I’ve been ranting about how ridiculous it is to judge a charity by the % of its funds that go to administrative expenses, which I’ve dubbed the “Straw Ratio” because I was too lazy to find a prominent advocate of it so I just invented a Straw Man.

Well, it turns out there quite a lot of human men (and women) who make this mistake. Specifically, according to a recent study that I found out about from Gift Hub, 75% of high-net-worth households say they would give more to charity if less were spent on administrative expenses.

This aspect of charity got by far the strongest response out of anything the households were surveyed on. High-net-worth households care more about their money going to administration than they do about having more access to research (34%), or being able to determine the impact of their gifts (60%). See page 7 of the actual study if you think I’m lying.

Meanwhile, frustrated with the incompetence and disorganization I’ve seen in the nonprofit sector, I’ve practically been begging these guys to spend more on administrative expenses.

If these survey numbers are to be trusted, we’ve got quite a conundrum here. How do we convince people that this seductively easy-to-measure number is no more meaningful for a charity than for a company? How can we make people care more about accomplishing something than about pinching pennies from executives?

My initial ideas:

• Yell
• Blog
• Insist on calling the program expenses / total expenses the “Straw Ratio,” banking on the negative connotation of straw
• Start a project to collect all the meaningful information about charities that we can find in one place
• Hold a protest! We could march around with straw hats on - it would be so symbolic!
• Social networking

Elie and I had lunch with three people representing the Children’s Aid Society (CAS) yesterday. At this point we aren’t used to having meetings without a wiki handy for note-taking - and dealing with corn chowder at the same time intensified the challenge - but here are the highlights of what I remember:

• The meeting started with a more or less total repudiation of the main self-evaluation study we’ve been sent so far, a review of test scores at CAS community schools. I had sent an email on Wednesday summarizing my problems with the study (basically, I think it shows nothing), and we were told that it had been put together on the fly for a donor request and that we shouldn’t focus on it. This is a little disconcerting because:
  • This study was originally sent to me a year ago, in response to my broad request for any and all evidence of CAS programs’ effectiveness.
  • When I repeated the request last October, I was sent basically a re-worded version of the same study (same data, same conclusions, different but equally unconvincing presentation).
  • I think this basically comes down to a disconnect between fundraising and analysis, which I’ll get to in a second.
• CAS claims that there is another, more rigorous study of community schools in the works, which they will send to us.
• They also told us that they have designed a much more ambitious, New Visions-like comprehensive study of how their community schools compare to other schools in the city, but they’ve been unable to get the necessary funding for it because most donors aren’t interested in spending a lot on evaluation. They are going to send us the design of this study as well.
• Jane, who oversees the community schools program, says there is a strong independent research case that the community school model (described here) is the most promising approach to improving education. She has agreed to send us some starting points for looking into this.
• We also talked about CAS’s relationship with other programs trying to do similar things, including New Visions for Public Schools and Harlem Children’s Zone. We came out of this discussion mostly confused - we were told that the people in these organizations know each other (which we believe) and that they work together (which we were unclear on the details of, especially since they don’t share funding and are generally going aboiut the same problems in radically different ways).

So, a lot of what comes out of this depends on what they email us for followup. The main thing I have to say at this point is that it’s been a long, hard slog through the fortress of fundraising (what CAS calls “development”) to meaningful conversations about why CAS chooses the strategies it does.

I’ve been hounding CAS for information longer than anyone else - they were my first ever real charitable donation back in July 2005 - and this is the third personal visit I’ve had with them. The first was a tour of one of their community centers; it was Halloween, and I was invited to participate in the “haunted house” for the little kids (I declined; I didn’t trust myself to draw the line between “fun, enthusiastic scaring the kids” and “causing heart attacks”). The second was a tour of a community school, where I got to interview little girls about the handbags they were making. From the beginning, I’ve been adamant about their sending me all the details they have of their programs’ impact, yet all I’ve seen is the study mentioned above and a longer community school study that is more encouraging but also is something like 10 years old.

