Give one charity donation, get one free

Making a big gift to draw other donors is only useful if the charity is highly effective

This article first published in the Financial Times

The practice of donors offering to “match” gifts made to charities they support has become common in the charity world. In the run-up to Christmas, many have been offering to double donations. In the recent Challenge Campaign, for instance, money given to selected charities was doubled by the Big Give, set up by Sir Alec Reed, founder of Reed, the recruitment firm.

Others schemes propose different deals: one donor was offering to give $2 for every $1 given on Friday to Charity Navigator, a charity rating agency; while PayPal will add 1 per cent to all donations made through its platform until New Year.

The UK’s Department for International Development does it too. Its UK Aid Match offered up to £5m from the UK aid budget to eight charities.

The theory is that the match attracts new donations. If your aim is helping your chosen charity to raise money, is it a good idea to offer to match other people’s contributions? The rigorous evidence suggests that it is.  Continue reading

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What the Skoll Global Threats Fund learnt with its $100 million

This article first published in Alliance Magazine.

The first president of eBay, Jeff Skoll, set up his Global Threats Fund in 2010 to ‘make hundredmillioncamper progress against five of the gravest threats to humanity’: climate change, pandemics, water security, nuclear proliferation, and conflict in the Middle East. It closes this month having spent its $100 million, and this week published a report about “what worked, what didn’t work, and what we learned about philanthropy’s role in reducing global threats”. As more foundations ‘spend out’ and publish their learning, we will probably see more such documents. This one is a weird read. Continue reading

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Giving suggestions for this Christmas

If you, like millions of people, want to give this Christmas / holiday season, the following are all good bets, in our view:

Medicins Sans Frontieres: They always seem to be to be where the sh*t is worst, e.g., Yemen, Rakhine province in Myanmar (where the Rohinga live/lived). We’ve never formally analysed them but all our contact with them and literature we’ve seen from them implies that they have their act together. Continue reading

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Try not to judge a charity by its admin costs alone

Producing the kind of data donors would like is hard and expensive, but not impossible

This article first published in the Financial Times.

We kept overheads low, boasts Camila Batmanghelidjh in her book published last week  about how and why Kids Company, the charity she founded, collapsed in 2015.

Perhaps skimping on administrative costs was a false economy. In the book she also says the charity kept paper records for the 36,000 children and young adults it claimed to support, which were “stored in 80 cabinets”. It hardly sounds ideal. Continue reading

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How to fund in education

This article first published in the Financial Times.

Malala Yousafzai starts at Oxford university next week. The Nobel Peace Prize, which she shared at the age of 17, was for her work promoting the right of all children to education. Many people give money in pursuit of that aim, so it’s reasonable to ask what we know about improving education, particularly in less developed countries.

The answer is surprisingly little. Rigorous evidence about both primary and secondary education is rather sparse, though primary education is better studied. Very few programmes have been tested often enough, and in enough places, to give confidence about their effectiveness. Continue reading

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Donating $100m is like donating anything else

So, $100m is a sizeable donation. And one charity is in line to scoop the lot. The choosing-a-major
John D and Catherine T MacArthur Foundation, a $6.5bn foundation based in Chicago, is looking for “a single proposal that promises real and measurable progress in solving a critical problem of our time” to which it will donate $100m.
More than 2,000 organisations applied to the aptly named 100 & Change campaign. Eight have been shortlisted. Foundations normally make their decisions behind closed doors (and are much criticised for it) but MacArthur is running the selection process in full public view. The single winner will be announced in December.

Continue reading

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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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