This it not my main blog! That’s at www.giving-evidence.com

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Leveson

Here’s the link to the petition about the Leveson enquiry which Madeline McCann’s father’s asked you to sign: http://hackinginquiry.org/petition/

And here’s the bespoke letter I just sent to my MP about it, and libel reform (MPs are said to take more notice of tailored letters):

I write about two issues related to free press and free speech.

First, Leveson. I, for one, would like to see the recommendations implemented in full. Furthermore, my conversations with many friends, people on social networks, and colleagues, indicate that many others share this view. Many of these are your constituents: and they are all UK voters. Trevor Kavanagh’s view expressed on TV last night that the electorate don’t care is rubbish.

The Prime Minister said that he would implement the recommendations if they were “not bonkers”. They are not.

He further said this week that “we should think very very hard before doing anything which would impair free speech”. Well the guy he asked to think very very hard about this has done that, and recommended some things, so the PM should do them. Leveson was abundantly clear in his statement on Thursday that the legislation he calls for does not amount to state regulation of the press. It’s rubbish to claim (as the BBC’s Nick Robinson said the PM might) that we couldn’t explain this to the Russians.

Is the PM a man or a mouse? We’ve been in the last chance saloon umpteen times before and there have been way too many suicides of innocent people hounded by the out-of-control press. Time to act. As he said he would.

Of course the newspapers on Friday were supporting his ludicrous position: they don’t want to be managed at all. Which is precisely why Leveson thinks they should.

Why is the PM defending the interests of Mr Murdoch over those of Milly Dowler’s parents? The electorate will never forgive him.

Second, not unrelatedly, thinking “very very hard before doing anything which would impair free speech” also pertains to libel reform, about which we have corresponded before. The Bill currently in the House of Lords is an improvement but not enough. It still lacks a ‘public interest defence’, and hence still wouldn’t have prevented Simon Singh, Ben Goldacre and Peter Wilmshurst from being dragged through the courts for highlighting medical practices which are dangerous. [I spent an hour on the phone yesterday to the guy who runs the libel reform campaign, so this is likely to be accurate.]

Government by the people, of the people and for the people means letting them speak about truth and science, and not have journalists putting messages in their children’s lunchboxes or accusing them of murdering their own children.

Yours sincerely,

Caroline Fiennes

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MoneyBox Live: good questions to ask

I’m on BBC Radio 4’s MoneyBox Live today (Weds 13th June, 3pm), answering questions from the public about charitable giving. Do call! (Here’s how.) I’ve suggested some questions you might like to ask – about which charities to back and how – and some boring topics to avoid.

Particularly interesting questions

– Charities make lots of claims about how good they are. How do we know if those claims are true?

– What are the best ways to give?

– Is it true that big funders waste lots of resources? [Yes] How can I / they avoid that?

– Can my company do anything charitable? What are the best things for a company to do? What are the best examples of corporate giving? [Answer: Goldman Sachs’ work on the IFFIm]

– I’ve got no money but I’d still like to help charities. Any ideas of what I can do? [Yes]

– Are Oxfam goats (etc.) a good way to help a charity? MoneySavingExpert says that often your money might not actually go to buying a goat. Does that matter?

– What do charities actually do with all their money?

– Why aren’t charities more open about what they do? [I don’t know: I’ve said before that they should have public AGMs, for example.]

– People often draw parallels between charities and business. But can’t it learn also from other disciplines? [Yes, lots]

– There seem to be lots of philanthropy advisors. How do I know the basis on which they advise? (Well, you know the basis Giving Evidence uses because it’s laid out in an entire book.)

Passably interesting questions

– How do I find a great charity? [Or] I’ve found a charity: how do I know if it’s any good?

– Charities spend too much on advertising.

– Why don’t charities tell you how much of your money goes to the actual cause?

– Why’s there no ranking of charities? [Or] What are the best charities in the UK?

– Why are there so many charities? Surely they should consolidate a bit?

– Why are so many charities based in London?

– Many charities have lots of money already. Should that affect whether I give to them? [Yes: but not always in the way you’d think.]

– Should I set up a foundation?

– Small charities are better than large ones:  they’re more efficient.