It seems clear to me that the whole donor communication process is designed to deal with people who are basically the opposite of me. If what I was looking for was the opportunity to talk to charming people and look at adorable children, I would be absolutely thrilled because CAS has definitely provided that. But as someone who thinks 1000 words are often worth a million pictures, I’m still wondering why getting in touch with people who could more directly address my concerns (a) took so long to happen (b) had to happen over lunch.

And all that said, CAS is one of the best organizations I’ve seen in terms of being responsive to donor concerns and at least trying to answer the questions I’ve been asking.

If donors wanted meaningful information, donor relations would be set up to provide it. At this point in time, it seems that what most donors want is pleasant conversation, cuties, and asparagus-shrimp ravioli. GiveWell would love to help change that.

I don’t have time for a real post today and I did two yesterday, so here are some scattered comments about what you can expect over the next few weeks:

• First off, there’s a blog carnival - which is an awful name for what I would prefer to call a “blogozine,” a collection of posts from various blogs on a single topic - on “responsible investing.” Check it out if you care what other people think of the issues I’ve been discussing.
• I’m not finished with the Straw Ratio. I’ve made the biggest points I want to make, but at some point I want to finish totally tearing it apart.
• Lately I’ve been very focused on the business strategy end of the GiveWell project; I haven’t had time to do much actual research and learn more about the world’s problems. So a lot of my posts have been on abstract philosophy of giving/evaluation. That will change somewhat over the next few weeks, as I am visiting two Holden Award-winning charities: Children’s Aid Society and New Visions for Public Schools. Elie will probably go with me, and we plan to absolutely grill these people and come back with much more knowledge of what they do. You’ll hear about it.
• How’s my choice of topics? What’s worth reading and what isn’t? What would you rather I blog about? Leave comments on the blog or email me (holden@givewell.net) to let me know.

“I’ve got a great new charitable venture. What I’m going to do is separate the S&P 500 into socially responsible and socially irresponsible companies. I’ll go long the good companies and short the bad ones.* Of course, I’ll be doing this for altruism, not out of any knowledge of the companies - so I might lose money - but it’s charity! Any losses will be covered by grants.”

*(This means betting on the good companies to outperform the bad–it has the same impact on prices as if you sold the bad companies’ stocks and bought the good companies’ stocks.)

So … does this idea sound as crazy and worthless to you as it does to me? Because it’s exactly equivalent to what people are calling for foundations to do: spend effort going through their investment portfolios so that they may shift their capital from the socially irresponsible investments to the socially responsible investments.

It would be different if someone could construct a well-respected social responsibility index, and convince a large number of foundations to use it. That might arguably be a good charitable activity. But taking a single pool of money, modest- or even large-sized, and devoting it to this would have practically no positive impact. The operation wouldn’t justify its costs.

Hopefully this is a vivid illustration of what I’ve been trying to say: that foundations shouldn’t expend time and resources on “responsible investing,” not because it’s irrelevant, but because there are more important things for them to worry about.

Speaking of which: no more on this topic for a while. Promise.

The debate on responsible investing continues, including some thought-provoking discussion of “blended value.” People are pointing out, rightly, that being profitable vs. being beneficial to society is not an either-or. A charitable foundation can make investments that it expects to recoup partly or fully, and still think of these as part of its charitable activities (an excellent example is Jeff Skoll’s investment in An Inconvenient Truth, which I learned about from this article - Skoll invested in the movie from a combination of altruistic and profit-making motives).

So why shouldn’t a foundation think of its investment portfolio as an extension of its activities?

My answer is that for just about any foundation, it just isn’t worth it. Presumably, a foundation has a limited amount of time and resources for identifying ways to improve the world. It should spend all of these resources on identifying the best possible, highest-impact projects it can fund. Some of these projects may be “investments” in the sense that there may be an anticipated return … but once the foundation has granted all it can and wants to save the rest for later, it should just save it for later. Shifting capital between publicly traded securities would not make any reasonable list of the best ways to use one’s funds for improving the world.

But thinking about this has raised a question that seems much more important to me. Why do foundations want to save so much of their funds for later?

The law requires a foundation to give away 5% of its assets every year, and that’s what most do, even Gates. Most foundations sit around forever–witness the Rockefeller Foundation, which has existed for almost 100 years. Why? Is there a reason to save the money, earning a market return on it, rather than spend it now, and let the good it accomplishes multiply at what is probably a much higher rate (as I argued in this comment)?

