Do non-profits trust normal people? And should they?

Today I am just posing a question: Non-profits seem sceptical towards outcome-based indicators of how effective different initiatives and projects are. Is this because they are afraid of what "ordinary people" would think and do if they had this information? And if so, could such a worry be rational?

Personally, I hope (and want to believe) that outcome-based indicators would make the connection between giving and accomplishing stronger, that people would not just give in order to "do a good deed" but also start giving to "have an impact on malnutrition" or "reduce malaria" etc. But other people might believe that the consequences would be different. Two possible worries that immediately come to mind:

• Myopic funding: The more concrete, short-term and certain a program was according to its outcome indicator, the more funding it might receive. This might make it easy to get funding for vaccines and malaria nets, but hard to get funding for investments and development in health infrastructure, education, human rights work with women, etc.
• Over-focused funding: Some measures may catch the public's interest far more than others ("go viral"), and this might lead to large shares of funds going to these areas - not because the need is the largest or the impact the greatest, but simply because the indicator is catchy in some way

Put differently - if non-profits developed and published indicators of effectiveness, this could lead to people asking for highly specific giving options ("I want to fund projects with a high payoff per dollar on under-five-mortality"). This could lead to both increased bureaucracy (in terms of tracking and documenting how streams of income from specific donors ends up in specific project and what their specific payoff turns out to be in the end), as well as a reduced ability to plan strategically in terms of what an organization wants to adress. The "scare scenario" might be that Red Cross etc. simply post a long list of projects with associated payoffs in terms of various indicators, and that the "capricious whims of the public" are allowed to determine what the organization does - based on whatever info or whatever beliefs about the world they have.

One way of trying to grasp the problem is to realize that we are talking about (at least) three different types of information that are important:

1. State of the world: What are the problems facing the world (malnutrition, excess mortality, human right abuses, illiteracy, poverty, pollution, etc) and how severe are they?
   
2. Action alternatives: What are the programs or projects or strategies we have developed to tackle these problems, and what would the cost and impact associated with these be?
3. Personal judgment: How do we weight and judge the different problems the world faces up against each other, and how do we choose between action alternatives? In economist language: What are our preferences?

Now a simple scenario: You have been working in a large non-profit for years. You've worked within different parts of the organization, you've studied and read and analyzed and in time developed a reasonably good grasp of what the major issues are, what you feel their relative importance is and how effective and useful different programs and approaches are. And you feel that these are difficult judgments, based on deep and hard-to-acquire understanding of the field. Next, someone comes to the organization and says that they want transparent indicators for each type of outcome, so as to be able to evaluate and judge their effectiveness prior to making a decision about donating funds.

Would you be worried about a "reductionist" or "oversimplified" interpretation of indicators? Would you be afraid that important but unsexy long term factors might be neglected?

And even if you personally don't see the problem - how can we answer this fear and develop indicators that don't have excessive (largely unintended) negative consequences?

Yes, we should measure impact - but HOW?

The desire for outcome-based measures or judgments of non-profit effectiveness is increasing, but non-profits seem sceptical. We need to develop a clear picture of what this would involve for the non-profits, and why they do not have to fear a reductionist "one-size-fits-all" indicator that sets "one reading child" equal to a fifth of a saved hurricane victim. We also need to make it clear why such measures are desirable - and finally, we need to get them involved in moving the process forward. And the time is now...