Boring questions to avoid 

– What are the most tax-efficient ways to give? [The answer to this Q is very detailed, depends on the context of your own finances, and anyway, the gains from giving tax-efficiently are tiny compared to the gains from choosing the best charities and giving in the best ways. Tax efficiency might gain you 60%, but choosing a great charity could easily gain you 200%, sometimes 2400% (yes really), and giving in the best ways gained Shell Foundation about 400%]

– Anything related to the recent charity tax fiasco. What was the gov’t thinking? [We don’t know.] How much would the change have cost charities? [We don’t know.] Which charities would have been hardest hit? [We don’t know.]

– What’s the difference between charity and philanthropy? [Nothing. Different people prefer different words, that’s all. Let’s focus on achieving stuff, not which words best describe that stuff.]

– Anything which relies on the assumption that giving in America is good, and/or that we should have more American-style giving here. Only if you want even lower social mobility and really haven’t notice that the UK and the US are very different places.

What have Cheryl Cole and Prince Charles been up to?—>

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Why I’m delighted to be working with Innovations for Poverty Action

Innovations for Poverty Action, the most influential charity you’ve never heard of, tackles poverty in less developed countries by rigorously investigating the effectiveness of poverty-reduction programmes, and supporting the expansion of the best. Its main investigative tool is the randomised control trial, developed in medical research (where it may well have quietly saved your life several times) now increasingly used elsewhere. Randomised control trials (RCTs) are powerful because they, uniquely, demonstrate what happened which would not have happened otherwise, i.e., the true impact of a programme. The sample size, duration and rigour of IPA’s studies makes them a great deal more robust than most charity/development evaluations.

IPA has run over 350 studies in 40 countries, across many aspects of poverty, including health, education, agriculture, governance, micro-finance and environment. Its research is normally led by tenured academics, many at universities such as Harvard, University College London, the London School of Economics Massachusetts Institute of Technology, Yale, and most of it is published in respected peer-reviewed journals. The evaluations are normally of programmes run by NGOs and/or governments. IPA now has 600 staff in 14 offices. Typical research questions include: 

–          Do better cook-stoves really save all the carbon, fuel, time and health problems which their advocates claim? (Answer: sadly not.)

–          Which is a better way of getting teachers to turn up to school in India: giving them financial incentives to attend, or putting cameras in class rooms? (Answer: cameras are miles better, though obviously affect the power dynamic.)

–          To dissuade poor parents from taking their children out of school, you might give them cash when their children come to school (‘a conditional cash transfer programme). The conditionality is quite expensive to administer, so does it matter if you ditch it? (Answer: not in Colombia, but yes in Malawi.)

Caroline Fiennes, Director of Giving Evidence, is now working with IPA in Europe, aiming to raise awareness of its method, usage of its research findings, and resources to enable further study and further uptake of the findings. I’m delighted: given my passion for giving based on the evidence of what works, it’s natural to support more which generates, uses and shares that evidence.

microfinance ghana

That extreme poverty persists, and now only a few hours flight from our comfortable lives, is one of the biggest shames of our age; and IPA deploys against it the scientific method, perhaps mankind’s greatest achievement. As a result, it has a cupboard full of surprising insights which need to be heard and used.

IPA sounds a lot like J-PAL (the Abdul Latif Jameel Poverty Action Lab at MIT). Is it the same?

IPA and J-PAL are sister organisations, both doing RCTs in development, and they collaborate more closely than any charities I’ve ever seen. For instance, their names – which share the ‘poverty action’ bit – are deliberately similar.

J-PAL is a network of academics, based at MIT and now with centres in four other universities (in India, South Africa, Latin America, Indonesia). Hence J-PAL’s studies are all undertaken by academics. IPA is a free-standing charity. Its studies are often led by academics (many of whom are affiliates of both IPA and J-PAL) but sometimes led by IPA staff. This provides an important freedom. Academics are incentivised to do studies which will get published, which encourages innovative studies. But suppose somebody’s studied cook-stoves in northern Kenya and now we need to see if the surprising findings are also true in southern Kenya: despite being important, that study is pretty unattractive to an academic, but IPA might well do it.

IPA and J-PAL deliberately avoid having offices in the same countries as each other.

By a weird quirk of fate, the leaders of J-PAL and IPA are actually sisters. J-PAL was co-founded by Esther Duflo (MIT professor, and co-author of the prize-winning book Poor Economics), and IPA’s CEO is Annie Duflo. IPA was founded in 2002 by Professor Dean Karlan at Yale University: Dean did his PhD with Abhijit Banerjee, the other co-founder of J-PAL.

