It's #GivingTuesday. Here's one way to find out how much good your donations will do
Updated November 30, 2021 at 1:52 PM ET
Editor's Note: This story was originally published in November 2016 and has been updated.
It's #Giving Tuesday — a holiday marketing tradition inspired by Black Friday, Small Business Saturday and Cyber Monday, but with a twist. Today thousands of charities are asking us to open our wallets. But how can we be sure the group we donate to is effective — that we're getting the most bang for our charity buck?
That question was vexing Elie Hassenfeld several years ago. He worked at a hedge fund, and he and a colleague wanted to give money to charity. Since they are numbers-oriented finance types, they wanted to maximize the results from their donation by finding groups that could offer the biggest impact per dollar.
"We were shocked by how little useful information was available," says Hassenfeld.
Sure there were the rating sites that show how much a given charity spends on overhead and point up any red flags suggesting possible mismanagement.
But that's not what Hassenfeld wanted to know: There was "nothing that said, 'this is how much a charity can accomplish with the donation that you give.' "
And so in 2007, Hassenfeld and his friend, Holden Karnofsky, decided to start a nonprofit called GiveWell. The mission: Come up with an annual short list of charities they can recommend based on hard evidence. But it turns out this data-driven approach has its own set of issues.
First off, it means GiveWell has to limit itself to recommending charities for which there is scientific proof of effectiveness.
"Randomized controlled trials [by academics and health organizations] of, for example, distributing malaria nets in Africa to see how consistently and how effectively that reduces cases of malaria and saves lives," says Hassenfeld.
According to GiveWell's analysis, passing out $5 bed nets against malaria-carrying mosquitoes saves a lot of lives. And that puts Against Malaria Foundation among the group's picks for the 2021 giving season.
The organization's data-driven approach leads to a list that may not sit well with all donors. For instance, many people feel particularly moved to help others who are close to home – say, by donating to a local homeless shelter or a youth arts program. But though GiveWell is based in the United States, the organization does not recommend donating to any charities that serve Americans.
"The needs are just so great overseas that a dollar goes a lot further there," explains Hassenfeld. For instance, GiveWell estimates that in 2020, donating about $4,500 to Against Malaria Foundation would save the life of a child who would otherwise die of malaria.
A second challenge is the dearth of reliable data for many programs that focus on the world's poorest. While academics and international health organizations have done rigorous studies of health interventions, it's only in the last decade that economic development and empowerment programs have started being subjected to similar scrutiny.
So says Hassenfeld, "there might be outstanding programs and organizations that we would recommend if only there were more evidence assessing their impact. The fact that we don't recommend something doesn't mean we think it's ineffective." It may just mean that no one has studied it.
Also, the charities that make GiveWell's cut aren't exactly household names. Take the Schistosomiasis Control Initiative.
"Yes, schistosomiasis — it's an intestinal worm," says Hassenfeld.
He's very passionate on the subject. The worm is common among children in sub-Saharan Africa, causing cognitive and physical development delays, he notes. And according to GiveWell's analysis, Schistosomiasis Control Initiative can de-worm a kid for around one dollars.
"When the worms are treated children may grow up to earn significantly more money in adulthood," says Hassenfeld. "So a very small amount of money may have really, really large long-term effects."
But Hassenfeld's argument for supporting schistosomiasis work points up a third issue with a data-driven approach to donation decisions. Social science research suggests rational, statistics-based appeals are not what motivate most people. Tell us about one child who needs our help and we're sold. Rattle off numbers about an obscure disease in a faraway place and a lot of us start to feel overwhelmed and turned off.
Hassenfeld doesn't disagree. "If my goal were to try to maximize the amount of money that I was able to raise for charity I wouldn't do it via numbers and analysis," he says. "I would do it via pictures and stories."
But he says GiveWell is trying to appeal to a narrower slice of the donor pool, "a particular type of person who's just thinking about their charitable giving in a very different way." For them, the very obscurity of schistosomiasis is a draw. "They say, 'This is not sexy, I haven't heard about this and here's a group that's done the analysis and they say this is one of the best ways I can donate and accomplish a ton of good.' "
In 14 years GiveWell has convinced over 90,000 people — often technology and finance professionals under age 40, like the group's founders, to donate a total of more $1 billion dollars to the charities it has selected.
Still, one of the charities on GiveWell's list tries to combine data-based pitches with human stories.
It's a group called GiveDirectly, launched in 2009. (We ran an in-depth story on their work that you can read here.) And basically, it wants to take your cash and just hand it over to an extremely poor person. No strings attached. The beneficiary can spend the money however he or she sees fit.
That idea can be a tough case to make, says Tyler Hall, director of communications for GiveDirectly.
"There's an entrenched myth that people in poverty can't be trusted with money and don't know how to spend it best. We're asking people to look behind that myth and see that people closest to the problem know best how to address their own needs, better than a donor thousands of miles away," says Hall.
Hundreds of studies prove the point. They end up spending the money on school tuition or a new roof that saves them expensive continual repairs. The point is, studies show that extremely poor people often know their needs best, and when you just give them the cash, over the long haul incomes rise, hunger goes down, there's even more gender equality.
GiveDirectly was founded by four economists who were inspired by those findings.
In just 11 years they've delivered more than $500 million dollars to over 1 million households in 10 countries.
Their website features a running list of photos and profiles of the beneficiaries for a sense of what folks spend the money on and what their lives are like, says Hall.
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