Saturday, July 27, 2013

Charitable Giving, And How To Do Better

There are a lot of useful criticisms one could make of the way wealthy people make charitable contributions, so it's kind of a shame that Peter Buffett had to write this instead. I'm sure he's right that there are all sorts of problems with the motivations and strategies of wealthy philanthropists, and that some of them made their money by contributing to the problems that charities need to deal with. A good article would suggest concrete better options, or profile people who were doing things a better way. Instead, Buffett's positive proposals are a mess of hazy metaphors and tech startup buzzwords: "It’s time for a new operating system. Not a 2.0 or a 3.0, but something built from the ground up. New code." Ah, I see you had lunch with Thomas Friedman.

People are figuring out how to do this better. On the straightforward charitable giving level, there are awesome health interventions like giving Africans mosquito nets so they don't get malaria. This works really well -- $40,000 worth of nets led to many thousands fewer malaria cases per month. This chart is kind of messy, but it displays an awesome effect:

Maybe you think you can get even better results through political advocacy. This is plausible. For instance, you could lobby the US Congress for federal funds for mosquito nets. If you got the leverage ratios that corporate lobbyists do in their best-case scenarios (as Giving What We Can describes, $220 for $1!) you'd be making absolutely godlike improvements in people's lives. I use the mosquito nets thing just as an illustration here -- if you think that advocating for a solution to climate change is a bigger deal, by all means go forward and give money to people who will push that.

It's a shame that Buffett doesn't talk up groups like RESULTS, which lobby Congress to help the global poor. Presumably the reason that rich people and corporations engage in lobbying is that it's a cost-effective way to achieve their political ends. The good guys can play that game too. (I gave RESULTS $2000, in part because a US Senator I donated to told me that they'd gotten him interested in various global poverty issues.)

From a smart donor's perspective, the distinction between charity and political advocacy isn't really significant -- they're both ways of helping people, and doing some kind of bang-for-your-buck calculation is how you decide which one to put your money into. It's harder to quantify the effects of political action, so I can understand if people want to be cautious and just give money to charities of proven cost-effectiveness (check out GiveWell for more information on what they are, and the mosquito nets are their #1 pick). Personally, I'm optimistic about using the corruption of the US political system to help the global poor, but all of this definitely deserves more study.

As a sidenote, this anecdote from Buffett describes a good result, as far as I can tell:
Often the results of our decisions had unintended consequences; distributing condoms to stop the spread of AIDS in a brothel area ended up creating a higher price for unprotected sex.
If the explanation is that most prostitutes preferred to use the condoms, so they'd have to be paid extra to do without them, there probably was less unprotected sex going on. That's a change for the better. 
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