Are RCTs really better than other forms of evaluation?

Yes, a lot (in the right circumstances). Explained here, about Goldman Sachs, and here about evaluations in general.

charity evaluation

But RCTs can’t be used in all circumstances.

Correct. Nobody said they could. Their limitations, and what to do about them, is discussed in my book.

Doesn’t helping IPA raise money conflict with Giving Evidence’s work advising donors?

Not really. First, it’s hardly a secret – and I discuss it explicitly with donors to which it pertains. Second, it’s no secret that I advocate giving based on evidence, and hence is hardly surprising that I’m working with the people who generate it. Third, in any instance where a donor is interested in development work, I’m ‘acting for’ the donor rather than IPA and IPA knows that. Fourth, I have no performance incentive with IPA. Etc etc.

IPA sounds great. How do I…

– find out more? Here

– find its research?  (IPA’s research is all summarised here (and here are summaries of J-PAL’s research.)

– give it money? Either here, or we’re setting up a UK mechanism: coming soon.

– support good programmes it’s discovered? Either here, or we’re setting up a UK mechanism: coming soon

– contact you for advice about my/ my company’s giving? At enquiries [at] giving-evidence [dot] com

The FT on how (as result of J-PAL’s work) development is becoming a science—>

The Economist on findings of a J-PAL study and IPA replication about nailing poverty—>

Bloomberg on how J-PAL, IPA and RCTs “speed our way toward a better world”–>

RCTs find how to buy one, get 24 for free!-

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How can we best support charities?

Charities are not equally good. Neither are techniques for finding and supporting them. Giving Evidence advises donors – individuals, families, foundations, companies, governments – on the ways of giving which will achieve the best ‘returns’, by a fanatical devotion to the evidence.

________

New book about effective ways of giving: It Ain’t What You Give, It’s The Way That You Give It

Freakonomics of the charity sector’, Martin Houghton-Brown, CEO, Missing People

The Body Shop: ‘A very clear guide with insight for any donor’

Dragons’ Den’s James Caan: ‘great advice: inspiring and entertaining’

Available at introductory discount from here, and on Kindle.

________

Work with donors:

Eurostar: ‘Caroline Fiennes is a great source of advice… helped Eurostar become effective very quickly’

We help donors across the whole range from choosing objectives, defining a strategy, gathering relevant partners, implementation (including identifying great charities and other non-profits to support), to tracking the charities’ impact, and tracking and improving the donor’s own impact. Recent clients have included a new family foundation, professional tennis players, Guardian News Media group and global a professional service firm.

All our work is based on evidence about how to achieve the most for beneficiaries: finding great organisations, helping them in the highest-value ways, and minimizing the work-load and wastage created for them.

________

Press coverage of Giving Evidence and It Ain’t What You Give, It’s The Way That You Give It

________

Does it matter which charity you support, or how you support them?

Yes! This article describes various ways of improving education in India, all of which sound great, but some are 25x better than others.

Here a company gives ~£2.5m in such a bad fashion that it will achieve almost nothing.

This describes a rather better process for giving, in which a company uses a foundation’s existing infrastructure to gain economies of scale.

What are the three golden rules of effective charitable giving? They’re here–>

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Why I don’t back the Give It Back George campaign

Charities are furious about the government’s proposal to give them less money via the tax system. Well, they would be, wouldn’t they? Hence they’re campaigning frantically to block the proposal. But people interested in effectiveness and impact – and who understand that we’re allocating scarce resources – should support neither the government’s proposed changes (which makes no sense) nor the current system which the campaign seeks to preserve, for three reasons.

  1. Your salary goes to donkeys and Eton

Under the current tax regime, any charity can get tax reliefs (of which there are many, including exemption from rates and corporate tax, as well as relief on donations). The charity world is very broad, encompassing organisations which care for donkeys, dogs, cats, hedgehogs, and posh school boys, as well as unarguably noble causes such as cancer and domestic violence.

Many taxpayers would be surprised that a chunk of their salary is subsidising donkeys and hedgehogs. At a time when we are closing public libraries because the Exchequer’s run dry, that’s probably not what they’d choose if asked.

There has never been a proper public debate about which charitable causes HM Taxpayer wishes to subsidise. This row would be a good starting gun for one.

