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.


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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Understanding impact of a corporate giving programme

I’m currently evaluating the ‘community projects’ programme of the Guardian News & Media group (i.e., the series of ~12 partnerships which GNM has with voluntary organisations near its London HQ). In this article in the Guardian, I explain what we’re doing & why, why understanding impact is so difficult, and what I learnt about understanding impact from Albert Einstein and Ben Goldacre:

Measuring the effectiveness of the Guardian’s community projects

What else can giving learn from physics and medicine? A lot —>

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Forget business: philanthropy needs to learn from tons of other disciplines

Philanthrocapitalism, social return, social investment, Absolute Return for Kids… Business is the analogy most commonly used for philanthropic activity. Though that’s not wrong, it’s dangerously narrow for solving what Warren Buffett calls ‘problems which have already resisted great intellects and great money’.

Let’s think through some steps which a donor – or a charity, for that matter – might take.

Since the giant array of needs in the world creates a giant array of options for donors (and charities), intelligent donors/charities are selective. Here, a pertinent analogy is the military. Even the Romans found it hard to fend off enemies on numerous fronts, and more recently the Nazis couldn’t deal with challenges on both the Eastern- and Western Fronts. We ourselves would perhaps have done better in Afghanistan if we’d had fewer and clearer
goals. ‘A single, unambiguous aim is the keystone of successful military operations. Selection and maintenance of the aim is regarded as the master principle of war’, as is taught to all officers in the Royal Navy, Royal Air Force and British Army.

Having selected an unambiguous aim, the judicious donor (or charity) will research their starting point. How widespread is poverty? How bad are race relations? Which groups are least well served by formal education? Answering even simple ‘factual’ questions like these is surprisingly difficult, because what we see and experience is heavily influenced by what we’re expecting to see. ‘Observation is theory-laden’ as philosophers of science have found.

So the donor/ charity defines some metrics and attempts to measure the amount of poverty or race relations or whatever. Yet the act of measuring may change the very thing which is being measured: we all behave differently when we’re being watched and the researcher’s questions may focus our latent anger. Any social scientist would have foreseen that, as would any physicist: Heisenberg got a Nobel Prize for the implications of his realisation that ‘What we observe is not nature itself, but nature exposed to our method of questioning’.

To establish the starting point, the donor or charity commissions a survey which, to minimise the Heisenberg effect, sequences the questions carefully. Psychology has much to contribute: to take just one example, psychologists have found that when young people are asked how happy they are and then asked when they last went on a date, their happiness rates totally differently than if they are asked the exact same questions just in the opposite order! Lawyers could help here too, since they know about (avoiding) leading the witness.

Perhaps the donor /charity navigates all this and is eventually ready to design her ‘intervention’ to get people to do more X or less Y: to drive more safely, to commit fewer crimes, to vote less tribally. She’d do well to engage with the newish field of behaviour economics (‘nudge’). Perhaps the most effective and least laborious ‘interventions’ are simply making it easier to repay loans,  or making it socially normal, or making it somehow fun.

Work begins. After a while, the donor /charity looks for its effect. ‘We did such-and-such and then something-or-other happened’ say many donors / charities, under the mistaken impression that this somehow indicates that the something-or-other was caused by the such-and-such. Any economist or statistician, or scientist, or indeed anybody who understands the difference between causation and correlation (such people are rarer than you might suppose) would raise an eyebrow at that. You can’t claim some God-like control of the solar systems just because the sun comes up every time you eat your Weetabix.

To really understand whether the something-or-other had anything to do with the such-and-such – i.e., whether the donor/charity made any difference – we need a control experiment. A simple one involves sitting around doing nothing to see whether something-or-others happen all the time anyway. Social scientists and physical sciences teach a great deal about constructing good control experiments. (And, by the way, rather more than business does. I’ve yet to see an article in Harvard Business Review about them, though they’re discussed in Nature all the time.)

So what?

Two implications are important for donors and charities.

First, we should open our minds to learning from many disciplines – from any discipline. Donors and charities face some of the most difficult challenges on Earth, and hence need all the wisdom and insight they can get. The observed over-reliance on one discipline is patently insufficient. People involved in these challenges should read and listen widely, for relevant learning lurks in surprising places.

