Alexandra Bowie Consulting

Peter Singer has an interesting Op-Ed "Good Charity, Bad Charity" in yesterday's New York Times, in which he argues that there are clear answers to the question 'to which charity should I donate?' He argues that there is a stark choice between donating to organizations that provide medical and social services, and to cultural organizations like museums.

I tend to agree, though I question his assumption that donating to a cause overseas is more important than donating to an organization that serves people in the US. (I can also see an argument that funding a museum is important - future artists need a place to go and view art, and without public museums most art would be in private collections. The rest of us sometimes need to see art too.)

But what's most interesting about Singer's piece, and the reason I'm linking to it here, is his final point: there is now objective evidence of a charity's effectiveness available, and donors can use it as part of their decision-making. Singer links to both the sites of GiveWell and GiveDirectly. The former ranks charities by their effectiveness. It's still fairly small, and focuses on finding outstanding charities rather than ranking all (or many) charities but to its credit GiveWell is open about its processes and its mistakes.

GiveDirectly, which is highly rated by GiveWell, transfers donations directly (and electronically) to recipients' cell phones. Recipients then use the money for whatever is important to them. GiveDirectly reports:

• The most frequent self-reported use of funds is purchasing a metal roof. We estimate the annual rate of return on on metal as opposed to thatch roofing to be 15%-20%, suggesting this is an attractive investment.
• 1% of recipients report regrets about the way they used their transfer. For example, one woman chose not to pursue a business opportunity but later wished that she had.
• 1% of recipients report having had some of their transfer stolen.
• On net, 100% report being better-off as a result of the transfer.

Helping organizations understand the impact of the work they perform is one of the most important things I do so it's heartening to see the progress. Organizations don't have to wait for a a GiveWell to tell them how they're doing - with a little effort, they can do it themselves. It's well worth the investment.