One reason would be simply running out of worthy recipients. But is this really what’s going on? Why don’t foundations that have run out of projects to fund send their money to other foundations with similar goals, that haven’t? They’re all trying to accomplish the same things, right? Why doesn’t the money just flow where it’s needed, instead of sitting in the stock market?

Does this make any sense? Millions of people are dying from curable diseases and suffering from underfunded education … celebrities and charities exhort ordinary people like you and me to open our wallets today … all while 95% of your average gigantic pool of money left by a wealthy philanthropist isn’t even being used?

Wow. I’m about 10 times as stumped as I was when I started writing this post. Is this crazy or what?

I have plenty more ranting to do on the Straw Ratio, but apparently blogs are supposed to discuss current events or something, and the big story in charity blogging (yeah, charity blogging is a thing–I knew it wasn’t going to take much more time to get going than food blogging) is “social investing.” Specifically, the LA Times articles that accuse the Gates Foundation of contradicting good works with evil investments.

Here’s my summary of the debate: some people are upset that the Gates Foundation isn’t going to make any changes, and others claim that a foundation can’t make these kinds of “judgment calls” (which seems like a bizarre claim to me–what exactly are they supposed to be doing in picking grant recipients?)

The first thing I want to point out, which I haven’t seen acknowledged enough, is how extremely, extremely minor the impact of a foundation’s investing decisions are on the companies it invests in. It’s one thing if it’s doing private equity and helping a startup, shoestring baby-eating venture to get off the ground; that would be socially irresponsible investing. The much more common situation is that it’s holding a bunch of publicly traded stocks. The stock price impact of pulling out their money, even for a behemoth like the Gates Foundation, would be tiny, and any price impact they did create would be partly offset by other investors jumping in at the lowered price.

This isn’t even mentioning the indirectness of the link between a company’s stock price and its ability to carry out its activities. An extreme example of this is the one kind of company the Gates Foundation does divest from, tobacco. Tobacco companies are generally not seeking capital to expand their activities, so investing or not investing in their stock has literally no impact whatsoever on what they do. Buying their stock is buying a slice of their profits, not contributing to them. Saying you shouldn’t invest in Altria because smoking is bad is almost exactly equivalent to saying you shouldn’t bet on the Colts to win the Super Bowl because they’re annoying.

Still, indiscriminate investing can mean that (a tiny bit) more capital goes to irresponsible ventures. So should foundations be worried about this? Generally, I’d say no–not because it isn’t relevant, but because foundations’ resources are better spent elsewhere.

Let me use a nonsensical example. If the Giving Hope to Babies Foundation wants to give hope to babies, it should be doing whatever gives babies the most hope per dollar, net. This probably means spendings all its resources to find and fund a few extremely effective activities (say, showing Braveheart in maternity wards). It wouldn’t make sense for it to demand that the people who sell it electricity, rent out its building, deliver its packages, etc. are all people who never discourage babies–this would be a lot more money and hassle for very small, scattered improvements, and the resources would be better used for more Braveheart screenings. And likewise, it wouldn’t make sense for it to spend resources on consistent investing, weeding out all the baby-demoralizing companies from the standard stock indices it’s holding. It’s better off using a simple, cost-effective investment strategy and using the savings on its core Braveheart-showing programs. I see I’ve lost you.

That said, I think the Gates Foundation is an exception, because:

1. They are really enormous, and they are probably hurting for things to spend their money on. Seriously. Unlike most foundations, they recognize the silliness of giving money away less quickly than possible, and yet they’re still giving it away at a slow rate (~5% of assets per year).

2. They are a leader, and if they did a good job developing a “socially responsible investment index,” many others would leverage their work.

3. If this index were constructed using clear, consistent guidelines, we might actually start to see an impact, in that businessmen would know that violating the guidelines will mean more difficulty raising capital.