  1. Some charities are rubbish

Some charities are better than others, just as some teachers are better than others, some doctors, some athletes. Some demonstrably achieve twice as much as others for the same money, some 10 times, and occasionally, some achieve 25x as much. Put another way, some achieve only 4% of what others could achieve.

Furthermore, some charities don’t need money half as urgently as others do. The Donkey Sanctuary can spend over £2000 per donkey, whereas mental health charities can spend only £714 per beneficiary*. And if charitable income all dried up today, the Donkey Sanctuary’s could keep going more than two years; Oxfam would last just two months, and Christian Aid about three weeks*.

Donors should allocate their scarce resources based on the evidence about what works, yet currently, as I say, any charity can get tax relief, irrespective of its performance. Why should the taxpayer subsidise the bad as well as the good?

They shouldn’t. In medicine, public funds are only spent after drugs have been evaluated by a public body (NIHCE); in education, schools wanting public money are subject to inspections; economic and scientific research proposals get only public funding after scrutiny by an independent research council.

It seems to me not unreasonable that charities wanting tax subsidy should be asked to produce some evidence of their effectiveness, and that the finite resources should be allocated based on the convincing-ness of that evidence. [Given that the charity sector has been talking for ages about impact, it knows that some charities are better than others, so it’s odd that nobody’s made this point before.]

  1. Some non-charities are brilliant

By contrast, tax relief is generally not available to social enterprises. A cafe set up to employ young people with learning disabilities probably would be unable to register as a charity so would get nothing from HM Taxpayer, despite possibly being much more effective at helping those young people than some charities. For a government which only a fortnight ago launched a £600m fund for supporting social enterprises, this seems a curious omission.

What to do?

Clearly HM Taxpayer has very limited resources. They should be allocated on merit and democracy alone. So the public should be asked which causes are eligible for tax relief, and perhaps the government should define the total sum of tax relief available (for my money, human rights is in but donkeys are out), and then to the most demonstrably effective organisations within those causes, irrespective of whether they’re charities, social enterprises, public bodies or anything else.

*Data from my book It Ain’t What You Give, It’s The Way That You Give It. The calculations are public.

How do you find out whether a charity is achieving anything?–>

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The government’s raid on giving makes no sense

The UK government recently announced that it would cap tax relief on charitable giving. The surprise move has met a furious response, and makes no sense whichever way it’s intended. It’s a shame, because the charitable world has plenty of real battles actually worth fighting.

The detail. The government is capping the total amount of tax exemption which any individual can claim, at £50k or 25% of income whichever is the greater. Fair enough to clamp down on tax avoidance schemes, but the issue is whether charitable giving constitutes tax avoidance.

The fact is that we don’t the government’s logic – it’s not explained it clearly. Below are all the hypotheses I’ve constructed and heard – and why they’re all bonkers.

Philanthropy is a tax avoidance device. Well it’s not a very good one, since it costs the donor money. If I donate £100k, the tax payer adds £66k, but I’m still £100k worse off than I would have been otherwise. The tax system provides a discount for giving: not an incentive, as such, so it’s hard to imagine anybody who’s in command of the maths giving to a bona fide charity in order to save themselves money.

‘These austere times’. Obvious HM Exchequer is empty, but if the Chancellor’s concern is raising tax revenue, surely dropping the 50p tax rate is rather curious. Added to which is the fact that much of charities’ work saves the government money, and the donations which the cap may scare away greatly exceed the revenue which the Exchequer would save.

We can spend your money better than you can.’ Perhaps the government dislikes the tax-payer subsidizing individuals’ charitable giving because it thinks that government does a better job of spending money. That’s a left-wing position – which, though defensible, nobody made in the Labour years, when tax-subsidy grew – and an astonishing view for a Conservative administration.

It would be particularly bizarre for an administration whose central tenet is moving responsibilities away from the central state through localism and ‘the Big Society’.

Out of control. It is said that HMRC dislikes forsaking money to organizations which it can’t control. Again, this conflicts with decentralization: it doesn’t control local authorities, or the Greater London Assembly, and the government’s agenda will soon cede more power to cities and elected police chiefs.

There is a serious point here that donors are answerable to nobody, and yet the money they spend is partly the tax-payers. Perhaps half of the money in endowed foundations belongs to the tax-payer, whose ability to influence or object is precisely zero. This should not be acceptable: it’s like taxation without representation. Only one* of the many foundations in the land allows the public to even see its meetings (the City Bridge Trust: hardly new, it was founded in the year 1209), but even there, HM Taxpayer has no say.

