||It has been suggested that this article be merged into Effective altruism. (Discuss) Proposed since October 2013.|
Effective giving is the practice of making charitable contributions with the intention of maximizing social good.
- 1 Principles
- 2 Benefits
- 3 Examples
- 4 See also
- 5 Groups/blogs related to effective giving
- 6 References
Effective giving seeks to maximize the impact of every dollar spent. Impact on human quality and quantity of life is measured with the DALY, or Disability-Adjusted Life Year. This measure of disease burden is expressed as the number of years lost due to ill-health, disability or early death. The DALY is a key measure employed by the United Nations World Health Organization in such publications as its Global Burden of Disease. The highest impact charitable contributions will be those that have the lowest cost per DALY averted. The health improvements of high impact projects can be 100 times more effective than low impact projects.
The primary method of measuring impact is the randomized controlled trial. Randomized controlled trials are considered to be a reliable form of scientific evidence in the hierarchy of evidence that influences healthcare policy and practice because randomized controlled trials reduce spurious causality and bias. Certain medical interventions (like vaccination) are already backed by high-quality medical research, and so there is a lower burden of proof for charities doing these types of programs. The following academic groups do randomized controlled trials on other types of interventions as well: Poverty Action Lab and Innovations for Poverty Action.
The Copenhagen consensus 2008 listed 15 problems to be most cost-effectively treated; on the list were (1) micronutrient supplements for children, (4) expanded immunization coverage, and (6) deworming.
Effective giving seeks to maximize the efficiency with which charitable donations are allocated. High efficiency charities will spend a low percentage of their revenue for fundraising and administrative activities, so that the maximum revenue can allocated to the charitable service. However, this line of reasoning is disputed by some, including Dan Pallotta  who argues that charities should be encouraged to spend more on fundraising if it ensures they increase the amount they can allocate to the charitable service overall. Additionally, a study by Dean Karlan "found that the most effective charities spent more of their budget on administrative cost than their less-effective competitors", presumably because spending on administration costs may include analyses of whether a particular activity is effective or not. Thus, the extra spending on admin could lead to resources being focused on the best activities.
Accountability and Transparency
Effective giving seeks to ensure that a charity provides sufficient information to stakeholders for them to judge the impact and efficiency of the charity.
Pledging to give effectively
Giving What We Can is another group that is building a community of people who pledge a percentage of their income (at least 10%), and recommends where to give.
- Increased giving. Donors give more money when high-quality evidence shows they can have confidence that donations will be well used
- Change incentives for charities. The growth in popularity of effective giving creates an incentive for charities to align with its principles
- Have a bigger impact. The top recommended charities on GiveWell or Giving What We Can permits donors to save a life for as little as $1600 (by giving to the Against Malaria Foundation, for example).
Helping the Blind
The cost of a guide dog for the blind is $42,000. As an alternative, the cost of performing surgery to correct trichiasis, the blinding stage of trachoma, costs $25 in developing countries. This surgery is 80% effective. Therefore, sight can be restored to 1344 people for the cost of one guide dog, and the guide dog does not restore sight.
Improving Philanthropic Effectiveness Among Professional Athletes
Athletes’ charities have been accused of financial and administrative mismanagement and general lack of efficiency. Critics suggest their inability to remain compliant with IRS policy has caused legal and tax issues for their founders, only adding to the disservice these organizations are doing for the community. Thus, there is a compelling need to revisit the ways athletes, with the help of agents and managers, structure their philanthropic endeavors to ensure that the athlete’s good intentions are effectively applied toward the causes they are passionate about.
In 2001, the USA Today identified over 350 public charities and private foundations that were connected to professional sports teams or individual athletes. With the passage of time, that number has grown, with the Sports Philanthropy Project cataloging over 100 private foundations associated with professional athletes in 2006 and increasing still by 2008 when a Salt Lake Tribune examination on athletes’ charitable organizations counted 89 private player foundations in the NBA alone, not to mention the 89 player foundations to which NFL Charities contributed in 2009. The causes these athletes support span across a vast array of social trouble spots, including youth fitness, education and empowerment; reach beneficiaries on 4 continents; and raise funds and awareness for over 15 different diseases.
