much feedback as you can, push people to be honest, and get so used to negative feedback that its emotional impact wears off (leaving only the educational impact). When someone starts giving you the “nonprofit niceness” disclaimers, cut them off and ask how you can improve. When someone uses inappropriate language like “you suck,” be grateful for the assistance in toughening up. I’m speaking from personal experience, as a very emotional person whose gut instinct is to shut down when I get criticized – the more you go through this, the better you will become at getting improvement, rather than pain, out of criticism.

If you find yourself unable to do this, I only have one explanation: that helping people isn’t the core of your motivation. That you care more about your short-term emotions, day to day, than about the good work you’re trying to do. That you’ve chosen nonprofit over for-profit not because you want to improve the world, but because it’s a nice, cuddly atmosphere where you will never be challenged. If this is you, I take back everything nice I ever might have said about you, your intentions, and your project. It would be one thing if you were off volunteering on your own, but the money you ask for could be going to someone else with a thicker skin, and more value on learning than on their own feelings, who can do a better job than you at helping people. I want you out of your job and other people’s way.

Let me close on a personal note. I’ve been a donor, but now I am on the other side. I’ve given up a great job with great pay for one that has more hours, more stress, and less comfort. I’ve already struggled, I’ve already felt pain and demoralization, and I know that I’m just getting started. But to give me “sympathy” by tempering your feedback would hurt our project, and my desire for the project to succeed is the only reason I’m doing any of this in the first place. So please, honor the following wish for me. If you ever talk to me, be totally blunt with me about the job you think I’m doing. And if I ever complain that your language or your tone or your criticism is inappropriately harsh, and focus even a speck of my energy on making you “nicer” rather than learning from you, please do these two things in succession:

1. Remind me of this letter; call me a crybaby and a hypocrite; and repeat your feedback, as harsh as or harsher than before.

2. If that doesn’t work, and I continue to focus on my feelings rather than your feedback, kindly bludgeon me in the head.

Best,

Holden

What corporate social responsibility means to me

| by Holden

I find a huge disconnect between what others mean by “corporate social responsibility,” and how I think of it. Here are some of the things I don’t think are part of corporate social responsibility, pulled from a scan of dotherightthing.com (think CSR meets Digg):

People, not corporations, should give to charity. In fact, every penny that a for-profit corporation gives to charity is a penny that it could have given to its shareholders. Those are people, as capable of giving to charity as any other people. And they’re capable of giving using their own judgment and personal values, rather than being stuck with the charities that their CSR committee (most likely more concerned with marketing than with doing good) chooses. If you’re mad that charities are underfunded, yell at the shareholders, not the companies.

More broadly: a corporation is not a person. A person should contribute to society, spend time with his% family, take care of himself% first but also give to charity, etc. (You haven’t heard that you can now gender-neutralize any word by sticking % on the end? Well, I just invented it. Pass it on.) A corporation is a legal entity whose sole purpose is to provide particular goods or services. A person’s life should be well-balanced; a corporation exists to do one thing well.

If the world were a family, the businesses wouldn’t be the cousins and uncles; they’d be the chores assigned to different people on different days. You wouldn’t complain that taking out the laundry is wrong because it doesn’t involve petting the cat, even if petting the cat is a good thing to do. They’re just two different tasks that need doing.

That’s why I think of a socially responsible company, broadly, as a company that uses only what it pays for and charges only for what it provides. Business models built on under-regulated pollution, invasion of privacy, or other violation of property rights are irresponsible. Business models built on addiction, manipulative/deceptive marketing, or flat-out snake oil are irresponsible. And of course, there are some products that I simply feel that everyone (including the consumers) would be better off without, but my opinions on those are pretty personal. If a business can stay away from these dirty tricks and still turn a profit, that means it’s providing something that people are willing to pay for, enough to justify the cost of making it. For a legal entity, what more should you ask?