The desire for outcome-based indicators of effectiveness from nonprofits seems to be increasing. Some recent examples/indicators:

• Anonymous blogger "Don't tell the donor" wrote in a new column in "NonProfit Times" that "Currently, donors who thirst for information on whether their donation is being spent efficiently or effectively are too often left without enough information to make those decisions. Is it any surprise that faced with an absence of any real alternative, too many donors turn to simplistic (and often misleading) fundraising ratios?"
• The interest generated by GiveWell, founded by two hedgefund managers who wanted to analyze the impact of non-profits rigorously. Unfortunately, GiveWell, which was featured extensively in the media (see, for instance, this December article from New York Times article), was a couple of weeks ago by the news that both (!!) founders had pretended to be someone else on the web in order to direct people to their service (see New York Times here)
• The lively blog "Tactical Philanthropy" by Sean Stannard-Stockton repeatedly returns to this theme (as in this post). He also started an interesting discussion about the appearance of Non-profits in Google Finance concerning how the template should be modified to be more appropriate to non-profits

The question I want to raise today is how to measure impact. It is clear that one major fear of non-profits is an oversimplified universal indicator - as evidenced by two answers from Red Cross employees given to Stannard-Stockton's question on the Red Cross Google Finance page. They compare it to "choosing a favorite child" and are evidently afraid that valuable things will be left undone because they are low on some universal metric. "How would we compare the community impact of, say, a unit of blood, a person learning a lifesaving skill like CPR, a person sheltered in a disaster, a meal delivered to someone cleaning up after a disaster, etc.?"

The first thing we should tell the non profits is that, of course, there is no universal metric! Teaching a child to read is important. Giving a pregnant mother nutritional supplements to avoid premature childbirth is important. Providing disaster relief after a hurricane is important. That's not the point. The point is: Given that you want to teach children to read - how do you know that you are doing a good job, that you are spending your funds in a wise manner and using the appropriate teaching methods, partnering with communities in a way that makes new procedures stick long term, and so on? Given that you want to provide nutrititional supplements to pregnant women, how do you evaluate whether you are doing it in the best way possible and how do you find out in what areas you could do better? Are you targeting the geographies where the problem is worst? Are you focusing only where infrastructure makes it easy to assist? And so on.

In other words: The question is not "what is the equivalent of a universal profit measure for non-profits?" (How much goodness-per-dollar are you providing?) - the question is how can we measure or evaluate or judge our success in achieving the outcomes we are aiming for - however narrowly these need to be defined to make sense?

Imagine two non-profits both trying to teach children in the same area how to read, but one using volunteer teachers from Canada and the other spreading a new teaching method to local teachers using local volunteers. Both strategies can have their strengths and weaknesses, we can have our personal convictions concerning what we think is a good strategy - but how can we find out? What data or whose judgment could be used for these two charities to discuss their alternative strategies for achieving the same purpose? What would it take to (rationally) convince one to abandon its approach and switch to the other?

Put differently: We cannot assume out of hand that every idea someone has funded is a sensible way of approaching a problem, and even good approaches can be improved. What do we use to compare two approaches and to evaluate suggested improvements?

The second thing we should tell the non-profits is that if the demand for outcome-based indicators or judgments is growing - now is the time to act. Otherwise, we risk getting a long, drawn out period with a confusing array of overlapping and poorly thought out indicators. This will also waste resources, as organizations devote time to parallell development of indicators, and administrative and personnel time in collecting, aggregating and publishing information that ends up being less valuable than it could have been.

My suggestion for what we should try to achieve:

• End state: A taxonomy of different outcomes, a Dewey-decimal system for goodness if you will, a catalogue that you can use to look up the cause you are interested in and find well-thought out and thoroughly discussed indicators or ways of evaluating outcome and effectiveness.
• Process: An open, collaborative, transparent, discussion-based process involving the non-profits themselves! This involvement is crucial if they are to adopt the measures - their concerns and knowledge will be critical to making the measures practical and relevant. At the same time, I don't believe they can do this alone - they need to get new ideas, be pushed, etc.
  
• Next step: The next thing to do would be to define a simple structure for the discussion/process. It might be to create a WIKI and define a hierarchy of users so that some features can be locked in as time goes by (a continually disrupted way of organizing causes would just be confusing), while also providing a way for any question to be raised and rediscussed. All that would need to be done is to
  
• Define a simple set of rules for operation (who is in charge and determines the hierarchy of users, what are the rules of discussion and conflict resolution, etc.)
  