If the government wanted to force more transparency and accountability in foundations, it could, but this tax vehicle will not achieve it.

Johnny Foreigner. Perhaps the government was spooked by an EU ruling that UK taxpayers can reclaim UK tax on donations to charities in other EU countries. It certainly is weird that UK taxpayers should subsidise organizations in, say, Portugal. But the government denies that this is the reason.

If that were the problems, there’s an easier solution. UK charities pay VAT – about a £1bn of which they can’t reclaim (big scandal which nobody knows about). The UK government could cancel ALL tax reliefs for donors (which are ~£1b/year), and instead spare UK charities from VAT. That would solve the foreigner problem and be roughly cost-neutral all round.

No donkeys please. ANY charity gets tax breaks. And the set of charities includes some which probably aren’t priorities for most tax-payers: donkey sanctuaries (in the UK and abroad), dogs homes, the opera, Eton…

If that is Chancellor’s objection, he should say so. And then he should fix it – by initiating a national debate about which causes should get tax relief and which shouldn’t. There’s a review of charity law underway, so he can get that to consider it. But the sledgehammer he’s chosen will miss that target.

‘Some donors are giving to charities which don’t do much charitable work’ said the Chancellor this week. Correct: some charities are rubbish, just as some doctors are rubbish, some teachers, some golfers. But that’s not a reason to punish them all in this way.

There are two reasons that charities might not be much good:

1. Fraud. Sure, some charities are fraudulent. If that’s the concern, then beef up the Charity Commission*, or fire it. Fraud in a few is not a reason to choke off revenue from the many.

2. Quality. For sure, there is a quality problem in the charity world. Health is closely analogous to charities – both industries ‘do things’ to other people, often without those people’s consent or full grasp of their situation. In the health world, there are three rather good quality assurance mechanisms. None of these is mirrored in the charity world.

First, all health treatments have to go through rigorous, public and independent scrutiny before they can be administered (i.e., the peer review system). Charities have no such thing. Most ‘impact reporting’ is by the charity itself, so it’s hardly independent, and it’s anyway voluntary and hence patchy. The international development community is rather better than the domestic charity sector – they have randomised control trials, and systematic reviews and write in peer reviewed papers – but even there it’s voluntary.

Second, public money is spent on treatments only when they’ve been approved by the National Institute of Clinical Excellence. All other public spending is subject to ‘value for money’ analyses by the National Audit Office. The charity world has no such thing. Simply registering as a charity – which only means abiding within very broad areas – is sufficient to get tax-payers’ money.

And third, health professionals are all highly trained. They also belong to professional bodies, who can strike them off. By stark contrast, any old body can set up a charity, run a foundation, even advise major donors, on the basis of zero qualifications. It’s like the wild west.

All of these quality assurance mechanisms could be introduced by the government – and should, I’d argue. None is achieved by the tax cap.

So what do we conclude? That the Chancellor is mad?

Jill Rutter at the Institute of Government, says that the charity tax raid, along with the pasty tax, granny tax, and other tax debacles, arises from a fundamental brokenness in our tax policy system: tax policy is bound to fail because, uniquely amongst policy, it’s devised by The Quad (PM, Deputy PM, Chancellor, and Chief Secretary) in isolation with no outside consultation or discussion.  Like much philanthropy, in fact.

How do you find out whether a charity is any good? Like this –>

__

*to my knowledge

**There are in fact three charity regulators in the UK, contrary to popular wisdom. The Charity Commission does England & Wales; there’s also the Office of the Scottish Charity Regulator, and the the Charity Commission for Northern Ireland.

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Giving Evidence: not all charities are the same

Charities are not equally good. Neither are techniques for finding and supporting them. Giving Evidence advises donors – individuals, families, foundations, companies, governments – on the ways of giving which will achieve the best ‘returns’, by a fanatical devotion to the evidence.

________

New book about effective ways of giving: It Ain’t What You Give, It’s The Way That You Give It

‘Freakonomics of the charity sector’, Martin Houghton-Brown, CEO, Missing People

The Body Shop: ‘A very clear guide with insight for any donor’

Dragons’ Den’s James Caan: ‘great advice: inspiring and entertaining’

Available at introductory discount from here, and on Kindle.

