Why Most of Us Do Charitable Giving All Wrong

Laura Shin

Giving What We Can works closely with GiveWell, a Brooklyn-based organization that researches charities to see which ones are the most effective. Founded in 2007 by former two hedge fund managers, GiveWell initially thought it would obtain data on the effectiveness of projects from the charities themselves, says Alexander Berger, GiveWell’s research analyst.

“But collecting data is a social scientist’s job, and it’s something that charities are not very good at. What we can do is rely on published academic papers or academic journals to make a basic case that a certain type of program works,” he says. After evaluating methods, GiveWell then interviews charities employing that method to make sure that they are executing the work correctly.

To date, GiveWell has analyzed the work of almost 800 organizations working internationally. It currently recommends three top-rated charities, which were chosen for being cost-effective, underfunded, exceptionally effective and transparent with donors–essentially places where your dollar will go furthest:

GiveWell’s analysis has subsequently turned up some surprising results. Popular charities, such as Heifer Project International–known for providing much-needed livestock to families in developing countries–don’t make the cut. In fact, GiveWell hasn’t found any evidence that livestock gift programs are effective at all. Other well-known organizations that don’t receive a negative rating, but also don’t get a recommendation: charity:waterDoctors Without Borders and Partners in Health.

RELATED: Why Giving to Women Is the Best Way to Give

How to Jump Start Your Own Effective Giving

Here are a few tips from Giving What We Can’s Research Director, Robert Wiblin, and GiveWell’s Berger:

  • Be proactive. “It’s easy to respond to solicitations or when friends ask, but if you’re just waiting for the charity to come to you, you’ve lost the battle,” Berger says.
  • Be open-minded about the cause. ”The broader minded you are, the more opportunity you have to find an appropriate organization,” he says.
  • Don’t be swayed by a moving story. GiveWell notes that most charities offer testimonials as evidence, “but scattered success stories can’t really capture whether a program is working. Out of 100 people in a program, the odds are that some of them will see their lives improve, just by chance,” the site says.
  • Separate giving to friends and local charities from effective giving. ”If you want to give to an organization in your community that makes you feel good, that’s fine,” says Wiblin, referring to donations that you make to your local church or a friend who’s running a marathon for charity. “But you should count that as personal spending, and separate it from money that you put out to help others.” What would count in this latter category? Charities whose effectiveness has been ranked, such as those who received top ratings from GiveWell.
  • Look for proven effectiveness. The best evidence is to look at controlled trials that demonstrate a statistically significant impact, but it’s difficult to find this evidence yourself. A site like GiveWell can make that research easy.
  • Focus on developing countries. Wiblin says that, in order to give a lot of charitable bang for your buck, people who live in developed countries should give to countries where incomes are particularly low.
  • Give cash–no strings attached. Find an organization that you believe in, and then give it cash, trusting them to use it well.
  • Increase your giving by giving a percent of your raise toward charity. “People don’t like to see their paycheck go down,” says Wiblin, “but they don’t mind if it doesn’t go up as much.” So instead of increasing your donations now, and living on a tighter budget, you could vow that, for every raise you receive from now on, half will go to charity.

So this year, when you go to make your end-of-year donations–or when you plot out your overall giving plan for 2013–think about what you can do to make sure that your charity dollars have the most effective impact.

“People really like a personal story, especially about one individual,” says Berger. “It’s a totally legitimate urge, and a human one, but you can do more to help other people when you put in the work to be more thoughtful and critical.”

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  • Mary

    I wonder if givewell considers how a charity is working to also stem the systemic challenges that underlie the problem. For example, for charities that focus on the environment, policies, regulations and business behavior can have a huge impact on things like climate change, but it might not seem as direct or immediate. But changing the way our economic system works is still key to solving the problem. Just a thought…

  • SaMoDodger

    Charity is personal, not pragmatic.  That’s why it’s not-for-profit.