• Set up the WIKI
• Make it known and start contributing - working especially hard to make sensible, valid indicators for some of the more common aims - and working especially hard to involve some of the larger, international organizations working towards those aims

Maybe this could be a new focus for GiveWell that would allow it a useful role in a project perceived less "in your face" and judgmental by non-profits (one of their major problems was getting answers to their requests for information - such requests may be seen as less of a burden if that information was collected to isolate a few, sensible parameters that could be the focus going forward).

Anyway - this is an idea, not a finished solution. Let me know what you think.

Too many charities - Not enough charity...

There are too many charities and if we are not careful, the new web-based philanthropic services and tools will worsen the situation. What is needed is responsible ways of aggregating information, simplifying comparisons, achieving credible and outcome-based rankings.


I am not by any shot the first to think about these questions. One recent post on this is from Albert Ruesca, who argues that we probably don't have too many charities. Basically, his main argument is that they are surviving in the market, which suggests there's a sufficiently valuable reason for their existence. Against this, there's Rosetta Thurman, who is arguing that the number of charities is excessive and driven by the ego of founders: They believe starting a non-profit is easy and that their ideas are so much better than those of others that they require their own organization.

As an economist, my take on this is that there are forces operating from the two "sides of the markets," that is to say from the organizations and from the funders. 

• From the side of the organizations:
• Benefits to scale: Surely there must be some reasons why larger-scale organizations can operate more effectively in this field just like in most others? A larger organization can build on past experience, transfer people with skills between projects, aim for large-scale projects when appropriate, have a smaller share of overhead if it avoids bureaucratization, raise funds through a well-established brand, etc.
• Interests of workers/volunteers: People working in this sector are probably more strongly motivated towards specific issues. Especially I would think this is true for volunteers. Thus, it might be easier for smaller, more focused organizations to attract people.
  
• From the side of funders, the big question is "why are they funding non-profits?" Are individuals funding what they believe to be the most pressing and serious issues handled in the most effective and responsible manner, or are they contributing to specific issues they have a personal stake in for some reason? Are companies funding indiscriminately (picking from some list of "good enough" charities) in order to give off an aura of social responsibility? And what is behind public spending on non-profits? Which criteria are important?

In theory, these different incentives and forces are balanced by a well-informed market - but as Sean Stannard-Stockton has been discussing in a couple of very interesting posts recently (see for instance the post on the value of information-sharing and his response to the responses), information that enables comparisons on who does what and how well is perhaps the biggest gap in the non-profit field today. It could be that the large number of non-profits reflected an underlying difference in what funders want to fund - but it seems unlikely. It seems more likely (to me) that the lack of widely available judgment or outcome-based indicators of effectiveness is the issue.

I've written on this before: If you look at several of the new on-line charity sites, they are trying to gather information, create lists of charities sorted or tagged by what they are working to eliminate, where they are operating, what their share of overhead costs is, etc. But what we need is something that narrows down the discussion, helps us focus, gives us an overview and a sense of proportion and priorities.

In the comments I've read on the net there seem to be (roughly speaking) three main camps:

• Those who see the situation as fine: The more people and organizations we have doing good work the better it is. They are (almost) all well-intentioned and responsible run charities, and if they are able to get funding and excited people then this is great and a force for good.
• Those who believe in quantitative measures - finding outcome-based indicators that say something about efficiency or impact
• Those who believe in judgment - whether individual judgment or some form of structured discussion leading to a consensus or "expert norm"

Personally, I believe the last two are complementary - finding good quantitative measures and ways of using them responsibly requires the kind of informed, judgment based evaluation and discussion covered by the third camp.

Personally, I also believe this is the most pressing issue to be solved in order for web-based charity to really take off - and I would love to see some creative and deep thinking about how to get it done.

