Should you be a charity sceptic?
"I don't give to charity because charities are just *so* inefficient"
Are charity sceptics just looking for excuses not to give?
Have you ever heard someone complain about charity efficiency and wonder whether they are really passionate about efficiency, or just looking for an excuse for selfishness? (in other words, is it "motivated reasoning"?)
If you have, it turns out there is research which supports your view. For example, this paper compared how participants responded to charity performance when there were or were not self-serving motives at play. It was able to use this comparison to demonstrate that some complaints around charity performance or effectiveness almost certainly *are* an excuse for avoiding to give. (Other interesting papers here and here)
Are charity donors at risk of being overly trusting?
If you're someone who has not let concerns about inefficiency hold you back from giving, you may be feeling smug at this moment.
Not so fast!
There is also evidence to suggest that propensity to be trusting is associated with propensity to donate to charity.
While the trust that the charity's employees are genuine is largely well-placed, in my experience, this does not mean that the charity is achieving anything material.
In this we'll look at how often charities achieve nothing or close to nothing.
Sanity check: is it realistic to suggest that lots of charities might be achieving nothing?
At first glance it may seem that all charities must surely be doing good, unless, of course, they are fraudulent. So before we look at the evidence, let's take a moment to sanity check whether a level of scepticism could make sense.
Two points to make here:
- Achieving things is hard.
- To succeed as a charity, you don't need to serve your beneficiaries effectively (funder-beneficiary separation)
Achieving things is hard
It is widely believed that 90% of startups fail (see, e.g., here or here, or many other places) (Note, I haven't been able to find the original source for this stat, so I can't confirm that it's true)
If startups frequently fail to achieve their goals, why shouldn't charities frequently fail to achieve their goals too?
While this might sound like a rhetorical question, you might be tempted to answer it. You might argue that *startup charities* might have a high failure rate, but that more established ones will have learned more about their work and therefore will be better.
However this ignores funder-beneficiary separation
Funder-beneficiary separation
The survival incentives for charities are not geared very strongly towards impact; rather, the charities that survive are those which keep their *donors* happy (regardless of what they do with their beneficiaries).
You might hope that keeping donors happy has *some* correlation with impact; however most charitable interventions have complex causal chains, and donors typically don't have the time (or willingness to annoy their fundees) needed to follow up every last detail, so appealing stories or crude measures of outputs (the immediate effects of a charity's work) rather than outcomes (the knock-on effects that we care about) are typically sufficient to keep donors happy.
So how many charities are achieving nothing?
Roughly speaking, it seems reasonable to believe that around 80% or so of social programmes (working with beneficiaries, as opposed to research or campaigning) achieve impacts so small that they are not statistically significant, or even have negative effects.
More can be found on this here: https://80000hours.org/articles/effective-social-program/
So in short, yes, it seems reasonable to employ a certain level of scepticism.
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Appendices
Appendix 1: Is there motivated reasoning?
Thank you to our friends at Rethink who helped us find these resources.
This paper looks at triangulating between money going to self, money going to a low rated charity, and money going to a high rated charity to work out motivated reasoning. It finds that there is motivated reasoning (i.e. excuses to not give)
https://www.hbs.edu/faculty/Publication%20Files/charity_metrics_v9_d4870581-e84a-4f26-abc7-abf7581fd233.pdf?fbclid=IwAR1nj1c08WtNHgV2L3tG4LmX6cwVbq0kzOalh_R-QwLnq1yHlMsz11S4OxI
This article looks at uncertainty in giving and compares a money-to-self lottery with a money-to-charity lottery to get a sense of the differences in risk appetite. The paper finds that people may exploit risk and uncertainty as an excuse not to give
https://halshs.archives-ouvertes.fr/halshs-01934606/document?fbclid=IwAR3h-1M3Kw6uh-4aaFkZOFeyfAJVLJNIxClihvLGSU8yyXUY1pzLeQY7Up4
This paper also finds that responses to risk are consistent with excuse-driven behaviour in the context of charitable giving
http://www.restud.com/wp-content/uploads/2015/10/MS20286manuscript.pdf?fbclid=IwAR0Czcf_SfCpHMG7zLOPCph5hS4d7ltCYuYBlt0rXjRB95uorle1ZMB2ytw
Appendix 2: How many startups fail?
It is widely believed that 90% of startups fail (see, e.g., here or here, or many other places). Note, I haven't been able to find the original source for this stat, so I can't confirm that it's true, but I can confirm that it's widely believed to be true. Other sites give lower percentages, but use perhaps slightly different definitions of startup failure than you might expect: this post claims the failure rate is closer to 60%, but is based only on those startups which have already got VC funding; this post argues that around 50% fail by year 5 and 65%-70% fail by year 10, but this is based on company closure, which ignores the "zombie startups" whose entity still exists but should have been shut down years ago; it is also confounded by successful company closures.