The rise of the mega-charity that may never die

This article first published in the Financial Times.

Established fundraisers dominate — but they don’t have a monopoly on good ideas

Death comes rarely to big charities. The Charity 100 Index lists the largest charities in the UK, and of the 100 which it listed last year, 94 have reappeared this year. (For context, the UK has more than 200,000 charities.) The top 10 biggest charities were exactly the same as the top 10 last year, though the order has re-shuffled a bit. The top three — Nuffield Health, Cancer Research UK and the National Trust — were not only the same last year but have been the top three now for 13 years consecutively.

This is a global pattern. In Australia, half of the list of the top 20 charities in 2014 were on that same list 20 years earlier, according to research by wealth manager JB Were. In New Zealand, the 40 largest charities are on average 75 years old, and 80 per cent of them are more than 20 years old. In the US, none of the 25 biggest charities as listed by the Chronicle of Philanthropy was founded within the past 13 years. Continue reading

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Three ways to tell if you’re giving effectively

This article first published in the Financial Times. It describes three methods for assessing the effectiveness of giving. If many donors did this, and published the results with descriptions of how they give, we could build up a picture of how best to give in various circumstances. This ‘science of philanthropy’ is described in Caroline’s article in the scientific journal Nature. Giving Evidence recently published analysis of one of the types described below, with the ADM Capital Foundation, based in Hong Kong, published here.

Analyses to check that your donations have the maximum impact

Warren Buffett notices a feature of philanthropy that makes it more difficult thanstudyingbooks running a business. With philanthropy, he says, “you can keep doing something that doesn’t make any sense and there’s no playback from the market”. So how do you know if you are giving well?

In my work, I’ve found that foundations and major donors can gain useful insights by analysing three fairly simple types of information. Continue reading

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We need a science of philanthropy

This article first published in the scientific journal Nature. PDF copy here.

Billions of dollars are being donated without strong evidence about which ways of giving are effective

Philanthropists are flying blind because little is known about how to donate money ca5ngd2rwell.  Facebook co-founder Mark Zuckerberg’s US$100-million gift to schools in Newark, New Jersey, reportedly achieved nothing. Some grants to academic scientists create so much administration that researchers are better off without them. And some funders’ decisions seem to be no better than if awardees were chosen at random, with the funded work achieving no more than the rejected.

The recipients of funds are increasingly scrutinized, but the effectiveness of donors is not. Funders are rarely punished for under-performing and usually don’t even know when they are: if the work that they fund helps one child but could have helped ten, that ‘opportunity cost’ is felt by the would-be beneficiaries, not by the funder. The same is probably true of agencies that fund research.

I founded an organization that promotes charitable giving based on sound evidence. I am acutely aware of how scant the evidence is about which ways of giving work best. The solution lies in more research on what makes for effective philanthropy. A ‘science of philanthropy’ could enable more to be achieved with the tens of billions given each year by foundations and other donors and funders. dbk-g-fuqaaap_z

Only a handful of studies have been done on donor effectiveness. The Center for Effective Philanthropy in Cambridge, Massachusetts, found that the time spent on proposals for, and the management of, ten grants of $10,000 takes nearly six times as long as the time spent on one grant of $100,000. The London-based consultancy nfpSynergy found that UK charities value £2 (US$2.6) of unconditional funds as much as £3 of conditional funds, suggesting that attaching strings to donations reduces their value. And the Shell Foundation found that three times as many of its grants succeeded when the charity was heavily involved in creating and managing the work than when it had funded work based on a proposal from a non-profit.

Establishing the effectiveness of a donor is not straightforward. After all, donors have diverse goals, from funding basic research to testing interventions, providing services or promoting social policies. Nonetheless, answering three questions can provide useful insights for any donor. First, how many grants achieve their goals? (I call this the donor’s hit rate). Second, what proportion of funds are devoted to activities such as preparing proposals or reports for the donor? Third, how satisfied are the recipients with the donor’s process? Logging the goal of every grant and tracking whether these goals were met would be a big step forward.

Several fundamental questions about effective giving have yet to be studied. An obvious one is the role of grant size. Intuitively, larger grants should enable more impact and be proportionally less expensive to manage. But my organization’s analysis of ten years of grants by the ADM Capital Foundation in Hong Kong (published this month) found that grant size didn’t seem to affect success. Similarly, a study of the impact of arthritis research found that large grants were no more consequential than small ones, possibly because smaller grants were awarded for different types of work. Another key issue is whether a broad or narrow scope makes funders more effective. The dominant theory in business is that specialization boosts success; nobody knows whether (or when) that is true in philanthropy.

Other unanswered questions concern the appropriate duration of grants, whether funders do better operating alone or in partnership with other funders, how involved donors should be in the work that they support and how donors should find recipients. Is it better to open applications to everyone, or to approach prospective grantees?

