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How GiveWell Is Creating More Effective Altruism, By Taking Funding Risks

The charity evaluator uses data to recommend the most effective charities, but now it’s spending its own money on less-sure bets, in the hopes of creating a new wave of effective organizations it can recommend.

How GiveWell Is Creating More Effective Altruism, By Taking Funding Risks
[Illustration: Rogotanie/iStock]

Charity effectiveness evaluator GiveWell has won a lot of fans for its data-driven recommendations about where people should donate to have their money used most effectively. The organization usually recommends nonprofit groups that offer fairly inexpensive and direct remedies to solve global problems on a major scale. That’s because the group adheres to a philanthropic philosophy called “effective altruism,” which means it encourages donors to make investments that do the most quantifiable good per dollar invested.

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While such arithmetic has endeared the group to Silicon Valley givers, who appreciate the rational approach, it has also affected GiveWell’s ability to nurture another Silicon Valley darling: promising philanthropic startups, which may not have the track record to generate a positive rating, but do have a lot of potential.

Since the group launched in 2007, each solution they endorse has had to be measurable in either lives saved or a substantial standard of living increase. That means it must be proven in randomly controlled trials, and in a way that shows that the group delivering the solution has the capacity to replicate it consistently and effectively. “We had been recommending insecticide-treated nets to prevent malaria deworming treatments and direct cash transfers,” says Catherine Hollander, a research analyst with the group. “And so we wondered whether there might be something we could do to create or find additional top charities.”

The result is an emerging program called GiveWell Incubation Grants. The group awarded three in 2014, and another three in 2015 before ramping up to give eight more last year. In total, the group committed more than $11.5 million by the end of 2016, with a couple more groups earning endowments this year. All of it is backed by GoodVentures.

“The goal of the program is to support the development of potential future top charities and we see this happening in a few different ways,” says Hollander. “One is by supporting research that our charity recommendations rely on such as randomized controlled trials of programs that we’re interested in. And another is by providing startup funding to a group that’s getting off the ground and implementing a program that’s evidence backed.”

“We’re really interested in whether we might be able to increase the pipeline of top charities that GiveWell is considering,” she says. ”It sort of grew out of the recognition that our top charities group had not changed fundamentally over the last few years prior to starting this program.”

How much is a GiveWell recommendation actually worth? The company tracks that, too, and it’s grown over time. From 2007 to 2010, GiveWell’s recommendations drove about $3 million overall to three vetted groups. Five years later, they took in $110 million in just one year, which was distributed among nine charities.

Some groups like New Incentives, which currently has a pilot program to pay people who receive immunizations in Nigeria, have received multiple grants as they’ve grown or altered their mission in ways that might make it easier to expand. So far, no group that’s received incubation funding has proven its mission to the point that GiveWell recommends it. That’s not surprising; it takes time to carefully track a single group’s impact among the many factors that can affect quality of life and life expectancy.

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But for some Incubation Grant recipients, the payoff may arrive shortly. Earlier this year, the group reported that two groups, Zusha!, a road safety campaign in Africa, and No Lean Season, an effort that incentivizes migrant workers to go work in urban areas during their off season, may earn recognition as top charities by the end of the year.

What’s remarkable about both is that they hinge on saving lives through changing behavior, not the distribution of some new tool or medicine. For Zusha! (Swahili for “protest”), the intervention is a public safety campaign that involves public bus drivers in Africa–a place where lots of traffic deaths occur–placing stickers on their vehicles that encourage passengers to speak up if they are driving unsafely. In return, the drivers who adopt the program are entered into a weekly cash-prize lottery, which may incentivize them to tolerate a little back seat driving.

For No Lean Season, field workers in Bangladesh are given roughly $20 or less in a subsidy—either a grant or loan—to cover travel and food while they head into a city to find extra work after their growing season winds down. Early research shows that once they realize there’s more opportunity, such migrating becomes more common even without anyone financing it.

The data shows that both groups are actually more effective at improving lives (both by saving them, and boosting the welfare of those targeted) than GiveWell’s current baseline for good: a direct cash transfer to those in extreme poverty (as practiced by GiveDirectly, another top rated GiveWell group.)

Having more places for people to donate is about more than just catering to a personal interest. In classic GiveWell logic, the group also attaches an investment-limit recommendation on all of their analysis–their projection of how much funding will truly empower the group compared to creating diminished returns. After all, a gigantic windfall isn’t actually a good thing if the group receiving it doesn’t have the right staff, partners, and supply and delivery mechanics worked out to take full advantage of it. That’s one lesson Valley executives don’t always keep in mind.

About the author

Ben Paynter is a senior writer at Fast Company covering social impact, the future of philanthropy, and innovative food companies. His work has appeared in Wired, Bloomberg Businessweek, and the New York Times, among other places.

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