Reading this week:
- Congo by David Van Reybrouck
When I want to remind myself to do something, I either open up a tab and type in a google search or else send myself an email. This blog post is mostly for my own benefit (all these blog posts are for my own benefit), because writing it will let me close a tab I’ve had open for I think about a year now. As documented elsewhere on this blog, I think about international development a lot, and in this post I am working through some thoughts on program effectiveness vs. a program’s ability to raise money.
Evaluating the effectiveness of development programs is a something I find to be quite fraught. In my limited experience, you very quickly wind up doing something like trying to put a dollar value on quality-adjusted life-years, and then find yourself trying to weigh the relative effectiveness of improving someone’s floor or buying them HIV meds. If you get too wrapped up in effectiveness, I also think you wind up in a bit of a moral conundrum: what if you have a program, but then find some other program is more effective? Aren’t you obligated to transfer all your funds into the new program, lest you are wasting limited resources and letting people die? Then again, if you don’t try to evaluate effectiveness of programs, you will do ineffective programs and waste even more of the limited resources and that is even worse! Not an easy business to be in.
There is of course an ongoing movement to just give people money instead of doing almost any other sort of development project. Giving people money is pretty darn effective in a lot of cases, which should be intuitive. Development projects come in and try to identify a needs gap, and then fill that gap. They come in and go “man these people could really use a cow” and then give them a cow. Instead of trying to identify people’s gaps, you could instead just give them the money and let them fill their own gaps. This makes sense. If someone offered me a cow, I would probably take it, and then just go and sell it and spend the money on whatever I actually wanted (just giving money, I want to say, is far from a cure-all, and there are ways to make the impact of direct cash transfers more effective, but still).
On the other hand, the gigantic advantage, I think, of running a give-people-cows charity is that it is much easier to solicit donations. If you go on the website for Heifer International, they give you a whole “gift catalog” of different animals you can buy for families. As yet another caveat, this is actually misleading, when you “buy” a “cow” from them for a family, they actually just use your $500 to fund their programs in general, though some of those include buying cows for people. But let’s pretend they’re exclusively in the business of buying people animals, because that is what their website wants you to think. Heifer International clearly thinks that people are much more willing to cough up donations if they can believe that they are buying a cute widdle baby goat for a specific, photogenic family in a picturesque but nondescript developing country. Contrast that with GiveDirectly, which firmly believes in direct cash transfers. If you go on the website you really gotta kinda poke around before you find any picturesque families!
The thing I was thinking about when I opened up a tab a year ago is the balance between program effectiveness and funding raising effectiveness. To wit, if my program is half as effective as yours, but I can raise twice as much money, aren’t we doing equal good in the world? What I really wanted to do was come up with a donor discount rate, a reasonable quantification of exactly how much less money you raise when you’re like “hey we’re just gonna give cash to people, they need that $20 more than you do” instead of saying “wanna buy a chicken?”
After thinking about it off and on for a year, I realized that was going to be hard. There are too many variables for me, personally, to figure out. Are there people that will only donate money if they can buy a chicken, or if they can’t buy a chicken will they donate to direct cash transfer charities? Are the different chicken charities competing with each other? How do people pick which charities to donate to anyways? Beats me! Plus market forces have probably already revealed the answer: there are more “donate things” charities than “donate cash” charities (I think), so charity world clearly thinks one method is more effective than the other.
Nevertheless, I will do some pointless math on Heifer International and GiveDirectly. According to the abstract from this decade-old study, for every $1 Heifer International spends, they cause somewhere between $1.19, $1.25, or $2.35 of benefit to a household. Let’s average those and say $1.60. Meanwhile in the year ending June 30, 2020, they raised just south of $108 million and spent about $94 million, doing I suppose $150 million “worth” of “good” in the world. On the other hand, according to this only couple-year-old study(‘s abstract, as I understand it), for every $1 GiveDirectly transfers, the community benefits $2.60 worth. Meanwhile, in 2019, they raised about $42 million and gave about $33 million in grants, doing, by my hokey system, $85.8 million “worth” of “good” in the world. So there ya go. Except in writing this post I have learned that in 2020 they raised $300 million and spent at least $210 million, mostly it seems because MacKenzie Scott really likes what they do. I guess that answers that debate.
Jeez I love what MacKenzie Scott has been up to. If you’re hiring, MacKenzie, I will work so hard at giving your money away.