• A WIKI covering proposed measures, their pros and cons - with a forum for discussion structured in a way that promotes seriousness?
• A real-life conference involving academics, NGOs, bloggers and politicians?
• Discussion on-line with proposals and counterproposals from various individuals and groups?

Or is this the kind of thing the "big shots" such as the Gates Foundation should be covering?

I don't feel I have any good answers here - but I feel that this is something worth thinking about a lot.

What charity should you choose?

According to Give.org "In a detailed donor expectations survey of two thousand Americans commissioned by the Alliance in 2001, 70% of adult Americans said it is difficult to tell whether a charity soliciting for contributions is legitimate." With more than 20 000 charities available online (or, according to another site, 1.7 million nonprofits ), how do you choose which one you should give to? And how do you evaluate the ones you know about or find?

Ideally, as I argued in my last post, I would want to be able to see these ranked in terms of indicators capturing both impact and effectiveness. We're not quite there yet, and so the question is what you do instead. How do you find an organization, and how do you evaluate it?

Some of the more common strategies I think people are using to do both are:

1. Give "reactively," i.e. give in response to fundraisers who contact you or specific ads or TV spots, and judge it using "gut feeling" based on the information, images etc. provided
   
2. Give to a large, well-known institution (Red Cross, UNICEF, Save the Children, etc.). After all, these are big, professional organizations that are probably under a lot of scrutiny due to their size and visibility, which might be taken to mean that evaluating them on your own is unneccessary.
   
3. Follow a recommendation or connection from somebody famous (see the celebrity-associated charities here or one of the celebrity-backed causes at SixDegrees.org ) - and assume that this cause is worthy because the celebrity would not risk his or her image or credibility by being associated with an illegitimate operation.
   
4. Give to a cause (malaria, child health, AIDS, disaster relief etc.) - and use size, gut feeling, a quick google-search etc. to evaluate it

It turns out that there are different types of sites available to help people in this area as well. Some of the ones I've dug up (without doing an extensive analysis to assess their credibility or anything) are:

• Charity Navigator provides ratings and info on charities ("5 300 of America's largest charities"), with hassle-free access to various financial indicators (financing costs as share of total revenues, administration costs compared to total budget etc.) and the ratings based on scores relative to each others. They also provide various top 10 lists on their front page allowing you to see the "most frequently reviewed" organizations, "inefficient fundraiser", "highly paid CEOs at low rated charities" etc.
• Network For Good provides a way of finding charities for specific causes (through Guidestar )and donating through a central payment system to any one of these. The service was started by large companies such as AOL and Yahoo, and also provides "regular giving" options to easily set up automatic giving to a variety of charities, and collecting your financial info over the year (to simplify tax deductions). Guidestar provides some simple financial and "mission" related information, but they suggest using Charity Navigator to gain a more analytical overview
• Give.org  provides a list of roughly 500 charities (to be expanded) and evaluates them in terms of whether they fulfill a set of standards for charity accountability
• Justgive.org provides a list of category-sorted charities satisfying certain requirements. Take a look at the JustGive guide which contains 1 000 charities sorted into categories (such as community, crime prevention or health & disease) and subcategories (such as specific diseases within health). These charities have been evaluated and judged to pass a set of criteria, mostly financial, but also some that piggyback on (presumably more extensive) research of large funds ("Charities who have received funding from the top 100 foundations generally have to go through extensive reviews of their programs and financials. We examine the grant recipients based on this process"). Finally, they claim to rely on expert testimony and reviews. In addition, they have various other services (such as charity gift-certificates, charity wish lists and wedding registries) and set up recurring donations. Their stated mission is "creating tools and services to make charitable giving part of our everyday lives [...] a nonprofit organization whose mission is to increase charitable giving by connecting people with the charities and causes they care most about."
  

The basic lack of these sites seems (to me) that they lack tools to help people compare and prioritize between causes. To be able to do this, you need to be presented with information on both how serious and prevalent a problem is, and how expensive, difficult and risky current approaches to reducing or solving the problem are. In other words: Is there a big problem? And is there anything we can do?