How to select recipients also needs study. Almost all funders make their decisions subjectively, either by soliciting the opinions of experts about a proposal or by interviewing applicants. Research on everything from picking stocks to student admissions shows that humans show weaknesses and biases in allocating scarce resources. The role of biases in awarding philanthropic funds has not been examined. One funder of academic research found that shortlisting applicants on the basis of objective criteria was a better predictor of success (measured by scientific publications) than interviews were. Such findings are intriguing, but still too indiscriminate to yield broad implications.

When medicine became a science, health and longevity increased. Similarly, a science of philanthropy could reveal principles about which ways of giving are most successful. To move in this direction, every funder should gather data about its performance on the three metrics I have outlined, and share these data with researchers. Analyses should be done by researchers, not by the funders or the recipients. The analyses could be retrospective, for example, by assessing how performance and recipient satisfaction have varied with grant duration, or with how recipients were selected. Or it could be prospective: for instance, a funder could deliberately make some grants large and others small, and invite researchers to investigate how grant size affects hit rate and the cost of managing funds.

Such studies will, of course, require resources — from research councils or philanthropic funders. Although that might initially reduce the resources for the work being funded, it stands to improve the effectiveness of that work overall. More evidence about how to fund well could also increase the amount that donors are willing to give.

 

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Investigating what makes for successful giving

Giving Evidence is pleased to publish what seems to be unprecedented analysis of the success of a foundation’s various grants split by characteristics of the grants: such as size, duration, restrictions, and extent of non-financial support. We have analysed all of ADM coverthegrants made by the ADM Capital Foundation in its first ten years (2006-16).

The results and method are detailed here.

This analysis and these findings are important. As Giving Evidence’s Director Caroline Fiennes discusses in the scientific journal Nature this week, remarkably little is known reliably about how to do philanthropy well – how to use it to achieve particular aims – despite philanthropy’s long and varied history. A ‘science of philanthropy’ would help, by investigating empirically which ‘ways of giving’ work best in which circumstances. This analysis with ADM Capital Foundation is exactly that. We urge other foundations and funders to investigate their success similarly – and are happy to be involved. Continue reading

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How to give: how to do evidence-based giving

Ask an important question and answer it reliably‘: how to do evidence-based philanthropy. This talk was given to an invited group of major donors.

(18 mins)

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Help the homeless — don’t give them spare change

This article first published in the Financial Times

Support homelessness charities and send your money to where it’s really needed

It is the classic Venn diagram: not everybody who is homeless is a beggar, and not
everybody who is a beggar is homeless. Rough sleeping is different again: rough sleepers are a small proportion of homeless people; some of them beg and some don’t.

Crisis, the homelessness charity which this week marks its 50 birthday, says 114,780 people were homeless in England during 2015-16. Perhaps as many as 34,500 people sleep rough in England in any year; around 4,000 a night. Crisis says that for every rough sleeper, there are 100 people in hostels, and 1,100 households in bed and breakfasts and overcrowded accommodation.

Continue reading

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What is evidence-based philanthropy?

This five-minute video is Caroline’s take on what evidence-based philanthropy is, and how it’s similar to and different from evidence-based medicine. Filmed on a park bench…with Oxford-Cambridge boat race crews practising in the background.

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Breaking the hunger cycle for the price of a bus ticket

Modern philanthropists adopt an evidence-based approach

This article first published in the Financial Times.

The Christian tradition of giving things up for Lent comes, it is said, from making a virtueof necessity. Last year’s harvest, gathered in the autumn, would have sustained people through the winter, but by March and April, supplies would be running thin. Rationing and starvation were common. Hence, religious blessing was given to abstinence and forbearance during these bleak months.

The cycle persists. About 300m people globally still have an annual “hungry season” before the new crops are ready. They’ll often skip a meal each day, which is particularly dangerous for pregnant women and young children because it irreparably damages cognitive development. Yet this suffering can be prevented for just the price of a bus ticket.

Continue reading

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Why are there so many charities?

This article first published in the Financial Times.

Donors encourage smaller organisations — but does that help beneficiaries?

There are 165,000 registered charities in England and Wales alone, which people often say is a lot. But is it? Moreover, it is too many? It’s not clear what “the right number” of charities actually means. By comparison, the UK has nearly 30 times as many companies

The reason there are so many charities stems from the economics and dynamics of the charity sector, which are worth understanding as they’re completely different to those underpinning how businesses work. When entrepreneur and former mayor of New York, Michael Bloomberg, embarked upon philanthropy, Richard Riordan, then mayor of Los Angeles, advised him: “You are going into another world. It’s like going to Mars — [there is] a different logical and mathematical system.” Continue reading

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Don’t spread the love with your Christmas charity giving

This article first published in the Financial Times.

One big donation will be more effective than several smaller ones

Would you prefer to receive one big present this Christmas, or lots of little ones? Your
inner child will tell you that holding out for one major gift that you really want is often the best choice. And the same goes for charities, who will benefit from one big donation this Christmas rather than numerous small gifts.

In my last How to Give it column, I told you how the insurance group Aviva has been inviting public involvement to give away £1.75m to “at least 800” non-profit organisations. Yet the evidence suggests that making numerous small gifts is not a good idea. Continue reading

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