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Saving administration costs or saving lives?

By Lucius Caviola & Nadira Faulmüller

Imagine a car company advertising as follows: “90c of any dollar you pay for your car goes directly to building cars. Only 10% of our expenses go into planning, designing, and advertising them.” Such a campaign strategy would seem patently bizarre; when buying a product few of us are interested in how much went into administration, all we care about is what we get for our money. Overhead ratio (the proportion of money going into administration) is irrelevant; only cost-effectiveness matters.

This common sense approach to purchasing goods or services does not seem to translate into the non-profit sector, however. Consider the following advertisement by the organisation CARE:  “More than 90 percent of our expended resources – among the highest of all philanthropic organisations – support our poverty-fighting projects around the world. Less than 10 percent of expended resources go toward administrative and fundraising costs.”Read More »Saving administration costs or saving lives?

People and charitable causes are importantly different things

Like Prot – the lovable character played by Kevin Spacey in the underrated movie K-PAX – you’re an intelligent benevolent extraterrestrial who has just been beamed to Earth.  Sadly, unlike Prot, you have no return ticket.  The good news for you is that just moments after hopping off of your beam of light, you found a briefcase stuffed with $3 million.  Being benevolent, and having concern for the inhabitants of Earth, you decide to give nearly all of this money to charity.  Being completely new to the planet, however, you do not yet have any special concern for anyone here – no friends, no loved ones.  Having this equal concern for everyone, you want simply to do the most good possible, and so you decide to give this money to the most cost-effective charities you can find.

Exit science fiction scenario.

One important difference between each of us and this Prot-agonist is that we do have friends and loved ones; we have rich shared histories with them, we care deeply about them, and, crucially, the level of concern we have for them is not on a par with the general concern we have for strangers.  If your fiancé were drowning in a lake to your north, and ten strangers were drowning in a lake to your south, and you could either rescue the one to your north or instead the ten to your south (but not all eleven!), you’d probably head north.  Whether this constitutes morally good behavior on your part is a matter of controversy among contemporary ethical theorists.  But let’s assume the commonsense view that it’s not wrong of you to save your fiancé over the ten others.  This degree of special partial concern is, we’ll suppose, justified.

Read More »People and charitable causes are importantly different things