GiveWell: another front opens in the donor revolution

Here's a group that should probably make you nervous: GiveWell. It's a group of donors who are seizing power.

As noted in the Tactical Philanthropy Blog, it's the "pissed-off donor model." These guys want to give, but they want to know in detail whether and how their giving impacts the world. And, by gum, they're aren't giving until they find answers!

Here's how they put it:

... unlike for-profit corporations, nonprofit organizations generally attract investment through emotional appeals rather than by demonstrating results. We aim to change that, by providing a single place where you can see all the information we have about the world's best nonprofit organizations....

This is the flaw in GiveWell's model. They aren't going to change the way people decide to give. Not unless they figure out how to re-wire the human brain. Because giving is overwhelmingly an emotional decision. The no-emotion model just isn't going to spread very far, because it's swimming upstream in the broad and swift river of human neurology.

But that's a small quibble, really. Because they can fix that and apply their donor-powered approach in a more realistic, right-brained way. And if they don't, somebody eventually will. We'd better get used to it.

GiveWell is doing two amazing things:

1. They insist that nonprofits be accountable to donors -- on donors' terms. They ask some stringent questions of nonprofits. Are they the right questions? It doesn't matter: They're their questions. GiveWell is shifting the power into the donors' court. (Read how this sometimes plays out on the GiveWell Blog: Where I’m coming from.)
   
2. They're slicing up the charitable giving world by cause, not by organization. The current fundraising model pretty much forces donors to accept all of an organization, not just those things they care most about. GiveWell explodes this: They start with causes (like the fight against malaria) and then seek the organizations they believe do them best. If this catches on, fundraising could become a very different kind of activity. Can you say "restricted funds"?
   

Can you afford to ignore GiveWell? Yes. But not for long. The approach is likely to get refined and to grow. Now is the time to get ahead of the curve.

Technorati Tag: fundraising, GiveWell

Comments

[DN]

Heh heh, gives a whole new dimension to the "pissed-off donor model".

[rumple]

Holden was just caught out astroturfing givewell using sockpuppets at metafilter. Rather unethical.

http://metatalk.metafilter.com/15547

[Holden]

Oops. Apologies for the wiki syntax above. ''' is supposed to be bold. Just look for the triple-hyphens and imagine that that text is jumping out at you.

[Holden]

I want to clarify a couple things.

First off, this is the second time someone has interpreted the quote about "emotional appeals rather than ... [results]" as meaning that we expect to eliminate emotion from giving. We don't, and I will change that language. What reason is there to give besides emotion? Our emotions make us want to give and our brains make us want to give well - just as a parent's emotions for their children will make them very interested in scientific details about medicine, car safety, etc.

More importantly: '''We strictly OPPOSE restricted giving in all cases. The reasons for this have to do with the important distinction between demanding transparency (which we do) and thinking we know better than charities (which we do not).'''

We question the heck out of charities because of the fact that we have so many options. Charities are competing for our money. It isn't enough to know that they have good intentions. We want our donations to accomplish as much good as possible.

But to micromanage charities would be silly. They deal all day with issues that we don't. A great nonprofit's employees are in a MUCH better position than we are to make decisions, and our goal is to find these great nonprofits. We don't want them to turn over the decision making, just to explain it.

We think restricted donation is an incredibly harmful phenomenon that creates management by mob, leads to absurd situations like overflowing AIDS support in countries suffering from hosts of other problems, and generally keeps good people from doing their job. It's sad that this is how people want to ensure charity accountability, rather than letting charities compete, picking the best people and organizations, and letting them make decisions on the fly. We want to change this.

We have separated charities into causes so that we can reasonably pit them against each other; comparing all charities in the same terms would lead to absurdities and would become more about philosophy than analysis. But we are still evaluating charities, not projects.

We believe that '''freedom and competition''' is the best formula for a great nonprofit sector. With people restricting funds rather than doing quality analysis, both of these qualities are missing. Switch to a model where we do hard-core evaluation followed by unrestricted grants (and more hard-core evaluation), and this will change.

One more thing. I hate when people say it "doesn't matter" whether we are asking good questions. It matters to us, so if you think the customer is always right, then listen to this customer: I want to know when I'm wrong, because the product I'm really interested in purchasing is a better world, whether or not the specifics of how this is best accomplished match my current guess.

[Bob Mcinnis]

I agree that there is much we can learn from for profit businesses and entrepreneurs but to suggest that it is 'their way or the highway' is ridiculous. We have hundreds of committed donors who practice engaged philanthropy but understand that the 'work' that we do is different from the work they do. If a donor or group of donors said " they want to give, but they want to know in detail whether and how their giving impacts the world. And, by gum, they're aren't giving until they find answers!" I am not likely going to waste much energy or time catering to their needs when our clients basic needs are not being met.
That being said, there are valid reasons for asking questions about impact and results. Too many npros are building empires rather than seeking solutions. Well intentioned people with well intentioned plans are not entitled to funding unless they can demonstrate results.