The only page I have found that makes a serious attempt to address the question of impact and cost-effectiveness (what can we do - and what would it achieve?) is Givewell.net. It will be very interesting to follow this webpage going forward. It is a relatively recent page, and seems on a first look very text-heavy and (I would guess) difficult to navigate and use to draw out easily actionable information. Also - the span and number of organizations is still relatively narrow and small.

Anyone know of any other sites or services along these lines? Please let me know by email or comment...

The requirements of transparent charity

I have posted earlier on my belief that people would give larger sums and more frequently to charity if the true consequences of their everyday choice alternatives were clear and credible. What does this mean, what would it take - and what remains for this to be put in place?

What this means is that most people in western society are stinking rich in a global context. One report estimates that "162 million people live in ultra poverty on less than 50 cents a day" and if you're curious as to your own position in the global income distribution you can check it out here.

What this means is that wealth is power. By spending your income you are determining how a portion of the world's global resources shall be used - you are directing people, bulldozers, trucks, factories, etc. towards the production of chewing gum, chocolate, sneakers, fashion clothes, books, etc. - OR towards the improvement of global public health, micro-charity for the poor, improvement of the environment or women's health, child education etc.

What this also means is that this is not a theoretical possiblity but a practical possibility! The organizations and systems through which your money would have this kind of impact are in place. When you buy a hamburger you could indeed have financed a malaria net for a mother with a newborn child somewhere in Africa instead.

However, we all know that it doesn't feel like saving a child is within our possibility set. The choice does not seem clear and present, the impact does not seem concrete and vivid, and the required action is very unclear.

I belive that web tools and technologies can be used as an extremly powerful way of unlocking private funds for development, aid and charity if they build on these insights. Used correctly these can provide:

• Individual overview:
  
• The person in the street needs a way of "clearing the clutter" of information and gaining a simple overview of what kinds of impact she can have on the world. My suggestion: Impact-indicators that are clear, vivid and simple within areas such as health, education, human rights, and that are small enough that the sum involved in financing one unit is relatively negligible. In health, an indicator could be lifeyears - or, if that is too "expensive" to finance, lifemonths. In this way, you bring it down to something that has a clear impact, allows you to easily aggregate and compare information from different projects from different organizations, and that is small enough that you can buy it without making it into a big deal.
• Improving trust by having clear, credible, simple information that shows why you should trust the different organizations running the projects, their track record, their budget/overhead/financing costs etc.
  
• A feeling of true contribution/impact
• Follow-up information on the projects (blogs, pictures, videos or something that makes the impact concrete and vivid for those who want to follow it in detail?)
• Summary statistics over time: "You have saved 412 lifeyears and 4 lifemonths so far"
  

In future posts I hope to explore already existing on-line tools/sites/etc. that provide pieces of this puzzle or that utilize parts of what we are talking about.

How about you? Do you have any suggestions? Know any sites that should be checked out? Have any thoughts or respo

How problemsolvers can help save the world

If you are a good problemsolver - how can you best help address the major social problems faced in the world today?

One answer - which I will explore today - is this: By identifying the "bottleneck" factors or barriers that limit our effectiveness in responding to these problems, and developing and promoting ways of removing or reducing these bottlenecks.

That's way too abstract - so let's rephrase it.

Part of my point is that we need to realize that most problems are already being addressed. Look around and you will find lots of efficient, smart, hard-working people and organizations already addressing most of the world's major problems. However, since the problems are still problems, something must be limiting or constraining our effectiveness in addressing them.

As a problemsolver, you can have the most impact by identifying the stuff that is stopping "everyone else" from already having solved the problem. Show them how to do this, and they will do the rest. In other words: You have your greatest impact by unlocking effectiveness in all the others.

