How can we do charity best?

Jane is starving.

Starving is bad. Jane shouldn’t starve.

How do we help others best?

Thankfully, a group of Jane’s friends notice that something is bad, very bad indeed. They decide they would like to change this. One friend–let’s call him Mitch–remembers a time when Jane was feeling down. Mitch recalls that a shopping trip made Jane feel better. So he cheerfully suggests to Jane that they go shopping… but Jane doesn’t have any money. Another couple of friends resolve to pour ice cold water over their heads in support. More friends, after seeing Jane Is Starving petitions in their Facebook feed, think that it would be better to help by taking Jane out to dinner. They get shut down in the comments as someone shows that only 33% of money spent at a restaurant actually goes to food. Meanwhile, a GoFundMe to take Jane shopping gets picked up and promoted by a local chain store.

This is not an entirely inaccurate model of how charity can work; things can be messy and useless. There are a vast number of people struggling in the world, and there are an equally vast number of creative ideas about how to fix the issue. Despite all good intentions, efforts and initiatives, not all ideas are created equal. Jane’s peers genuinely want help her. But there’s a big difference between wanting to help someone and actually helping them.


PlayPump is one such example. This ingenious company came up with the idea of improving hand-drawn water pumps by replacing them with merry-go-rounds. Children could play on the merry-go-round, and the spinning motion could provide the energy to draw the water out from the ground into an overhead tank. From the tank, families could have clean water on demand without the arduous task of hand-pumping ground water. It’s a beautiful image; using the enthusiasm of children to solve water-access issues. This romantic idea attracted numerous design awards and celebrity endorsements from the likes of Jay Z, Justin Timberlake and even our own Hayley Westenra.

It all sounds lovely… but in reality, the idea was a failure. Lifting water takes a lot of energy; more energy than primary school children expend in a lunch break. Also, the engineers tried (and failed) to compromise between energy used for water pumping and energy used to freewheel on the merry-go-round. The result was something so inefficient that it required a whopping 20 revolutions per minute to be half as good as a popular hand-pump. Kids couldn’t keep up this rate of play to make it worthwhile. Adults often had to step in and use the inefficient, undignified method of drawing water. There were even cases of people paying children to play on the merry-go-round. PlayPump didn’t bring progress to these regions as much as it brought child labour. Then there were issues with maintenance, lack of community consultation, and payment. Several of the popular hand-pumps were ripped out and replaced by the PlayPump; a charity effort that made life decidedly harder for disadvantaged people.

PlayPump shut down with only a quarter of its implementation goal achieved and, as far as I know, Jay Z never mentioned it again. It’s important to note that PlayPump, the people that donated to it, and the celebrities that endorsed it are not bad people for this failure. They had good intentions and thought they had a clever solution to a very real problem. However, intentions aren’t everything. A first-year health science student may sincerely want to give me medical advice with all their new HUBS191 knowledge, but I’d rather go to a real doctor (thank you kindly). I’m glad people want to help but at some point, there’s a degree of competency that needs to be addressed.

What is Charity?

Charity can be awkward. It falls into a distinct group of things that are definitely ‘Good To Do’, but for most of us, charity never reaches a high enough priority level to actively care about. Charities are aware of this. That’s why they need bucket-shakers on busy street corners to try and raise awareness for just long enough to get the spare coins from our pockets. Unfortunately, this can mean when people do give, they do it out of a sense of obligation or guilt-easement rather than actually wanting to help people. This isn’t terrible, and you’re still doing good by donating. However, when we only give from our hearts we can miss solutions that are much more effective.

Imagine you were alone, far away from home, with only $50 in your bank account to see you through the last week of your vacation. You only have enough money for essentials. Now what do you buy? Do you just buy a couple of loaves of bread so you’ll still have enough money to see some sights? Do you eat slightly nicer food but be limited to walking around? Maybe there’s some way to get your calories from beer and coffee so you can still go night clubbing, with some frozen mixed veges squeezed in because you swear you really do care about your health…

Then again … there is that beautiful restaurant down the block that you’ve heard about. The guidebook says it serves the best fish meals in the entire city! Fish is your favourite food. You would hate to have an amazing fish restaurant at your doorstep and never get to appreciate that delicacy. It would blow your entire week’s budget in a night but.. Oh, what is this? The restaurant is next to a beach! You love beaches! Wouldn’t that be idyllic?

Apart from the fact you only have $50 in your bank account and a week still to survive. Spending all your money on one luxury meal means you won’t be able to sustain yourself for the week to come. The money is spent. Doing this would be dumb. Economists call this opportunity cost: the loss of other alternatives when you commit to a particular choice.  You can’t have your cake and eat it too. Just like you can’t have an extravagant fish dinner and also feed yourself for the next week. This is as much a fact for our financials as it is for charities. Both operate on a limited budget and so both must make choices, sometimes hard choices, about where they dedicate their money.

