Raising for Effective Giving seeks to promote a new way of thinking about charity. Our approach can be summed up in two main features: unusual cost-effectiveness
and unusual commitment
Neither of the two is in itself new or revolutionary, but combined and applied in the domain of charity, these two principles distinguish REG from more traditional charity projects. Read more on this below or get an overview of our most important blogposts.
In most situations where personal gain is involved, cost-effectiveness is a no-brainer. In finance, for example, investors carefully consider all the data available to them in order to invest in the option most likely to generate a profit. In charity, however, most people put much fewer cognitive resources into the selection of organisations to donate to. People may choose charities because…
- they were convincingly approached by street fundraisers
- what the charity is doing seems to make sense intuitively
- the charity has particularly low administrative costs
- the charity is pursuing a cause close to one’s heart (e.g. fighting the disease a relative died of)
These reasons aren’t necessarily bad. Donors may have different motivations for giving money, and if some of the reasons listed make them happier about their donations and more likely to donate again in the future, this is a great thing! Nevertheless, it is odd that donors rarely look for explicit cost-effectiveness in the charities they support.
Cost-effectiveness in general is the output you get for a given input. In charity, it is the amount of people helped per unit of money donated. If your reason for donating is at least in part that you want to help others for their own sake, and if you prefer to help more people rather than fewer people, then you should have a strong interest in the cost-effectiveness of charities.
Given that cost-effectiveness differences can be enormous between charities, this is especially important. Consider the example of education:
As displayed in the chart, some programs are up to hundreds of times more effective than others. Deworming, for instance, is more than 280 times more cost-effective than simply giving money to secondary schools – and the above chart only compares education interventions in developing countries. Between rich and poor countries, the difference in cost-effectiveness can be even more extreme: an extra year of schooling in poor countries can be achieved with as little as $2.50, while achieving the same result in rich countries rarely costs less than $5,000 – a staggering 2000-fold difference.
It’s not uncommon for people to focus only on specific causes when it comes to charity, such as education, micro finance, medical aid, etc. In contrast, a strong focus on effectiveness implies that one should adopt a neutral approach, favouring the most effective cause no matter what it may be. By dogmatically limiting oneself to only specific causes, one is potentially ignoring interventions that could have a much higher impact.
The concept of cost-effectiveness may appear to some people as “cold and calculating”, and may be uncomfortable with the thought of viewing well-intended projects in relative competition with each other in order to distinguish the “less effective” ones from the rest. But we must accept that such comparisons are unavoidable – in the end, no matter which cause we favour and why, we will end up not picking lots of other causes. Taking the cost-effective approach allows us to be honest about these judgments, and thus more likely to avoid making mistakes. In the light of us having to make a choice anyway, “cold and calculating” is really an inappropriate description. If anything, the approach should be labeled “warm and calculating”, because a strong focus on effectiveness follows directly from nothing more than the belief that all lives are the same.
It is difficult to properly envision that through our donations, we are in a position to save or greatly improve the lives of dozens or even hundreds of people. But make no mistake – this is really the case, even for those of us whose daily pursuits are unlikely to one day make us millionaires!
Whether you view it as a “moral obligation” or simply a personal life-goal that is important to you, as a supporter of REG, you want to put an unusually large portion of your resources into effective charities (or their promotion). The scope of this commitment varies from person to person. The metric “2% of your income” serves as a baseline which individual donors can adapt to their particular circumstances at any given time. Whenever money is tight, we naturally encourage our donors to focus on getting back to a state where they don’t need to worry about the money. Conversely, those earning more than usual are encouraged to donate more.
Here at REG, taking charity seriously means motivating people to donate unusually high amounts, both in relative (% of income) and/or absolute terms. At the same time, it is important not to over-commit early on when enthusiasm is high. Long-term motivation and one’s own personal happiness is of central importance even for people who want to primarily help others, because being happy and motivated ensures that someone will donate effectively for, ideally, the rest of their lives.
Studies consistently show that people are more generous with their donations when giving is common within their peer group. REG thus encourages its supporters, whether members or one-time donors, to list their donations publicly to help establish a “culture of giving” among their colleagues, friends and/or supporters. Last but not least, REG will continue to do outreach in order to spread awareness about this amazing potential at our disposal – the potential to make a huge positive impact, and to collectively change the world for the better, one donation at a time.