Because they’re a leader and because they’re huge, the Gates Foundation has a chance to set the standard for socially responsible giving. That would matter, and if the index were well constructed, it would discourage “evil investing” enough to start discouraging “evil entrepreneurship” as well, which is really what matters. The good this would accomplish might be comparable to what they could accomplish by spending the money on other things. But this tradeoff is highly debatable, and for smaller, less influential foundations, I think it’s clearly a better move to just invest for results.

This all might seem pretty irrelevant if you’re not a gigantic foundation with loads of money to invest well or evilly. Here’s what’s relevant: division of labor. It’s way less effective to try to do everything perfectly than to pick something that you can do really well, do it, and outsource all the other crap to others. That’s why Ford doesn’t make their own steel and I don’t do my own laundry. And that’s why I’m generally pretty unenthused about–and often against–both “responsible investing” and “responsible consumerism,” stuff like Fair Trade coffee. People should buy their favorite products and give to their favorite charities, rather than spending extra money on products that are “made without evil.” Avoiding the bad isn’t nearly as effective or important as identifying and supporting the best (… so … GiveWell is awesome). This post is already long, so I’ll be more convincing about this some other time.

1. “90c of your dollar goes directly to building cars. Only 10% of our expenses go into planning and designing them.”

2. “We’re using a volunteer director and no advertising, so we can spend 100% of the movie’s budget on shooting expenses. It’ll be a hit!”

3. “90% of our military budget goes directly to soldiers and weapons. We don’t waste your tax dollars on administrative costs.”

4. “More than 90 percent of our expended resources … support our poverty-fighting projects around the world. Less than 10 percent of expended resources go toward administrative and fund-raising costs.”

The answer, of course, is #4, because it’s real. But to hear me tell it, it’s as silly a “selling point” as the others.

Efficiency is great, but who the heck came up with the idea that efficiency means low “administrative expenses”? When I think of what’s included in administrative expenses, the following jump to mind:

• Salaries for executives
• Technology infrastructure
• Self-tracking and -evaluation

For-profit companies spend boatloads on all of these things, and it isn’t because they’re being extravagant–it’s because these things are cost-effective. When you’re doing something complex and difficult (like, say, trying to improve the lives of Africans who suffer from a host of interrelated problems), you need to get great people and keep them happily employed, you need to have good tools to leverage their skills, and you need to be stepping back and looking at what you’re doing and how you can improve it.

A theme we have already hammered on ad nauseam, and don’t intend to stop, is that in giving as in everything else, It isn’t just how much you spend–it’s how you spend it. And that means that the people, tools and processes that can help you spend more intelligently are worth quite a bit of expense themselves.

This isn’t just a hypothetical/abstract argument about how the Straw Ratio can mislead you. This is the product of our experiences and frustrations with organizations that we find to be disorganized, technologically behind, and incapable of producing any details about what they do and whether it’s working. The obsession with the Straw Ratio goes beyond Charity Navigator: there is a pervasive attitude that nonprofits need to get all their money right to the needy, and do all their administration on the cheap. No one thinks a business should be run this way, but it’s conventional wisdom in the nonprofit sector, and the result is that the groups you’re paying to accomplish great things are trying to do them without good technology or good people. Examples of both to come.

I’m spreading my rant against the Straw Ratio across a few posts, because (a) I have a lot to say; (b) this idea is really central to what we’re doing.

Let’s start with an observation so obvious that you’re going to get mad at me for being patronizing. There is a lot you need to know about a charity besides its Straw Ratio. For example, if 99c of every dollar you give to Love the Children International goes directly to children in need (a common way of citing a strong Straw Ratio), but the specific way in which it goes to children in need is that it funds a team of singers that sings ’80s hits to them, this isn’t necessarily the best possible use of your donation.

Of course, I’m not aware of any charitable program devoted to singing ’80s hits. But I’m aware of many whose stated missions are vague enough that they may well encompass this. Some popular examples off the top of my head: one, two, three. I’m also aware that for many of the strategies I do understand, the effectiveness is far from clear. An example that jumps to mind is organizations like AmeriCares and Direct Relief International, which distribute medical supplies to areas in need, but (perhaps in pursuit of a high Straw Ratio) appear to do zero tracking of what happens to the supplies once they arrive (even though they are often arriving in extremely dangerous, disorganized areas).

