Fast Company

Hope Neighbor Is Wising Up Your Irrational Donation Strategy

Ever had the feeling you weren't making your donations wisely? Hope Neighbor has been there. That's why the nonprofit and banking veteran launched the first in-depth research into how carelessly we give money to charity--and how to create better opportunities for impact investing.

Hope Neighbor

When Hope Neighbor returned from her job at a World Bank field office in Africa, she decided to fund the college education of a boy she met there. "He was the son of my cook in Burundi," she tells Fast Company.

Most people would applaud Neighbor for her goodwill, but according to new research--conducted, ironically, by her own firm--Neighbor's funding decision could use a little modification.

In May, Neighbor--who runs a strategy consultancy, Hope Consulting--produced the first comprehensive report on impact investing and charitable giving, called Money for Good. Despite a lot of buzz building around these subjects, nobody had done any real research about what drove people to give and where the best opportunities are. "These are public, tax-deductible resources," she says. "It's really important to know what your opportunity cost is, and to invest in spaces where you can have the greatest possible impact."

Neighbor got funding from major foundations such as Rockefeller and Hewlett, hired market research firm e-rewards. She then surveyed 4,000 people nationwide, including 2,000 high-net-worth individuals with incomes over $300K. Her aims: find out how to get donations and investments to go to the highest-performing non-profits, and gauge the market for impact investing.

Money for Good's study identified a $120 billion opportunity for impact investing. It also found that people don't think too much about their charitable giving. While it would make the most sense for someone to take their donation dollars to the highest impact organization within a particular cause, only about a third of donors do any research when making a charitable gift. They're much more likely to spend time evaluating choices about jobs, business investments, or vacation plans with their family. Even those who do research charities only do so 63% of the time to validate a choice they've already made.

"If you're giving to a homeless organization and there are seven homeless organizations near you, ideally you would give to the one with the highest impact, where your donation dollars would go the furthest," Neighbor says. This is seldom what happens. Her own decision to donate to her cook's son ("He may be the next Einstein, but I suspect he's not"), her own university, and charity bike rides that her friends take part in is a case in point.

"I'm incredibly lazy in my giving," she says. "I do exactly the same things in the report. I am mired in inertia, and I definitely don't choose the best organization. The way we act is different than the way we think we act. It's true for me as for any of the people surveyed."

If anyone knows how money and goodwill translates into real action in the field, it's Neighbor. She spent her first two years after college in Cameroon with the Peace Corps, where she developed a community health program in a village called Garey. As she was getting ready to leave Cameroon in the late '90s, the World Bank was ramping up plans to build a controversial $3.7 billion oil pipeline from Chad to Cameroon. Neighbor wanted to work for an organization that protested the World Bank, but an adviser convinced her that her best move would be to go and work for the bank. "I came away really impressed," she says, "Everyone there was really smart and organized." Neighbor went on to work at the Bank for the next four years, including several years at a field office in Burundi, which is where she met the boy that she ended up funding.

Until recently, all of the steps Neighbor took in life were on a carefully planned out, focused on a career track. "I'm really structured," she says. "I can create my own structure in the middle of nowhere." That structure worked to her benefit when training health educators in Cameroon and structuring loans and grants in Burundi, but she realized that real change often occurs outside of an institution or a particular mindset. "I was like a cobbler wearing bad shoes," she says. "You can miss opportunities if you're super focused."

She left the World Bank in 2005, spent two years learning strategy consulting for Fortune 500 clients at Marakon, and then quit working entirely in 2008. "I relaxed, did yoga, and recovered from flying 150,000 miles in three years," she says. "I needed to let go of my professional intention a little bit in order to reset."

Now, at Hope Consulting, she integrates her strategy consulting experience with her passion for development by advising social sector firms on growth, marketing, and distribution. Money for Good is an apt side project for her, providing research and data that identifies the key areas in which impact investing and charitable giving are stuck. And this report probably wouldn't exist if she hadn't unstuck herself first, keeping her own professional door open for opportunities to do unconventional things, she says: "With Hope version 1.0, 2.0, or 3.0, this wouldn't have happened. Now it can." With some luck, she might just convince herself to change her irrational charitable giving behavior next.

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