Why effective giving?
In the United States alone, over $500 billion is 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 begun 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 the following research organizations: GiveWell, Animal Charity Evaluators, and Founders Pledge. These organizations employ teams of independent researchers who systematically evaluate and identify the most effective opportunities to direct resources based on the best available evidence.
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, providing an outstanding "bang for your buck", and their achievements have been well-documented.
Measuring effectiveness
A common misconception about effectiveness is that it’s about minimizing administrative (overhead) costs. Imagine applying this idea to businesses. Successful businesses 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 poverty alleviation, (ii) farm animal welfare, and (iii) catastrophic risk reduction. That's why the charities we recommend focus on these three problems.
Resources
Introduction to effective giving
Effective Giving 101 (Giving What We Can)
How Much Does It Cost To Save a Life? (GiveWell)
How we think about charity evaluation (Founders Pledge)
Why Farmed Animals? (Animal Charity Evaluators)
What are the most important moral problems of our time? (TED talk by Prof. Will MacAskill)
The Life You Can Save (book by Prof. Peter Singer; e-book available for free)
Psychology of charitable giving
Giving Multiplier was co-founded by academic researchers who study the psychology of charitable giving. If you’re interested in learning more about how and why people donate, check out the following resources from our team:
Articles
How Can You Do the Most Good with Your Donations? (Charity Navigator)
Making Charitable Giving More Competent (Harvard Magazine)
Giving with your head and your heart: combining evidence and personal connection in your charitable giving (Charityvest)
Podcasts
How to Give More Effectively (The Happiness Lab podcast)
Joshua Greene on Morality, Psychology, and Trolley Problems (Sean Carroll’s Mindscape podcast)
Effectively encouraging people to give more (Clearer Thinking podcast)
Cooperation, Charity, and Effective Giving (Stanford Psychology Podcast)