Sunday, November 25, 2012

Philanthropy for Cold-Hearted Hard-Nosed Realists

With the day of giving thanks behind us, the season of giving has arrived.

Dad sent me a link to this great TEDx talk on a series of studies that illustrate how spending money on other people makes you happier than spending money on yourself. Science! I recommend watching the whole thing, but I'd particularly like to draw your attention to the part around 06:15, comparing buying your mother a scarf (in Canada) to paying medical bills for a friend's kid with malaria (in Uganda):



From the giver's perspective, how much you give or what exactly your gift buys doesn't seem to matter very much - when you feel like you have done something nice for someone else the psychic payoff is about the same. This is great for encouraging everyone to give a little bit, but it also means that sometimes well-intentioned people who give without thinking end up getting their warm fuzzies by giving gifts that are suboptimal, ineffective, or even counterproductive.

I saw some pretty dramatic examples of this in my last job at the Office of U.S. Foreign Disaster Assistance, during the response to the earthquake in Haiti. Thousands and thousands of people saw the footage of the devastation on the news and gave with their hearts instead of their heads, so they donated things like old winter coats and frozen microwave dinners to people who live in the sweltering tropics and who never had access to freezers or microwaves before the quake, let alone afterwards. Those gifts did no one any good at all, and in some cases did harm by using up limited resources (like shipping containers) that could have been put to work providing more useful assistance. But the givers still got to feel good about themselves, though they probably wouldn't have felt that way if they knew how utterly useless their gifts were to the people they honestly did want to help.

How do we fix this? Information! Research! Knowledge is power! (And cash is best.) Charity Navigator is a great place to find out how efficiently charities use their donated dollars and how transparent they are about where that money goes and what effects it has. You can look up organizations that you know to see how they rank, or browse by category to find groups that are doing good work for a cause that you care about.

But what if you are a detached, disinterested Homo economicus who cares neither more nor less about spotted owls than baby seals? What if you have no inherent preference to fight breast cancer rather than prostate cancer, or to fight cancer at all rather than saving the rainforest, ending child hunger, or protecting women's rights? What if you just want to find the single activity that maximizes the global increase in human happiness and well-being per dollar spent and put your money there? That's a much more challenging question, but fear not! Cost-benefit analysis is here to help!

Earlier this year a crack team of five economists, including four Nobel laureates, plowed through the most up-to-date research on how to best tackle the world's most pressing problems for the Copenhagen Consensus 2012 Project. They weighed the evidence and distilled all that data down to a ranked list of the 16 actions that provide the best overall bang for the buck. And the winner is...bundled interventions to reduce undernutrition in preschoolers! Sexy, right? Other highlights include subsidizing malaria treatments, deworming schoolchildren, investing in early-warning systems for natural disasters, and getting people to consume less salt. The project even has a handy Guide to Giving to help individual donors like you or me funnel their charitable gifts in ways that will help meet these goals.

So there you are. Go forth and give - generously, intelligently, effectively, and efficiently! It'll give you those warm fuzzies you've been wanting, and help save the world too. However, if these carefully reasoned rational arguments have failed to sway you, go give some money to the ASPCA. Because KITTENS!

3 comments:

  1. Thank you Meredith! Timely and as always, well written. I hope this goes viral.

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  2. Amen! I can't count how many times when I was working in non-profit we would be approached by the warm fuzzy donors. When they heard we worked with at-risk and abused children all people wanted to do was donate stuffed animals. Note to donors - you can't eat a stuffed animal. It won't heal your diseases or put a roof over your head or help you finish high school...especially not when you already have a closet full of them. Donations go a lot further when they're well thought out, so thanks for posting this. I hope the message sinks in!

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    1. jdc - Saw this, thought of you. Check out #7!
      http://money.howstuffworks.com/10-worst-things-donate-after-disaster.htm

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