So it isn’t enough to know how much of your dollar goes to programs–you need to know what the programs are. This might seem obvious, but I think it’s often overlooked. I think this because when I ask charities for budget info and evidence of their effectiveness, I often get a pie chart showing how much of my dollar goes directly to program expenses, and nothing else. And when I ask for more, I often get confusion as to why I would want anything else. Keep in mind, these are large charities, frequently with vague and all-encompassing mission statements and always with more than one major program. I want to know what they’re doing with the money. They think it’s enough to show me that they’re doing something.

If the need to know more than the Straw Ratio were obvious to everyone, this wouldn’t happen to me. If it were obvious, there wouldn’t be such a hubbub about Charity Navigator’s new feature allowing people to donate directly through the site–in other words, saving them the trouble of so much as visiting the charity’s website, and thereby allowing them to donate to a charity about which they know nothing other than the stated mission and the budget breakdown into program expenses, overhead and fundraising.

The fact is, I think most givers trust charities to do good things with their money. In other words, most givers are in a state of brain de-activation. Most of us wouldn’t give our best friend money without at least wanting to know what s/he’s going to do with it (and not just that s/he has good intentions). Yet many of us are ready to fork over a check to a bunch of total strangers as soon as they incorporate with a name like “Happy Smiles Worldwide.”

It isn’t enough to know that your dollars are being used with good intentions. You need to know that they’re being used on things that work. A yummy name and 501(c)(3) status guarantees neither that the people you’re funding are well-intentioned, nor that they have any idea what they’re doing. And as long as the Straw Ratio is all people look at, a good reputation and even a multimillion-dollar budget shouldn’t put you at ease, either. The only thing that tells you your money is accomplishing good is a description of what it’s being spent on and why that can be expected to improve people’s lives reliably and effectively.

This is obvious to anyone investing in a business, or lending to a friend, or buying a car (you do take it for a test drive, right?) So the only possible way that people can miss it when donating to charity is that they’re turning their brains off. And that’s exactly what I think is happening. Some of the smartest people I know turn into weak, gullible, soft-minded suckers the second the subject turns to “charity” or “giving.” And it’s too bad, because that’s possibly the area where their intelligence–not just their wallet–is most needed.

Tune in next time as I move on from “The Straw Ratio isn’t enough information” to “The Straw Ratio is misleading information.” I believe that a good Straw Ratio can be a bad thing–and in today’s climate, it generally is.

If what I’m saying is obvious and boring you, just fill in the arguments yourselves (comments) and I’ll go back to complaining about corrective surgery organizations.

The Charity Navigator blog, and this post in particular, is a great resource for the conventional view of charity. What makes me say that? Trent Stamp writes about a Scottish charity that created an ad campaign criticizing (and that’s putting it delicately) people who give to animal-charities when there are poor people who are in need. Here are some excerpts from his latest entry:

I’m not saying that I necessarily agree with the sentiment here, and I’m even less sure that it’s a good idea for charities to start bashing other charities missions or to try and steal their donors.

I really don’t understand why anyone would waffle on this issue because it seems incredibly clear. In case anyone forgot, we eat animals; we use them for hard labor; we keep them as pets. We don’t generally assign animals the rights to life, liberty, and the pursuit of happiness. Why? Because they’re animals. Supporting organizations which help people over organizations that help animals seems like an incredibly easy choice, and I don’t know why anyone wouldn’t “agree with the sentiment here.”

When you start telling people that some charities are more important than others, you run the risk of losing your supporters when someone convinces them that their cause is worthier than yours.

This is the conventional view of charity - don’t criticize others because they may criticize you, and your cause may lose support. But, why is everyone so afraid of criticism? Perhaps, through criticism, some organizations will go under, but it will be because they’re not as good. And perhaps, through open debate and criticism, the best organizations will prove themselves. Wouldn’t that be terrible. And maybe, just maybe, a few more people will live happy lives and a few more animals won’t. I think I can live with that.

Plus, based on their popularity in this country at least, picking on the animal charities and their supporters might not be the most brilliant strategy around for those who want to stick around for the long haul. Those people don’t play.

