effective charity

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.” Continue reading

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.

Continue reading

Sponsoring student adventures, with added charity.

Last weekend’s work was greatly enlivened for me by keeping track of the updates for Trinity Jailbreak. The challenge: 37 student teams had 36 hours to get as far from Trinity College Dublin as possible, without spending any money. They were, however, allowed to blag, persuade, and get corporate sponsorship to aid their “getaways”. Pre-contest, Donegal, Kerry, or perhaps Calais at a stretch seemed like likely winning destinations. However, this was grossly underestimating the resourcefulness of these students – with 1 hour to go, two teams were separated by less than 10km, frantically running in opposite directions – one in Indonesia, the other in Argentina, both >11,000 km from home.

From Trinity College Dublin’s website: “Medical students, Claire and Matthew were named winners of the competition on Monday when they reached the sunny Atlantic coastal city of Mirimar, south of Buenos Aires. They managed to fly to Buenos Aires and take a taxi down the Argentine coast without spending any of their own money and without speaking Spanish. Musician Chris de Burgh stepped in to pay for their ticket home… Many of the students persuaded travel agencies to sponsor them and made it to Paris, the Vatican City and Warsaw during the event… Lydia Rahill of the Trinity Law Society expressed gratitude to all who supported the event through sponsorship and offers of food, accommodation and help with travel expenses.”

The Challenge was organised on behalf of charity St. Vincent de Paul, which aims to fight poverty in Ireland, as well as Amnesty International, and had an original goal of raising €4,000 (~£3450). However, it caught the public imagination, and €10,000 had been raised by Monday, with €15,000 expected as a final tally. It’s apparently even made it into Time Magazine.

“Very impressed with @TCDJailbreak. Brilliant way to raise money for charity and amazing to see how far you can get by just blagging” tweets one Irish celebrity.

A great success!

Or was it?

I’m taking anyone’s best guess at how much all of these flights, accommodation, food and so on for the 37 teams would have added up to. It would take an age to find out, but it seems that it cost at least one team well over €4,000 (from Twitter: “@RoyalBruneiAir and Dermot Mannion are unbelievably generous, sponsored a @TCDJailbreak team w/ return flights to the tune of over €2000 each”). Now, only a few teams got as far as Indonesia, Brunei, Sydney (neither Brunei nor Sydney won due to missing the deadline) and Argentina – most stalled in Europe and some didn’t make it past Ireland. But it’s a near certainty that the overall cost of sponsoring this event is more than the expected €15,000 raised – I suspect a lot, lot more.

Which means the bottom line is: €15,000 to be raised for charity, >>€15,000 raised to sponsor “adventures for students”.

There are a lot of positives about this challenge – it encouraged a great deal of resourcefulness in those taking part, and showed quite how far you can get from a starting position of very little. But as a charity event? Can we say ‘the bottom line is €15,000 is going to good causes that wouldn’t have otherwise’? Or is this an example of a hugely wasteful resource-gobbling ‘charity challenge’ with only a small fraction of the funds making it to the intended charities?

– Perhaps this just counts as ‘good advertising’ for the airlines and travel agencies that sponsored it, and that this money would have gone into more television advertisement otherwise.
– Perhaps the personal individuals who covered flights, food and accommodation just like sending students on holiday, and wouldn’t have dreamed of sending this money directly to a charitable organisation if this event hadn’t taken place.

However, the public landscape is littered with good causes which need our support. And when we, or celebrities, or corporations support one cause, it means resources that can’t be allocated to another. When it comes to individuals, some literature suggests as well that biases such as “purchase of moral satisfaction” (Kahneman and Knetsch 1992) mean that people will spend just enough on a ’good cause’ to have that warm, fuzzy feeling – it may not matter how much actual good that donation does in the world; it would seem to follow that if a better target comes along they will not be inclined to support it. So a wasteful charity stunt may hurt other charitable ventures by diverting resources in inefficient directions*.

A contrasting charitable challenge taking place shortly is Live Below The Line. People challenge themselves to live for £1 or less a day for five days, raising money while highlighting how severe the poverty line is. And it doesn’t cost a huge amount to put on. If anything, those undertaking the challenge save money.

It’s hard for me to say with certainty without a lot more background work whether the ultimate charitable contribution of “Jailbreak” has a plus or minus sign attached – a growing number of organisations such as Giving What We Can focusing on these types of considerations could give a much more thorough and careful analysis. However, these types of event are unlikely to represent the best way to do the most amount of good.

If you want to climb Kilimanjaro, climb Kilimanjaro. If you want to raise money for charity, find a challenge that doesn’t cost large amounts of money and get sponsored for that. Then give the charity your Kilimanjaro travel money.

Responsible charities need to move away from association with costly, resource-gobbling stunts.

(Although in fairness, Argentina? That’s some pretty good blagging.)

*It has also been pointed out that this event had a dinosaur-sized carbon footprint that is perhaps worth factoring in, but further discussion on issues such as these is outside the scope of this blog post.

D. Kahneman and J. L. Knetsch, Valuing public goods: The purchase of moral satisfaction, J. Environ. Econom. Manage., 22, 57-70 (1992).

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