And second, donors and charities should hire staff from a broader pool. Foundations are often particularly narrow, staffed entirely by people with business backgrounds, and perhaps a few aid-wonks. If you have three business people, then you have enough: your next hire should have studied physics or epidemiology or psychology.

A single analogy or skillset – however good – is most unlikely to bring the breakthroughs which the poor, the lonely, the underserved so badly need from us.


Caroline Fiennes has a surprisingly useful degree in Physics and Philosophy.

This article draws on material in her forthcoming book, It Ain’t What You Give, It’s The Way That You Give It: Making charitable donations which get results.


Why is NatWest giving away tax-payers’ money, so amazingly badly? —>

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Didn’t we have a lovely time the day we went to prison?

Inspiration inside

I’d have felt more at home on the moon. I mean, nothing says ‘welcome’ like a fifteen foot wall topped by razor wire. And yet, my trip to HMP Pentonville was surprisingly inspirational. 

I was there just before Christmas in relation to a project I’m doing for a corporate giving programme. Because we were there to meet various inmates who together write ‘The Voice of the Ville’, I was scared. Not that I’d be attacked or detained, but rather just of the unknown: the alien set-up, alien building, people of probably quite alien norms.

The first challenge was crossing London with neither money nor phone, for I’d been warned that they can disappear from prison receptions where visitors must leave them. No phone! My reliance on it is more of a tic than I’d realised – for the time, the map, the Twittering. My colleague and I had to arrange a rendez-vous in advance: how 1980s.

The prison reception has all the charm of an industrial loading facility, with added signs about ‘rub-down searches’.

The early-ness of our arrival causes us to be forgotten, so by the time we actually get collected, we’re late. A load of keys unlock a door. It’s shut behind us. Another door is opened, and shut behind us. And another. The doors, keys and bars are startling, despite being totally unsurprising. Society takes seriously the business of secreting the gentlemen we’re about to meet.

Though I don’t know what I expected – cells? riots? murderers? – the giant Christmas tree in the prison’s central hall wasn’t on my list. Was I really expecting some cheer-less slum-like Victorian poor house?

Four wings radiate from the baubled hall. Even the architecture here is alien.

As we’re led down one wing to the newspaper room, we’re trying to disguise our craning to glimpse into the cells we’re passing. Cells – as seen on Porridge and endless films – but these house real people, with real stories.

We arrive during ‘free flow’: the transfer window at the beginning and end of the morning and afternoon sessions when prisoners move (accompanied) around the building. It’s rather like the school bell, with added locks.

The newspaper room is rather like a sixth form common room. Maybe 10 foot square, it’s carpeted with a big table in the middle and desks bearing computers round the edge. But the alien is here too; signs on the wall prohibit printing ‘letters to family, letters to court…’

They start to arrive. Instinctively, my colleague and I stand and move to shake the hand of each man as he enters, as we would for any other meeting. You probably don’t get that too often if you’re a prisoner. There is, of course, only one question in our minds but we never ask it: I ask a prison-expert friend that evening and her answer makes me glad I hadn’t asked before.

One of them is huge. 10 foot tall with giant biceps. As he sits, all I can think is that he’s between me and the door…

They’re like grumpy teenagers – surly, rather monosyllabic, hard to get talking. But, man, when they get going, it all comes out. This – the Voice of the Ville (VoV) – is where they get to create, to express, to be heard, to be somebody. “You see yourself [i.e., your skills and work] developing. You don’t get a lot of ego boosts in here [prison] but you do here.” These guys may not have had many ego boosts in their lives.

The paper is a joint effort – and there’s not a lot of that in here either.

It’s a position of responsibility. Every prison gets a copy and since “there’s people here on suicide watch, you have to make sure you’re upbeat. You don’t wanna tip anybody over the edge.” Few writers have that responsibility.

It’s a haven. “There are violent people here” – who, it transpires, generally have low literacy, and develop their bravado and aggression as coping mechanisms. They’re not in the VoV team, by definition. So the VoV room is calmer than the rest of the prison. Selection bias even on the inside.