Savvy decision-making

When it comes to making financial decisions for ourselves we are usually quite savvy. We check the prices of things we buy versus what we get. We may even research the products and shop around to get the best deal. Of course we want the best deal, who wouldn’t? However, when it comes to charity, we mysteriously lose this faculty. We donate to organisations like PlayPump: inefficient groups that take our money and don’t actually do all that much with it. They may paint a pretty picture, but this is as valid as buying a car only because it’s a nice colour. If charity was really about helping others, or to ‘love thy neighbour as thyself’, then you’d want a good deal for the disadvantaged in the same way you’d want a good deal for yourself.

“But Mr Author, why are you being so judgemental? These are people with genuine hearts just trying to be good. How were they to know that these organisations weren’t so good with their money?” You are right reader, and I don’t want to insult or prevent anyone from giving away to charity. Donating to any charity, even of dubious efficiency, is a bigger social positive than spending it on another drunken Maccas meal for yourself. As well as any charity being somewhat effective, there are sometimes foundations that deal with issues quite close to one’s heart. A cause can reflect personal experience and, in a story of reclamation, people are driven to dedicate their time and money to delivering this aid. Just because there’s a way to objectively help more lives doesn’t mean your passions and experiences are somehow redundant. What’s more, it’s grossly unfair to criticize someone for doing something inefficiently, when if they hadn’t even tried then they wouldn’t have had any criticism at all. The point of effective altruism is to simply understand that charity should be about helping people, and some channels are much better at doing this than others.

But how do you find these low hanging fruit? At first glance, it can seem quite a challenge to weigh competing causes against each other. How do you decide between giving your money to Books for Africa or the Deworm the World initiative? You’re in luck! It’s not too hard; you simply use the same strategies you use when shopping for yourself. If you’re starving and on a strict budget, you want something that’ll fill you up a lot compared to the cost. The most bang for your buck. You’re not worried about how much the CEO of the food company earns, or how much money goes into the purchase of ingredients or whether the food was baked with the laughter of children in the background. You simply want a product that’ll do the job best for the money you spend.

The same thing applies to charities. You want to donate to the charity that will have the greatest impact with your money. There’s a strange phenomenon where charities are rated based on their administration fees rather than how much good they do. It’s tempting to see lavish overhead costs as a signal of corruption and inefficiency, but this isn’t always the case. For example, I could start a charity where I help professors work YouTube in lectures. It’ll add minutes to your education! I could run it entirely unpaid and every single dollar donated would go directly to stopping a video from buffering in your lecture time. No admin fees whatsoever. Still, this doesn’t mean my charity does more good than the lifesaving groups that run malaria prevention efforts, or parasite treatment programmes. In terms of lives helped per dollar, my charity is quite inefficient.

You shouldn’t want a charity to scrimp on administration costs for the sake of it. If it’s a proxy measure for efficiency, then it’s better to skip the middle man and try assess efficiency directly. There are plenty of good reasons for a charity to spend money on things that count as overheads. Statisticians can be paid to come up with better targeting plans, lawyers can negotiate better contracts for suppliers, a network analyst could help get more reliable YouTube access across the university. Caroline Fiennes, director of Giving Evidence, puts it well:

“Assessing a charity by its admin spend is like assessing a teacher on how much chalk they use, or assessing a doctor on how many drugs they prescribe. They’re easy measures, but they don’t relate to performance. This isn’t to say that there isn’t waste in charities. There is – masses, much of it avoidable, and good charities try to avoid it. But don’t expect to find it clearly labelled in the financial statements.”

So don’t jump to your pitchforks too quickly when you hear a CEO is getting a cut of your charity money.

Thankfully, through the wonder of the internet, there is a resource that does all the leg work for you. GiveWell is an evidence-based charity assessor. It attempts to rate charities based on accomplishments and how much funding they receive. They even consider details such as whether a charity can maintain efficiency with more money or have they hit their peak. At the moment, their top two charities are the Against Malaria Foundation and the Schistosomiasis Control initiative. For roughly every $5000 donated to the former it’s estimated that it directly saves one life. This means the $10million US grant that PlayPump got could have saved 2000 lives. Yes, more charity money would be ideal, but we can already do a lot better with what we’ve got.

Let’s help others effectively.

Callum Grimmer has just completed his DipGrad in Computer Science and Psychology. He is passionate about effective altruism and regularly volunteers with the homeless in his home city of Tauranga. 

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