If we criticize those who choose to give to animal charities, they may stop giving altogether. Well, that may be true. And, if it is, I don’t think it’s that big of a loss. We’ll return to this topic later, but a central tenet of the conventional view of charity is that giving is good in and of itself; that’s wrong. Giving is good when it effects good. Giving to charities that help people effects good; giving to charities that help animals effects almost no good.

Let me note that there is some truth to what the Straw Man says below. There is very little information that you can get and compare across all charities, and looking at the Straw Ratio (program expenses / total expenses) is probably the single quickest, easiest way to spot the worst of the worst (i.e., Lighting Your Cash On Fire International).

There are a surprising number of charities that fall into the “lighting your cash on fire” category. Websites like Charity Navigator, which evaluate huge numbers of charities using these simple metrics, provide an extremely valuable service to society. They help expose and avoid the worst of the worst, and it’s also worth mentioning that this filter (and the categorization they do) makes work like ours feasible.

To read about the worst, read the Charity Navigator blog. It’s good reading, and eye-opening. But when you’ve knocked out the crooks, you still need to separate the well-intentioned and effective from the well-intentioned and ineffective. For this, the Straw Ratio is useless and even destructive. In the coming weeks, I will go into a lot of detail on why. Right now I’m hungry.

Hi there. I’m the Straw Man, and the purpose of my life is to say things that Holden disagrees with, in exaggerated ways so that Holden can tear me apart. It might not be the most glamorous job, but I’ve come to terms with myself.

So, guess what? I’m really into intelligent giving. It isn’t enough to be generous with your money–you have to make sure it’s accomplishing good. I’m a philanthrocapitalist. I believe in accountability. I like charities that are run like a business. Cool, huh?

Even cooler: I have solved the problem of how to do intelligent giving easily! I have devised a single number–breathtaking in its information content, stunning in its simplicity–that totally tells you what you need to know about a charity, and you can calculate it off data that’s publicly available for every charity in the U.S. Awesome? Are you ready to hear my secret formula? Here it is:

Take the money a charity spent on “program expenses” (designated on its required IRS form 990). Now, divide that number by the charity’s total expenses for the same year. Pow! Now you know how much of your dollar they will actually spend accomplishing good! What a number! I will call it the Straw Ratio.

A couple examples will demonstrate the frightening power of the straw ratio.

1. AmeriCares is a gigantic charity that takes donated medical supplies and delivers them to local organizations. Last year it spent over $1 billion, less than $7 million of which was on overhead, for a near-perfect Straw Ratio of 99.4. Good luck finding a better charity than that!

2. Interplast seeks to provide corrective surgery to people with deformities, through a combination of missions (sending surgeons overseas) and measures to build local capacity, including training and operating local centers. Last year it spent $3.6 million total–but $350,000 of this was on administrative overhead, and another $500,000 was fundraising. The Straw Ratio tells us that for every dollar you give, only about 77c are going to charity. Pretty fishy if you ask me.

This is an awesome number, so it’s no wonder that independent charity evaluators focus on it, from Charity Navigator (the biggest of all) to American Institute of Philanthropy (whose criteria are strikingly similar to Charity Navigator’s, hmm, actually, they seem identical) to the BBB Wise Giving Alliance. And no wonder that charities with high Straw Ratios love to put this info front and center, and those with truly innovative minds–here and here–even manage to achieve PERFECT STRAW RATIOS! Roll that around in your brain for a second. I guess these organizations neither fundraise nor administrate . . . and that means every penny is good!

There couldn’t possibly be any objections to this, right?

I understand that a lot of you have been sitting on the edge of your seats, wondering when GiveWell is going to recommend an organization for fighting diarrheal illness. Your wait is over.

My research on diarrhea began as an interest in the cause of “water.” It’s a very popular cause, and a very marketable one: hard to argue with the idea of giving people water. In my research, the first thing I learned was that the main problem of “water” is lack of clean water (not lack of access to water entirely), and that the main thing contaminating the water is fecal material. And the main problem caused by this, in turn, is diarrhea so severe it can actually lead to death by dehydration.

But the problem goes well beyond water. People lack access to adequate sanitation facilities, as well as sanitation education. Fecal matter gets everywhere (their hands, their food, and their water), and all of this contributes to the death toll of diarrhea.