And it’s interesting. They read newspapers and books and get some brainfood. Reading matter is highly prized – so I make the ultimate sacrifice, giving one guy the copy of The Economist which is in my bag. (He’s  never heard of it, and thinks it’ll be full of numbers: I suggest he starts with the book reviews.)  Hard copies are all there is, because of course there’s no internet inside. That reinforces the weirdness: I start recounting a story I discovered on Twitter and then realised that several of them have been in here since before Twitter was invented(!)

Then this, from a guy who’s clearly not making his debut at Her Majesty’s pleasure: “it [VoV] has taught me to take criticism. We criticise [critique] each other’s writing all the time. It’s not so easy to take that at the beginning, but now I really welcome it – all criticism helps my writing get better.” That’s huge. Intolerance of other people’s views is what lands people in prison in the first place. Mr Justice Secretary, if you’re looking for ways to reduce reoffending – and I hope you are – programmes which teach people to give and take feedback should be high on your list. Plus it’s cheap as chips to run: it takes just two staffers and some printer cartridges.

Hats off, then, to the two ladies who run it. They evidently create a supportive, inspiring and pedagogic environment amongst their tough clientele, and bring in various external people who come here bearing article ideas and writing tips and feedback.

So, to my amazement, I too am inspired. Yet as we leave, there’s a prisoner in the corridor being shouted at, and the myriad keys and doors remind us that our new-found friends are locked away for a reason. I’m glad it was just an afternoon trip: a dark, wet, windy London street has never seemed so glorious.

More interesting that what a charity achieves is what it doesn’t achieve –>

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Kate Middleton’s charities: a curious but quite good set for a beginner

The Duchess Formerly Known as Kate Middleton announced today her first four charity affiliations. It’s a quirky set. If she’s clever, Kate (if we’re still allowed to call her that) can add a load more value to them.

The overriding precept of effective giving is using your resources to their best effect. For Kate, that means using her ability to attract attention. So the National Portrait Gallery is a weird choice since that’s hardly a ‘cause’ or an institution below the radar, and neither does it lack high-profile patrons. (Since she has a degree in History of Art, it presumably arises from long-standing personal interest.) By contrast, the choice of Action on Addiction is a very good one: addiction is a hidden and un-sexy curse, much like HIV was when Diana brought the press into see it.

One resource which could be used better is Kate’s rationale for her selection. She’s clearly pretty switched-on and has some good charity advisors around her, so it might be valuable if she explained why she chose the East Anglia’s Children’s Hospices given that there loads of children’s hospices, and why she chose The Art Room, amongst the numerous charities which work with troubled young people in schools.

The other great insight of effective donors is that charities vary massively in their effectiveness – much as companies do, as teachers do, as sports people do. But not all her quartet seem to pay much attention to results. Action on Addiction does: its annual report begins “This has been another year of great impact”, and goes on to discuss results extensively. It surely gets extra marks for providing the first funds to support a randomised clinical trial in one of its areas of work. The Art Room talks about results a bit but not very convincingly: it cites a some recent observational data, of frankly limited value, and a detailed study which is now seven years old and whose authors recognised that it had insufficient depth (for example, no control group, and the duration was too short for the charity’s effect to be clear). East Anglia’s Children’s Hospices have zero discussion of results either on its website or annual report, as far as I could see. Any donor does well to choose charities which obsess about their effectiveness, and to encourage them to understand it more rigorously – let’s hope she does that.

So, what should she do next? I’d suggest that she publishes her rationale, and pushes all ‘her’ charities to talk clearly and publicly about what they do, why they do it, which bits work and which bits don’t (if they say that everything works, we should suspect their economising on the truth).

As she gets more confident and savvy about charities, it would be just great if she shone the spotlight on important issues that routinely get ignored. Your Royal Highness, here are some ideas for your next selections. Female genital mutilation. Child soldiers. People trafficking. Even prisoners’ families who are routinely ignored, despite reducing re-offending. Corruption and transparency. Or, on a different tack, get interested in charities’ effectiveness and champion the work to test their approaches using proper randomised control trials.