However, despite the good each of these athletes seeks to achieve, there are significant hurdles impeding their success when they choose to incorporate their own organizations. Dozens of personal foundations have lost their charters due to IRS compliance issues, from paperwork to hiring practices. For others, efficiency is the main obstacle; overhead and administrative costs often devour a majority of any funds these organizations are able to raise, rendering many these foundations grievously inefficient. In 2008, The Salt Lake Tribune examined player foundations in the NBA, taking a closer look at the efficiency and financial solvency of players’ private foundations across the league; what they found was startling. “Tax records indicate that 89 NBA player private foundations and public charities together raised at least $31 million between 2005 and 2007, but only about $14 million of that actually reached needy causes.” League wide, player charities only gave 45% of the money they raised to the causes they purported to serve; this is far less than industry standard (Charity Navigator reports that nine out of ten organizations spend at least 65% of their budget on the programs and services they exist to provide) and most certainly not an effective way to support charitable causes. "There are horror stories … of guys who set them up because their agent said to or they thought it was a good idea and they had good intentions, but not a good plan. That causes trouble," NBA Senior Vice President Kathy Behrens said. Furthermore, one third of players’ organizations were entirely dependent upon funds contributed by the individual players themselves, and up to 25% of these organization did not even have the basic documentation required by the IRS to hold certified non-profit status. With regard to staffing, very few player-run charities hire full-time executive directors to manage daily operations; instead, they typically give these positions to family members and friends despite IRS stipulations stating a majority of board members must be non-relatives. Michael Jordan found himself the object of criticism in this way, as there was significant speculation about his foundation’s administrative costs and the hiring of his sister as executive director before the foundation closed in 1996. Similarly, Josh Howard’s non-profit was founded in Dallas in 2007 with a single donation of $99,500, half of which paid salaries – $54,750 to three employees, one of which was his best friend. When asked about it, Howard stated “…I take that as me being charitable…”
Despite the fact that they will be unable to oversee operations, fully fund programs and stay on top of intricate legal details, hundreds of athletes elect to showcase their goodwill by establishing personal charities. For most athletes, their struggles drastically outnumber their successes, yet year after year rookies sign their contracts and look for the nearest cause they can support via an organization with their name on it. Why? "It's a status symbol," said Daniel Borochoff, President of the American Institute of Philanthropy. "If you're a star athlete and you've got the model girlfriend and you've got the Porsche and you've got the mansion, what's next? Well, start a foundation or charity." Beyond the opportunity to do good, athletes often see opportunities to build their brand from a socially responsible standpoint, refining their image in a positive light, which could lead to additional, more lucrative endorsements. But what these athletes don’t realize in their goodwill efforts, PR motivated or not, is that “it takes time, business savvy and financial muscle to keep a foundation healthy over the long haul. Too often, sports-affiliated charities sprout in a burst of altruism and then wither in neglect.” Greg Johnson, executive director of the Sports Philanthropy Project in Boston opined, “Personal foundations have become fashionable at the expense of other avenues of giving.”
Alternative Models Encouraging Greater Effectiveness
Some observers believe that providing small business loans is a better way to help economically disadvantaged households than direct giving, because it avoids creating a dependence mentality and incentivizes successful progress out of poverty. The web-based person-to-person microfinance organization Zidisha recently published a blog post which criticized direct cash transfers on these grounds.
Athletes for Hope is a non-profit, 501(c)(3) organization based in Washington, DC whose mission is to educate athletes on effective philanthropy and present them with alternatives to starting their own foundations. AFH has been highly successful in providing a vast number of professional athletes with the tools to make smarter decisions about philanthropy. Athletes can be matched with causes and organizations that resonate with them personally and can forge partnerships and engage their communities in that way. Founded by 12 highly philanthropic former athletes, AFH presents a particularly effective model for engaging athletes who may not have a ‘pet cause’ that they are already passionate about. But even for those who do, AFH can put these stars in touch with organizations in areas athletes may not be familiar with. This is another key advantage for rookies playing in new cities or veterans who move to new teams later in their careers. To date, Athletes for Hope has over 700 athletes representing more than 13 different sports on its roster and has made over 450 matches.