The nature of the constraint or bottleneck varies from case to case. I won't pretend to have the full list, but some of them may be

• awareness issues - where the awareness of the problem and its
  scope is grossly inaccurate, leading too few people and resources to be
  spent on it. This may be because some cultural, psychological or other
  factor makes it difficult for people to talk about or understand the
  issue and its solutions. Sometimes an issue may be difficult to embed
  in psychologically
  compelling and arresting stories or pictures, and may thus lose out in
  the attention market. Distasteful as it sounds, it has been claimed
  that rich, white people in the west find it hard to identify with poor,
  black people in the south (part of the reason why the typical Hollywood
  movie taking place in Africa is focused on the life and experiences of
  a white person). At other times, religious or social taboos or customs
  can make it difficult to spread awareness and start discussions about
  certain issues.
  For instance, some religious groups try (with some success in the US)
  to fight discussion of and information on the use of condoms in the
  prevention of HIV infection. Or the problem may contain horrors that
  most people would prefer to avoid knowledge of (which may be part of the reason why there is so little attention on the problems of the Democratic Republic of Congo).
  
• technical knowledge issues - where we don't know how to achieve some result. For instance, when we don't know how to prevent or treat some new illness, how to produce clean energy cheaply enough to compete with trees (leading to deforestration) or fossil fuels (leading to global warming), how to effectively and ethically change people's cultural traditions (regarding, for instance, female circumcision)
• information issues - where the link between people's actions and their impact on the problem is long, complicated or features long delays. In other words, if you see a man falling out of a window and you call 911, you know that you're the reason why the ambulance came and you can grasp the importance timely, medical help had for the patient. If you give money to a charitable organization, understanding how that money will be spent and what kind of expected and actual impact it will have on the problem is more difficult. It seems - in my personal experience - quite common for people to use this as a major excuse (for instance, people on TV and in the press will say stuff like "I don't believe the money reaches the starving children... it's lost on organization overhead and pocketed by corrupt politicians in the third world...")

An important thing to understand about the bottlenecks/constraints is that often, what is required is identifying a way of removing or relaxing or avoiding the constraint and demonstrating that it works by taking the first step. If you as a problemsolver do this and show the way, others will say "hey, that's a good idea - I'll do the same."

In other words, your task as a problemsolver is to

1. understand the rough, main structure of the "problem complex": What is the problem, what are the main ways of addressing it, where are the funds coming from, where is the public support coming from (and where is it not coming from) and so on
2. Identify the biggest limiting factors/bottlenecks/constraints that is limiting the size and impact of our response to the problem
   
3. Develop simple, easily taught ways of removing, reducing or avoiding these constraints/bottlenecks
4. Make your solution work in practice and spread it

Finally, some successful examples of this:

• Awareness issue: Al Gore's movie "inconvenient truth," or Michael Moore's film "Sicko" are both quite successful attempts at raising the public awareness surrounding specific issues
• Technical knowledge issue: Can be low tech, such as the search for economically viable alternatives to highly polluting and environmentally unsustainable cooking fuels (see this interesting TED-talk by MIT engineer Amy Smith). Can be high tech, such as the $100 laptop project. Can be organizational, by improving monitoring, organization and transparency such as the global fund to fight AIDS, tuberculosis and malaria, or by improving purchasing expertise as discussed in a TED talk by Bill Clinton.
  
• Information issues - such as http://www.kiva.org/ which links your specific loan to a specific person taking up a micro-loan in the developing world - and allowing you to follow his progress over time.
  

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Changed scope of blog

I've decided to change the scope of this blog. The LifeYears website is developing too slow and its development community is too small for there to be a role for the regular updating in a free-standing blog. Instead, I'll devote this page to what we may describe using the cliche (?) expression "charity 2.0"

What I mean by this phrase is ways of motivating and enabling people to "do more good" with higher impact through innovative use of the web. That may not be the most precise and accurate description, but we'll iterate as time goes by.

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