The initial quartet is reasonable start, but, since she’s less than half the age of her father-in-law who’s still waiting for what Diana called “the top job”, there’s plenty of time to be radical.

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Giving a goat (or similar) this Christmas? Get an extra half a goat for free

Oxfam Unwrapped is a kind of gift catalogue from which you can ‘buy a goat’ or various other items as a gift. A goat costs £25: you give Oxfam £25, which it uses to provide a goat to somebody in a less developed country, and in return Oxfam gives you a card picturing a cheery-looking goat to give your friend. Jolly good.

Your £25 appears to be ring-fenced (‘restricted’ as the charity-wonks say) to buying goats. In fact it isn’t, for this good reason. Theoretically, each of the 50m adults in the UK could ‘buy a goat’ tomorrow, and it would be just crazy if Oxfam suddenly rained 50m goats onto the unsuspecting communities it serves. So, sensibly, Oxfam’s small-print says that your £25 will go to ‘either your chosen gift or something else in the same category.’ (Goats are in the ‘livestock’ category whereas ‘training a teacher’, for example, is in the ‘education’ category, amazingly enough.) ‘This kind of flexibility means that poor communities worldwide can get exactly what they need if and when their circumstances change’ Oxfam says.

You can go one better. You can remove the ‘restriction’ altogether by ticking a box at check-out which says: ‘I am happy for Oxfam to use my money to fund any part of its work.’

‘Unrestricted’ donations are almost invariably the best way to give to a charity. They allow responsiveness, allow the people who are actually receiving the money a real-time say in what they get, and can be used by the charity for what is actually needed at the time, rather than what was needed when the goat-catalogue was printed.

Charities say that they’d rather have £660,000 unrestricted than £1m restricted. That is, making the donation unrestricted – ticking that box – magically increases the usefulness of your donation by half. Half a goat for free.

This sounds like some dull technicality. But the difference on the ground is real, normally because restricted donations create complicated accounting and faffing about at headquarters, which itself costs money – eating up roughly the missing £340,000 in the example above.

Some charity ‘gift catalogues’ don’t even offer this option. The Good Gifts Catalogue, for example, says that ‘your money buys the gift described… we guarantee it’. Even if it’s no longer needed or the recipient community has enough of those items already or something else has become more urgent since the catalogue was printed? Isn’t it important to give communities – anybody – the right to some control over their life in real-time? They get that much more if they can influence decisions to respond to changing circumstances.

‘Tis the season to be flexible: always.

(Unfortunately when the FT reported this story, it got it wrong, describing the reduced restriction as ‘marketing bull’. At least it correctly represented my view about it!)

[Source: for the £660k/£1m: Garvey, B., Sutherland, L., 2006, ‘Restricted and project funding survey, nfpSynergy’, p. 7]

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

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How should advice on charitable giving be priced?

Answer: In a way that aligns the advisor’s incentives with those of the beneficiary. But which way does that?

Along with many others, I’m often asked to advise donors about finding good charities to support and/or strategies to make their giving effective. I’m struggling to find a structure which does that.

Time and materials?

Nope. There are two problems here – which are common to any professional service paid for by time. First, it incentivises the advisor to take ages.  Hence some moves to pay lawyers on a piecemeal basis rather than hourly (why do I pay more just because you’re slow?) And second, it encourages the advisor to unnecessarily complicate their work (on the reasonable assumption that fees are deducted from the amount the donor has to give). Yes this arises even in the charitable world: I once saw an advisor claiming that managing a single, existing grant to a perfectly competently and stable organisation took him two days a week and required two foreign trips a year. Monsterous.

But there are two additional twists with charitable giving.

It’s easier (read: cheaper) to find charities in the UK than in, say, in South Sudan. So paying the advisor by time incentives the donor to support readily-findable charities. But you could easily argue that beneficiaries who are difficult to find because they’re cut-off from mainstream markets and funding are precisely where donors should focus.

