In the US alone, more than $400 billion are donated to charity each year—equivalent to 2% of American GDP. This generosity is wonderful, but these gifts don't do nearly as much good as they could.
In recent years, researchers have started studying the effectiveness of different charities, just as investors study the effectiveness of different companies. These researchers ask questions like: How much money does it cost for this charity to save someone’s life? The answers are stunning. Charity experts estimate that the most effective charities are about 100 times more effective than typical charities.
The evidence-based recommendations used by Giving Multiplier come primarily from research organizations GiveWell, Animal Charity Evaluators, Founders Pledge, and Open Philantropy Project. These organizations employ teams of independent scientists who systematically evaluate the effectiveness of charities and identify the most effective ones.
These organizations are part of the effective altruism movement, which aims to do as much good as possible by directing resources based on the best available scientific evidence. You can learn more about effective altruism here and here and from this TED talk by Peter Singer, the philosopher who inspired the effective altruism movement.
Focusing on effectiveness is important
When you give to charity, you’re not just trying to make yourself feel good. You’re trying to do good for others. That’s why effectiveness is so important. It turns out that your choice of charity is often much more important than how much you give. You can do more good by donating $100 to a highly effective charity than by donating $10,000 to a typical charity.
Most people find this surprising, but perhaps it shouldn’t be. The best athletes, artists, and businesses are much, much better at their jobs than most people are. But charities aren’t typically put to the test the way that individual professionals and businesses are. This makes it harder to know which ones are the real superstars. Charity superstars exist, and their achievements have been well documented.
You wouldn’t invest in a company if you thought you would earn ten times more by investing in a different company that makes better products or is run more effectively. You wouldn’t buy a phone that costs ten times more than other phones that are just as good. Likewise, If you’re spending money to make the world better, why shouldn’t you expect the most bang for your buck?
A common misconception about effectiveness is that it’s about minimizing administrative (overhead) costs. Imagine applying this idea to businesses. Successful businesses don’t waste money, but they understand that making money requires spending money. Successful businesses pay their staff competitive wages in order to hire and retain the most effective people. They invest in infrastructure and research. Likewise, well-run charities need good administrators, reliable infrastructure, and technical knowledge to maximize their impact. The right question is not “How can you spend as little money as possible?”, but instead, “How can you do the most good with the money that you spend?”
Measuring how much good an organization does is challenging, but it’s possible. A similar challenge arises in medicine, where decisions must be made based on the cost-effectiveness of different treatments. Which treatments save the most lives? Which treatments do the most to improve people’s quality of life? Is a risky surgery that costs $50,000 worth it if the money could be used to prevent 100 people from getting the same disease? One can ask the same questions about the work done by charities, and one can generate answers using methods originally developed by healthcare economists.
Choosing among causes
To give money effectively, it’s important to focus on the right problems. The charities that do the most good tend to focus on problems that are big (many individuals affected), solvable (we can make progress), and neglected (there is much more progress to be made). Given this framework, the most pressing problems fall into three categories: (i) global health and development, (ii) farm animal welfare, and (iii) global catastrophic risk reduction. That's why the charities we recommmend focus on these three problems.