The Charity Revolution

Where will you give this holiday season?

Think back on the past year. At one point or another, you have likely been approached for money on the street. You know the feeling - that pang of guilt. You want to help, but you can't shake the thought: what will they do with this money? Isn't there a better way to help? So you walk away, promising yourself that instead, you will support an organization that can demonstrate it really is making a difference.

Here's the problem: almost no charities actually do this.

Most organizations use sob stories to rope in donors - appealing to the same part of the brain that empathizes with the beggar on the street. These stories can be compelling, but they don't tell you whether the organization is actually helping people in a meaningful way. Data reported by charities typically track basic activities - books delivered, classes taught, patients seen - that, counter-intuitively, often don't correlate with what we really care about: improvements in learning, reductions in poverty and mortality. To make matters worse, the overhead ratios that have long been reported by Charity Navigator say virtually nothing about what charities are achieving. When you buy a car, do you ask what Honda's overhead rate is compared to Toyota's, or do you compare their cars on quality, feel, and price?

The truth is that measuring impact properly is hard. It requires not only monitoring what you're doing, but also asking, what would have happened in the absence of this program? Randomized controlled trials, which randomly determine who is eligible for a program and compare participants to non-participants, constitute the most well-known methodology for assessing this question, but they can be expensive and lengthy. Other approaches exist, but they pose challenges of their own.

So what happens when you do subject organizations to this level of rigor?

Very often, they fail.

David Anderson, Vice President at the Coalition for Evidence-Based Policy, writes that "the vast majority of social programs and services have not yet been rigorously evaluated, and... of those that have been rigorously evaluated, most (perhaps 75% or more), including those backed by expert opinion and less-rigorous studies, turn out to produce small or no effects, and, in some cases negative effects."

Take Scared Straight as an example. This is a nationally popular program in which at-risk juveniles are brought to prisons to learn about the consequences of criminal behavior, with the goal of deterring them from crime. Sounds reasonable, right? Two meta-analyses of Scared Straight evaluations found that it does indeed affect crime rates. The problem: it increases propensity to commit crimes - by up to 28%. Parents have sent their children on these programs for decades, and without these studies, we would never have learned they were harming the very children they aimed to help. Mind-bogglingly, these programs still remain popular. A host of other prominent programs have similarly been found ineffective - including D.A.R.E., the Even Start Family Literacy Program, and 21st Century Community Learning Centers - but in many cases, donor support for these programs persists despite the evidence.

So think back on that promise you made when you chose not to give on the street. When you give this year, how will you make sure you support a program that works?

This is a question more and more donors are asking themselves - and each other. A study by Redbird Communications found that over 40% of individuals surveyed were not satisfied with the information charities provide on their activities. The good news is that a renewed demand for evidence of impact is revolutionizing the way charities are being evaluated.

The leading example of this wave is GiveWell, the most rigorous charity evaluator. In addition to reviewing financials, it thoroughly assesses charities' evidence of impact. GiveWell directed over $17 million of donations in 2013 and now processes more donations through its website than does Charity Navigator. (Full disclosure: GiveWell has recommended funding to IDinsight in the past, the organization I work for.)

This work is allowing donors to help the needy in phenomenally powerful ways. For example, GiveWell's research indicates that Against Malaria Foundation, which funds insecticide-treated bed nets in Africa, saves lives for a few thousand dollars each. This is many times cheaper than what most charities achieve and is substantiated by unusually extensive research. By requiring post-distribution monitoring, Against Malaria Foundation also confirms that most recipients use the nets properly, a critical question donors should not take for granted.

It is true that many worthy activities are harder to evaluate than others, and randomized controlled trials are often not feasible or appropriate. But organizations can use a broad set of strategies to better demonstrate impact, from increasing transparency to inviting independent performance assessments. To compete for your dollars, charities should demonstrate that they are doing so. To this end, a movement called "Effective Altruism," dedicated to finding ways of doing the most good with our resources, is rapidly gaining momentum.

So where should you give this holiday season?

A great start would be looking at the research of organizations such as GiveWell, Giving What We Can, and The Life You Can Save. Their assessments indicate you can save many more lives by donating abroad, where the poor are at risk of dying from malaria and diarrhea, than in the United States. Those determined to give at home can find excellent research at the Coalition for Evidence-Based Policy, which highlights proven programs such as the Nurse Family Partnership.

Will this focus on evidence reduce giving to a coldly rationalist pursuit, devoid of personal gratification? Think back one last time to the beggar who asked you for cash this year. Think of all the programs that have tried to help her, and failed. This approach can allow us, where we have fallen short so often before, to discover how to not only give that individual her life back - but to prevent others like her from becoming needy in the first place. This knowledge, as donors are increasingly realizing, is most rewarding of all.