Donors often achieve most by collaborating: partly because they reduce the number of programmes in existence, which reduces admin for both the donor and charities. They also therefore reduce the need for advisors. So paying advisors on a ‘time and materials’ basis disincentivises the advisors to push for collaboration (they’d put themselves out of a job). Putting that more strongly, ‘time and materials’ encourages advisors to promote fragmentation amongst donors, which is bad for beneficiaries. Furthermore, creating those partnerships can take no time at all. When I put together the one between Eurostar and the Ashden Awards, it only took about half a day, yet created substantial value for beneficiaries.

Percentage of funds managed?

Nope, because this incentives the advisor to advise against giving anything away!

Percentage of funds given away?

Nope, because this simply encourages the advisor to dish it all out at maximum speed, which doesn’t bode well for proper planning and research.

Furthermore, it disincentivises the advisor from looking at impact investing, i.e., using the capital for social & environmentally useful purposes before it is given away. And, of itself, this structure doesn’t encouraging using any other resources, e.g., time, contacts, reputation, convening power – which may amplify vastly the impact of any money given.

Success fee / performance-related pay?

Sadly this is impossible because there’s no single metric of success on which donors can judge their success. Charitable giving is fundamentally different to financial investing in that sense: the advisor can’t take 2% of the upside, because there isn’t one; they can’t take be paid based on whether the beneficiaries like the donor because they probably won’t know that the donor exists; they can’t take be paid based on whether the charities like the donor because that may be totally independent of whether the donor is really adding value.

Other models?

The only other model I can think of is a fixed fee. Say £10k to fix your philanthropy strategy, irrespective of the amount you’re giving or the complexity of fixing it. That feels bizarre. It also leaves the advisor taking all the risk (they then have the incentive to opt for easily-findable charities.)

Perhaps some econo-brainbox can think of a better structure. Do give your suggestions in comments below.

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How do you know if your charity is making any difference? Take control

Charities need to understand which parts of their activities are working and which aren’t. But to really understand the charity’s impact, we need to know not only what did happen, but what would have happened without the charity’s work.

Imagine a city with poor air quality. Suppose that a charity works there, trying to persuade inhabitants to turn off their car engines when idling at traffic lights. When the charity started work, the air was clean 10% of the time (it has some sensible definition for air cleanliness: perhaps the air has fewer than 10parts per million of particulates), whereas a end late, it was clean 20% of the time. Result! Really? Perhaps the improvement was due to the charity; but perhaps it would have happened anyway; and perhaps more improvement would have happened without the charity. (It’s not unknown for irritating campaigns to provoke people to ‘rebel’ and do the opposite of what’s being asked.)

These kinds of ‘before/after studies’ indicate precisely nothing about whether the charity is doing a good job. It’s scary because they’re very common amongst charities (and others). If you think about it, the example above is analogous to an educational charity saying: ‘At the beginning of the year, the average height of a child we helped was 1.2 metres whereas afterwards it was 1.3 metres’! Or someone saying ‘we banged some pots together and then it stopped raining’ or even ‘we elected an Afro-Caribbean President and then the economy tanked’. We can’t infer causation from simple before/after statements.

To see why something happened, we need a control, that is, a situation in which everything is the same apart from the charity’s work.  This will show which of the scenarios above applies and therefore whether the programme is actually doing anything useful.

Celebrated development economist Professor Esther Duflo of the Massachusetts Institute of Technology says that without control situations for social or charitable programmes, we’re no better than medieval doctors putting leeches on their patients. If right now somebody put a revolting slimy leech on your arm, you too would probably claim to feel just fine. It is only by comparing ailing people treated with and without leeches that mankind learnt that the slimy bugs weren’t helping and could move to more effective treatments. Charities too need to test whether their programmes are working by using controls.

Sometimes getting a control is easy: run the programme in one class at school and not the other (keeping everything else the same between them) and look at the difference between them at the end. Sometimes it requires a bit of imagination: if you (like me) run national campaigns to influence behaviour, then look not only at changes in behaviour of people who have seen the campaign but also in people very unlikely to have seen it.

But without controls, we might as well be handing out leeches: we’ve essentially no clue what’s causing what, and thus we ourselves have no control.

How a proper control trial showed one programme is 25 times better than another–>

(‘Control’ article also published by TrusteeHome)

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