The Giving Back Fund is a public charity that offers a variety of philanthropy-oriented services, a staple of which are their donor advised funds. These funds put the money in the hands of organizations with the expertise in program management while still allowing athletes to contribute to the causes they wish to support. In 2007, The Giving Back fund, in charge of over 20 athletes’ donor-advised funds, had $1.1 million in revenue in 2007 and gave $824,092 to charitable causes, yielding a 75% efficiency ratio. The key here is selecting organizations “where the flow of dollars meets or exceeds standard,” but where the athletes are advised by The Giving Back Fund or other similar entities, they can rest assured that due diligence will be performed and their dollars will go to the most deserving and most effective organizations in their field(s) of choice.
The models represented by Athletes for Hope and The Giving Back Fund illustrate only a fraction of viable alternative solutions to the overwhelming inefficiency that has plagued professional athletes’ personal charities in recent history. Ultimately, it is up to the athlete to seek the council of his/her agent, publicist, financial advisor, attorney and, most importantly, his or her own philanthropic vision, to determine which of these models presents the solution that best aligns with his or her goals for community involvement.
- Effective altruism
- Earning to give
- High impact philanthropy
- Charity (practice)
- Gift (law)
- Secular humanism
- GiveWell: GiveWell.org
- Giving What We Can: GivingWhatWeCan.org
- 80,000 Hours (Career advice for effective givers): 80000hours.org
- Peter Singer’s The Life You Can Save: TheLifeYouCanSave.com
- Effective Animal Activism (effective giving toward animal welfare)
- Innovations for Poverty Action (IPA): Poverty-Action.org
- J-PAL at MIT (Research group): PovertyActionLab.org
- Good Intentions Are Not Enough
- Institute for Health Metrics and Evaluation, "Global Burden of Disease Study 2010", The Lancet, December 14, 2012
- World Health Organization, "Global Burden of Disease"
- Learnvest, "Why Your Charitable Donations Probably Aren't Doing Much Good", Forbes, December 14, 2012
- "Poverty Action Lab". Retrieved 24 June 2011.
- "Innovations for Poverty Action". Retrieved 24 June 2011.
- "Copenhagen Consensus 2008".
- "The Life You Can Save". Retrieved 24 June 2011.
- "GiveWell page on the Against Malaria Foundation".
- Guide Dogs of America
- Helen Keller International
- Tina Rosenberg, "Putting Charities to the Test", The New York Times, December 5, 2012
- Lewis, Michael C., Tony Semerad and Ross Siler. “NBA player charities often a losing game.” The Salt Lake Tribune. December 26, 2008 http://www.sltrib.com/news/ci_11314692
- “Cover story: The Bottom Line on Sports Charities” USA Today. July 25, 2001. http://www.usatoday.com/sports/2001-07-20-public-table1a.htm
- The Sports Philanthropy Project. Sports Foundations Directory. http://www.sportsphilanthropy.com/content/index.php?pid=49
- “NFL Charities Week highlights grants for player foundations” National Football League News. March 30, 2009 http://www.nfl.com/news/story/09000d5d80f83ae8/comments/nfl-charities-week-highlights-grants-for-player-foundations
- Charity Navigator Financial Ratings Tables http://www.charitynavigator.org/index.cfm/bay/content.view/catid/2/cpid/48/print/1.htm
- Farwell, Scott. “Experts say pro athletes sports charities could do better.” The Dallas Morning News. January 16, 2011. http://www.dallasnews.com/investigations/headlines/20110116-experts-say-pro-athlete-sports-charities-could-do-better.ece
- "About to send a donation? Think twice.". Huffington Post. January 18, 2014.
- Athletes for Hope. The Official Athletes for Hope Playbook. http://www.athletesforhope.org/aboutus.html
- Farwell, Scott. “Some Dallas sports stars’ charities waste money, inefficient.” The Dallas Morning News. January 18, 2011. http://www.dallasnews.com/sports/headlines/20110118-some-dallas-sports-stars%E2%80%99-charities-waste-money-inefficient.ece