________

Work with donors

Eurostar: ‘Caroline Fiennes is a great source of advice… helped Eurostar become effective very quickly’

We help donors across the whole range from choosing objectives, defining a strategy, gathering relevant partners, implementation (including identifying great charities and other non-profits to support), to tracking the charities’ impact, and tracking and improving the donor’s own impact. Recent clients have included a new family foundation, professional tennis players, Guardian News Media group and global a professional service firm.

All our work is based on evidence about how to achieve the most for beneficiaries: finding great organisations, helping them in the highest-value ways, and minimizing the work-load and wastage created for them.

________

Press coverage of Giving Evidence and It Ain’t What You Give, It’s The Way That You Give It

________

Should donors support small charities?

Not universally, no. But neither should they uniformly support large one, or local ones, or old ones or young ones or popular ones or trendy ones, or – as the evidence suggests they do by fully 22% – ones whose names start with the same letter as their own. Data-free fetishes are no more welcome in charity and philanthropy than they are in medicine, policy or the military.

Just has there has emerged disciplines of evidence-based medicine and evidence-based policy, it’s time for robust evidence-based giving.

Sometimes that will favour small charities. They may be more responsive and personal, and some tasks – such as a village lunch-club – just don’t require massive resources. [Smallness in charities can be deceptive because donated goods and volunteer time aren’t evident in an organisation’s revenue or cost figures, so the operations may be substantially bigger than they appear. This is just one of the surprises of the basic maths and demography of the charity world.]

Often it won’t. Small charities – like small anything-elses – don’t get economies of scale so may be expensive. And some of the challenges they face are hard: you just can’t eradicate malaria if you’re small: and in fact, multiple small organizations, if not properly coordinated can – by dishing out different drugs and increasing drug resistancy – exacerbate the very problems they try to solve.

Understanding a charity’s impact is hard, just as isolating the impact of an interest rate is hard. But we must make ‘best estimates’ in order that our limited resources achieve as much as possible. It involves being clear about what actually happened, and how much of that would not have happened otherwise. It’s therefore fundamentally about distinguishing correlation from causation. My book rattles through how to do it – with a short-cut for people in a rush, and the full, rigorous detail for the more patient.

Since charities address problems which, as Warren Buffett said, have already ‘resisted great intellects and often great money,’ we owe it to beneficiaries to abandon childish tastes and fetishes and prejudices, and focus ruthlessly on what actually works – however surprising, small or large an organisation delivering that might be.

This article describes various ways of improving education in India, all of which sound great, but some are 25x better than others.

Here a company gives ~£2.5m in such a bad fashion that it will achieve almost nothing.

This describes a rather better process for giving, in which a company uses a foundation’s existing infrastructure to gain economies of scale.

Great charities’ o

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Application and reporting processes keep 3m children out of school

Avoidable waste from foundations’ reporting processes is ~£100m every year, enough to fund the whole of Barnardo’s or the British Red Cross. Another ~£150-250m is wasted in reporting to public sector funders, plus there’s plenty of avoidable waste in application processes. I’m pointing this out,  not because I hate foundations (I don’t) but because the obvious failure for beneficiaries means that it needs changing.

Charities address ‘problems that have resisted great intellects and often great money’ as Warren Buffett put it. Hence they need all the support they can get. Foundations and other funders should be using every penny to rapidly eradicating those problems. My new book is a guide for any donor to doing that: the figures above are from that, and, like all calculations used in the book, is public. The book opens with this quote from Clara Miller, Founder of the Nonprofit Finance Fund: ‘Deeply ingrained ‘best practices’ frequently add cost and reduce management flexibility in already difficult operating conditions. We end up hurting organizations we mean to help.’

Application processes

Let’s take a moment to understand the process most commonly used by major donors, because I want to dissuade anybody from copying it. It goes like this: define and publish some criteria for the types of charities you will support; design an application form;  invite applications; consider applications at infrequent, closed meetings at which a few charities are selected; give cash to those few; request periodic reports on paper.

Silent, solo, slow, reactive and unengaged, this process hardly looks like a recipe for achieving goals ‘which have resisted great intellects and often great money’.

Application forms are typically unique to each funder, yet generally request the same core data: name, charity number, list of trustees etc. So charities spend time (i.e., waste money) writing that information multiple times in multiple formats. How is that serving beneficiaries?