Even though there are a few cost-effective strategies for reducing diarrheal illness, most of the organizations with which I spoke focused on expensive approaches, something that both former Secretary of the Treasury Paul O’Neill and I find confusing and frustrating. Part of the issue may be that focusing on clean water is more marketable–but less cost-effective–than focusing on the root problem, diarrhea.

But then, I investigated Population Services International. PSI is a large ($260 million budget last year) organization focused on basic health issues in the developing world. To reduce diarrheal illness, they offer Oral Rehydration Therapy (ORT) and water purification at point-of use. Uniquely, instead of distributing the products for free, they sell them through local vendors allowing them to recoup some of their production costs and reduce distribution costs. We estimate that PSI’s ORT program saves lives at less than $50/life. Holden’s made a big deal about numbers like this before (he did grossly understate ORT’s cost at 5c/life), but $50/life is hard to process. $50 … per … life. Jeez.

Along with its focus on the most cost-effective strategies, I’m a big fan of PSI’s evaluation approach - they keep careful records of exactly how much ORT and water-purification solution they distribute and have a research department devoted to evaluating PSI’s work.

Now, PSI isn’t perfect. It didn’t give me a detailed breakdown of its total budget - its diarrheal illness programs only make up about 2.5% - and it doesn’t comprehensively or systematically evaluate each program. Also, it’s been relatively difficult to get information from PSI, even after I made a reasonable donation.

Right now, I’m working on the review, which should be up on GiveWell in the next week.

So, I gave around $9000 ($5000-$6000 actual cost, factoring in taxes) to charity this year. Was it enough? I’ll be the first to admit that wasn’t all I could afford to give. It was as much as I wanted to.

And you know what else I’ll admit? Earlier in the year, when the baseball playoffs came around, I went to four games, spending a total of $400 on tickets alone. According to me, that means I let two children die of malaria so I could watch the Yankees lose in person. Those of you of certain philosophical persuasions could even say I killed two children. Adjusting for taxes, I killed three.

It’s an unnerving thought. But if I wrote that I’m losing sleep over it, I’d be lying. I’m not. I spend more time than most people thinking about the horrible problems in the world, but in an hour and a half what I’m going to be thinking about is how awesome it is when 300-pound men injure each other for my entertainment. And even when I am thinking about the horrible problems in the world, I generally don’t feel that terrible or sad and I definitely don’t cry (which some people consider to be the ultimate sign of an effective charity agent). Honestly, the main feeling I have is excitement that I can do something about them.

If you think that makes me a terrible person, and you’re either (a) giving away every penny you have or (b) staying up all night to jam needles into your eye because you feel so bad, well, cool. If you’re one of the remaining 99.99999% of people who values yourself way above others, I imagine that what I’m saying rings true.

I want to help others, but I have no interest in being a saint or Zell Kravinsky. I’ve got some disposable income, and I spend it on things that feel worth it. Improving the world is one of those things. Others include baseball, beer, and steak dinners. I wouldn’t fault you for doing the same. Just remember: you don’t have to give away everything to give away a lot.

All right! Some of those Christmas bonuses Elie talked about are going to charity, after all! This is awesome–not only are those Wall Street dudes super rich, but they’re super smart too, right? I bet they’re all thinking really carefully about how to accomplish the most good, and focusing on evidence and accountability, like these guys and this guy.

Or, they’re giving to whoever invites them to the coolest parties. One of the two.

I’m not trying to hate on the United Jewish Federation of New York. I know practically nothing about them (their website didn’t help … but I digress). But what percentage of the $21.5 million this party raised from Wall Street–accounting for about 1/7 their annual budget–would have come in if they hadn’t held an awesome casino party? And does this make any sense?

When it comes to evaluating charities, there is a common obsession with making sure your money goes “directly” to the cause, as opposed to overhead and administration costs. I think this is silly and I’ll discuss it more sometime soon … but hey … if you begrudge a charity every penny that it spends on salaries and infrastructure, how do you feel about their throwing an enormous gala to get you in the giving mood? Wouldn’t it be better to save them a little cash by sitting down yourself and figuring out where to give?

