In the meantime, Givewell began to pop up from time to time on the blogosphere. It was started in 2007 by two ex-hedge fund analysts, suddenly discovering that they had souls and and too much cash (New York Times article on the duo here). They decided to give some money to charity, but were upset by the lack of transparency and inability of most charities to properly demonstrate their effectiveness. So they founded Givewell, their attempt to reveal which charities would give you the best bang for your buck. So far, after two extremely strange years (more on this below), they’ve finally released their first report on the most cost-effective charities. Give it a look – especially if you work for a charity (where do you think yours ranks?). The findings are pretty scary, they haven’t even confirmed that their top-ranked charity, VillageReach, has a lasting impact!
I’ve always believed that charities should be subject to greater scrutiny – they tend to be given the benefit of the doubt by many in the development business, (mostly, I think, because many in the business work for charities). They have a comparative advantage in recruiting caring, motivated people, but are subject to the same incentive and administrative problems that you find all over the aid industry. World Vision (Paul Collier’s favourite charity) recently lost over a million dollars in Liberia. It is perfectly reasonable to demand more accountability from these organisations.
The big question is: can two former hedge-fund employees, with absolutely no experience in the subject, provide that accountability? As I mentioned before, their analysis, scattered around their still confusing website, seems to be hastily thrown together, a by-product of an era where a enough links = enough research (was that introspective?). For example, see their dismissal of the potential impact of schools on inequality, which they justify using the result of a single randomised study of vouchers (!). The claims they make aren’t necessarily wrong, just slap-dash – the equivalent of a high school science project.
It doesn’t help that Givewell have a slightly bizarre history. One of the two founders was caught red-handed astroturfing (the practice of self-promoting or arguing on message-boards, then creating alternative users so you can have them agree with you, or help promote your site). The organisation admitted this practice, and to its merit makes a decent effort in maintaining transparency: all board meetings are recorded and are available online. However, sometimes that transparency crosses the line of public self-flaggelation, as the group lists all of their known faults in an area called “Our Shortcomings” with punishments for board members that have misbehaved. All very laudable, but it feels a bit like they are airing their laundry for the sake of extra publicity.
Finally, as I discovered on the Createquity blog, the two founders have decided to pay themselves a reasonable $250k each for their services (over 25% of the organisations total operating costs). Far be it from me to make assumptions about the optimal wage for non-profit employees or the intentions of the founders (maybe they plan to give it all to charity?), but I find it a little difficult to trust your critical altruism when you cut yourself checks large enough to, oh I don’t know, fund serious research!
I recently heard an interview of Peter Singer, the Australian philosopher who has of late made it his mission to promote charitable giving. Someone asked him which charities they should donate money to. He suggested they go with whatever Givewell recommended (Singer is on the advisory board). I would perhaps be a little more cautious – read their research, judge for yourself whether or not you think they’ve reached the right conclusions: Givewell’s site is here – be sure to look out for the snarky comments on their blog. A great and very relevant discussion on philanthrocapitalism can be read here (Development Drums). Createquity’s discussion of Givewell is also required reading.