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.