It isn’t. The various attempts by funders to create common application forms have failed. Yet it can’t be that hard: even eccentric and eclectic universities have had one for years. So I’ve unilaterally created one: it is here, and I suggest anybody uses it: it has the standard info at the front, followed by questions derived from the Standard Information Return (required of charities in England and Wales with income above £1m) and the ‘six questions which any which any charity should be able to answer’ from the book. If a funder wants to add questions, they can, but at least a charity can re-use the basic info without re-formatting it ad nauseaum.

In fact, many donors don’t need application processes at all. Many seek something which somebody else has already found, so should just use their recommendations. Independent analysts such as GiveWell make reliable recommendations, as do the randomised control trials merchants J-PAL or Innovations for Poverty Action. Other donors’ recommendations may suffice: when NatWest was looking for ‘community projects’ (dreadful term) for its CommunityForce programme, it could have just asked community foundations rather than creating its own (dreadful & wasteful) application process. Enlightened donors really do do this: Eurostar’s new award for sustainable transport uses the existing infrastructure in the Ashden Awards; a new donor I’m advising right now is giving their seven-figure sums to organisations which have already been selected by independent analysts and sound grant-makers; and of course community foundations route charities to donors to avoid multiple parallel selection processes.

Reporting

Companies report once a year. Their investors all see the same report, which is public, and share periodic conference calls.

By contrast, charities normally produce different reports for each ‘investor’ (funder), often each on different forms, which leads to masses of duplicated work. It’s excused because much funding is ‘restricted’ to a particular part of a charity’s activity, though in fact this practice is also fabulously damaging (it has no analogy in business). Furthermore, there is no ‘reporting season’ because normally reports are triggered by the managerially-irrelevant funding anniversary.

Charities’ costs of dealing with ‘investors’ are at least three times those for companies: 20-40% vs 7% for companies. Vanessa Kirsch, founder of New Profit Inc., a US venture philanthropy fund, laments that: ‘Non-profit CEOs spend huge amounts of time – sometimes as much as half their time – dealing with funders. What’s unfortunate here is that these leaders have incredible ideas about solving fundamentally important issues such as child literacy…but they can’t focus on their work because of the constant demands of funders’.

Funders often request reports for ‘accountability’: presumably as deterrent against fraud. It isn’t one: writing a form full of lies is not hard, and anyway, charities with significant revenue are audited to catch that.

Funders requesting bespoke reports is egregious and unnecessary: if you give on an unrestricted basis, the charity’s standard annual report for its entire operation will suffice and create zero marginal work.

The total cost of reporting by UK charities (to government and foundations) is estimated at around £1.4bn. Reporting to foundations – set up, and tax-payer subsidised to address ‘problems that have resisted great intellects and often great money’ – costs about £400m. On NPC’s conservative estimate, at least a quarter of that is avoidable, so foundations alone could save the sector £100m just on reporting – there’s masses to be gained by streamlining application processes too. [The calculation, like all those used in my book, is public, here.]

In developing countries, many children fail to get decent educations because they miss school because of having intestinal worms. Deworming (as it’s charmingly called) costs $40/child on an expensive estimate: often it’ll be as little as $4/child. The avoidable losses from reporting to charitable foundations would deworm and thereby keep in school – on a conservative estimate – 3m children.

What are we thinking of?

“Great advice for any donor”, James Caan, on this book about how donors best operate–>

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Charity credit cards: generate 33 x as much for charity anyway!

Lloyds TSB is withdrawing its charity credit cards. Actually this doesn’t matter because you can actually generate MORE money for charities through your credit card. Here’s how:

1. Get a credit card which gives you cash-back on your purchases. The cash that these cards give you is often more than they’d given the charity anyway. Some charity cards give only 25p per £100 spent whereas cash-back card may be £5. So that’s 20x increase just to start.

2. Donate the money once a year to your chosen charity. You can reclaim Gift Aid (iff you’re a UK tax-payer). That’s a second way which increase the money that the charity gets – increasing it by 25% if you pay basic rate tax and 66% if you pay higher rate tax. So if you get the 66% increase on a cash-back card, you’re now generating 33x times as much money for charity.

3. The charity may incur lower transaction fees this way, because it may have been getting the money in several small dollops. (Transaction fees are usually paid per transaction, i.e., one big payment incurs a twelfth of the cost which twelve small dollops generate.)

Voila. Sadly, the ‘nudge’ is against you, i.e., you have to get your act together to make the donation, rather than it being done automatically for you. But since you might generate more than 33x as much money, you can nudge yourself!

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