The issue, it seems to me, is that many people think of giving the same way they think of eating broccoli: they feel obligated to, they know they should, but they’d rather not. So charities, smartly, treat them like 5-year-olds: they try to trick them into it. If there were millions of dollars riding on getting some kid to eat his broccoli, the wisest move would probably be to get one of those chocolate-covering machines and douse the stuff until it’s unrecognizable.

This phenomenon isn’t the charities’ fault, it’s the donors. And it means that where the money goes has way less to do with who’s accomplishing the most good than with who does the best fundraising and party-throwing.

But a funny thing happens as you grow up. You realize broccoli isn’t half bad. With a little garlic, it can be flat delicious. Seriously, try it if you don’t believe me. And it’s especially good when you’ve had more than enough chocolate for the moment and you’re feeling just a little sick.

You also start to appreciate the fact that chocolate-covered broccoli is, by any measure, pretty gross.

(Just realized that talking about medicine and sugar would have made more sense as a metaphor here. Screw it, “broccoli” is a funny word and I’m sticking with it.)

OK, maybe I got a little carried away in my last post, as Elie is more than happy to point out. I’ve been screaming about “low prices,” when the truth is that curing an obstetric fistula or cleft can be worth the extra $-per-person for a variety of reasons.

Something you’ll see a lot of on this blog is me ranting/raving/foaming at the mouth about the cause of the day, even if it isn’t my personal favorite. That’s because I think there are a lot of great causes that might appeal to different people, and I want to promote all the good ones. But something that’s very important–and that I think most people don’t do nearly enough of–is deciding between the many good things you can do with your money.

I think it’s crazy to make 10 small donations when you could make 1-2 big ones. None of your small donations will solve the problems they’re attacking (i.e., there will still be plenty of the problem left), so why not spend all the money on the most important one? Plus, big donations get you attention: they give you the opportunity to tell a nonprofit what you do and don’t like, and have them listen. The most important reason to concentrate your giving, though, is exactly the reason that most people don’t want to: it forces you to make hard decisions. And that forces you to raise the stakes, learn more, and think harder. And that leads to better decisions and totally sweet websites.

So, after raving about the great deals on malaria and cleft and diarrhea and fistula like a kid in a (nightmarish) candy store, let me put my 2006 giving decisions front and center. There are a lot of great places to give. These are the ones I determined (based on about .01% of the information I wish I had) to be the best.

$5000 to New Visions for Public Schools. As cheap as it is to save lives in Africa, I see improving U.S. education as the most difficult and important problem of all. This country is rolling in it. It should be a utopia, for crying out loud, and it isn’t close. Poorer countries are eventually going to be this wealthy, but unless we figure out how to promote true equality of opportunity, that wealth isn’t going to translate into what it should. And New Visions has the most promising approach I’ve seen in this area: go straight at the public schools (eliminating the selection bias of charters), and go at them with extreme systematicity and rigor. Read the review for details.

$2000 to Interplast. Cleft was the cause I specialized in researching over the last few months, so this was partly a relationship-building donation. But I also think corrective surgery is the cheapest and most concrete way I’ve seen to convert a full life of misery to a much more reasonable (if still poverty-stricken) one. There’s a good chance I’ll change my mind as I learn more about fistula, child slavery, etc., but this is what I’m confident in for now.

$1000 to the Children’s Aid Society, also promoting equality of opportunity in the U.S., though in a very different way from New Visions. They’ve received my biggest donations in the past; they’re good (though New Visions now excites me more); and I want to maintain a relationship because they could be great if they did a better job tracking their activities and results.

$256 each to four smaller causes: two with personal connections, one as a thank-you to Alliance for Smiles for being open and helpful (though I ultimately went with Interplast), plus alma mater.

And that’s it. $9000 in tax-deductible donations (so between $5000 and $6000 of actual money). I could have protected people from malaria, helped fight global warming, fed the hungry, saved the children, or even bought some books for affluent communities. I chose to support two organizations trying to break down inner-city obstacles to opportunity, and one correcting deformities for those who can’t afford it. And I’ll be the first to admit that I didn’t give every penny I have. So, how did I do? For my take, tune in next time. For yours, post a comment.