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“Mo Money, Mo Problems” Presentation Examined Effectiveness of Charity Organizations

A PlayPump, a merry-go-round which extracts water simply by being spun, sits in the middle of a barren field in South Africa. Down the road, a 2500-liter tank sits empty. Only an occasional gust of wind pushes the machine in the right direction.

It’s a sight unseen and unimaginable by most benefactors: the PlayPump, funded by donations, deserted and broken, a far cry from how the machine was portrayed in glossy flyers.

On Tuesday, Elie Hassenfeld, co-founder of GiveWell, a non-profit organization that researches and evaluates charities, described that and many more instances of philanthropic efforts gone to waste.

In a presentation to the Andover community entitled “Mo Money, Mo Problems: The Role of the All Mighty Dollar in the World of Social Justice,” Hassenfeld voiced concern about the effectiveness of each dollar of a donation.

Through careful analyses of numerous charities, GiveWell has discovered that many organizations do not meet their promised standards, despite worldwide campaigning and million-dollar donations.

Since its establishment in 2007, GiveWell, a five-person company, has researched hundreds of charities, 50 of which have been evaluated in-depth.

According to Hassenfeld’s research, asking questions before donating money is crucial because approximately 75 percent, or $227 billion of all donations in the U.S. come from individual donors, six times the amount of all charitable foundations combined and 100 times the amount donated by the Bill and Malinda Gates Foundation.

In his presentation, Hassenfeld shared some of GiveWell’s findings.

GiveWell also found out about Chess in the Schools, an educational organization devoted to improving the academic performance of inner-city students through after-school chess programs, was another organization that presented ambiguous statistics about their program’s success.

Although it received much acclaim, according to Hassenfeld, Chess in the Schools has a bias in the selection of students that the program works with, which can alter the results of studies.

“Who knows, maybe the group of kids being studied are a special group of kids. They may already excel outside of the program,” said Hassenfeld, during his presentation.

Another issue discussed was micro-finance in Asia, Africa and Latin America.

“The idea is very compelling. You have a mother who rises out of poverty by taking out a loan for sowing supplies and materials and [ends up making] millions a year… But there is very little evidence that anything like this is happening on a consistent basis,”

said Hassenfeld.

“Again, there could be a selection bias, and what we’re doing may actually cause harm. With high interest rates on loans, borrowers may actually lose money after doing what they need to do,” he said.

Even when charities are sufficiently funded, they may not operate properly.

Hassenfeld also cited Smile Train, an organization that provides cleft palate surgery to children in developing countries. “You can’t [always] use more money to do more effective stuff. We call it the ‘room-for-more-funding’ problem. Just because you have the money, you may not have the surgeons to perform the operations, so in the end you make no progress.”

“Organizations can have lots of great things they’ve done in the past, but it’s really important to ask them about what they’re going to do in the future and how they’ll use additional funds.”

On the other end of the spectrum, among the most reliable charities, is VillageReach, a health supply organization, the first-ranked international charity on the GiveWell website.

Based in Cabo Delgado, Mozambique, the organization distributes vaccines to various parts of the world.

According to Hassenfeld, in 2004, 80 percent of health centers in areas targeted by VillageReach were out-of-stock of at least one vaccine. This figure decreased to nearly zero percent in July of 2006, indicating that the organization was indeed doing its job.

GiveWell’s evaluations of the charities it investigates are publically available online.

“Our goal is to be most transparent as possible, and to be clear about our preferences.”

Hassenfeld came up with the idea to start GiveWell while working at a hedge fund. Trying to decide which charities he’d be interested in donating to, Hassenfeld began researching organizations and enlisted the help of his friends.

He said, “We didn’t find any useful information on which charities were accomplishing the most good. Instead, we found really general financial information and received only very basic marketing materials. So we left our jobs and started GiveWell.”

GiveWell hopes to influence more donors in the future, to continue striving for better research results and to connect with other organizations doing similar work in charity evaluation, in order to expose themselves to different perspectives.

The Community Service Office and Non Sibi Society co-sponsored Hassenfeld’s presentation.

“I think [being able to evaluate charities] is something students should work to develop. It’s important to be critical of the programs we support,” said Brad Silnutzer, Director of Community Service.