“Many attempts to do good fail, but the best are exceptional”
(William MacCaskill, Effective Altruism)

My first 3 Blogs focused on NGOs in the developing world, but this one explores simple question that’s relevant to all of us. Where should we donate money?

Donated money can do a lot of good. William MacAskill calculated that each dollar you give away if used well can be 100x more beneficial to a poor person, than it will be to you. That dollar which could pay for one days food for a girl in a refugee camp might increase her wellbeing 100x more than that sugar rush you get from a $1 coke (which I’m drinking right now). Makes sense right? This is really encouraging and should make us want to give more of our money away. But we have to send that money the right direction, otherwise its could be wasted.

What matters the most is the difference the money makes in the poorer country. Not how much is spent on overheads, or the reputation of the organisation you are giving too, but the bang for your buck. If you invest in a business, you want the best return for your investment. It helps to think the same way about your donation.

Who NOT to give to
Avoid giving money to high profile, big NGOs. (World Vision, OXFAM, TEAR fund, UNICEF etc.) You simply don’t get bang for your buck. I’ll break down what happens to the money you give them, and you’ll see why.

a) About 15-25% of money donated (varies between NGOs) is used for fundraising and administration in Western Countries. This on its own is not a problem.

b) Probably a higher proportion than 20% (its never published) is wasted on meaningless meetings, administration and high salaries for management in the poor country itself. This is an enormous problem.

c) The 60% (or similar) of your money remaining which is used to actually help the poor people, may not achieve what you expect. World Vision’s child sponsorship programme states “Your generous donations will help the whole community have access to vital resources like clean water, nutritious food, healthcare, education, economic opportunities, and more.” This sounds nice, but the holistic community approach is not as good as it sounds. The interventions may be only marginally useful, or worse foster dependence in the community. As far as I could see, they don’t even confirm whether or not they pay the child’s school fees. There’s nothing wrong with keeping it simple and just paying the school fees. Simple may not be sexy, but it could be better.

When NGOs do a wide range of interventions, they are usually not implemented by appropriately trained people. One staff with a bachelor degree in development will one month be doing an agriculture project, then the next month health education, then the next month starting a village savings group. Would you let your Teacher pull out your teeth?  I was recently outside an NGO office when I noticed a bunch of vegetable seedlings in pots. When I asked what they were for, the project officers said that they so they were about to start a big farming project, but the staff “didn’t have much” farming experience so they wanted to check what would grow! NGOs regularly send ‘quality improvement teams to our health centers who drive hundreds of kilometers in big vehicles, offer mostly useless advice and aggressively try and make us change the way we do things for the worse, often in a paperwork heavy direction. An NGO recently came to our Health Center and tried to get our nurses to implement a 16 column cash book, when we are currently struggling to sort out our 2 columns. Nice one.

Large NGO interventions are also unlikely to be based on what evidence shows works. They like activities which sound nice and inspirational to the Western Public but may be useless. There are plenty of examples like ‘playpumps’ (supported by UNICEF and World Vision) where millions of dollars are poured into useless causes, but this happens on a smaller scale all the time. Why didn’t they do it on a small scale, and study the effect before wasting money on that scale? Despite increasing pressure, NGOs still keen to base their interventions on evidence. Heiffer international (who give out cows) even refused an offer to have the effectiveness their method tested against other NGOs. I’m not saying that all development efforts must succeed, but the more we base our interventions on evidence, the better chance we have.

If you give to NGOs, some of your money is wasted, and the rest may used ineffectively. There’s also the issue of NGO corruption, which you may have already read about. So where do you donate if not to the big NGOs? I’ve outlined three possible approaches below, which are better ways of getting bang for your buck.

The Solution

Approach 1) Foster personal connections with friends, acquaintances or small NGOS doing work in developing countries, and give money to them. If you have a friend working in aid or development I’d advocate taking the time and money to  see the work they do, or at least talk to them over skype. When you are personally connected to your giving, you see exactly what happens with your money. The photo and the story of the actual kid you sponsored through school. The well built in the village you visited, the Health Center started. Big NGOs can’t usually manage this personal connection as there too many donors to keep personally connected with. Another bonus is that often close to 100% of your donation goes to the intended target. Cut the middle management! If you give money to build a hospital, 100% goes to building the hospital. If you give money for school fees, 100% is used to pay the fees.

Giving through individuals or to small organisations may not be the absolute most brutally effective use of your money, but we are connected, emotional human beings. The more connected we are to where our money is going, the better we feel and the more likely we are to both being socially conscious in our own lives, and continue to giving money to good causes in the future. “Now that I have seen, I am responsible” (Brooke Fraser)

Approach 2) Focus your donation on the most effective and efficient interventions. What aid will give the best bang for your buck? What organisations can best turn your 1 dollar of happiness into 100 dollars worth for your neighbour across the world? Most of us don’t have the time or brains to crunch the numbers, but luckily super-smart people at organisations like Givewell have done the work for us.

The results may surprise you. It turns out buying kid’s school uniforms is more effective than buying them books. You might have heard that small loans, or microfinance is a massive success in the developing world. One of the founders Muhammad Yunus even won the Nobel Prize for it. Unfortunately, the research seems to show that the billions spend on microfinance may have achieved exactly nothing. Perhaps those women in south-east Asia would have started successful businesses without the loans, the economy in those countries was growing so well anyway.

Givewell mostly selects large Public health programmes as the best value for money.  Malaria Nets, Iodising Salt, Deworming programmes. 6 out of 7 of Givewell’s highest rated charities are healthcare related. The seventh, ‘givedirectly’ simply gives money to the poorest people, no strings attached. Although I instinctively hate the idea, the evidence points to it working well. Unfortunately though, studies can only done on big organisations, so smaller endeavours and innovative efforts by individuals which may be at least as effective get missed.

Approach 3) Give to big NGOs that do one thing well and have clear goals. Although they may be a bit inefficient, and their work may not always be evidence based, at least they have experts trying to tackle specific problems. Amnesty International (human rights advocacy), or Doctors without Borders (Healthcare in warzones and famines) are good examples of this.

*Arowhenua

Give freely, Give well.