Good Intentions Are Not Enough

No Silver Bullets

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During dinner with my brother last weekend our conversation turned to microfinance and the fact that it's not living up to it's original hype. In fact, rather than being a panacea to all problems, people receiving microloans face many of the same problems we face with credit cards. High interest rates, using one card to pay off another, using borrowed money to pay for things that are not actually necessities. It is starting to appear that it may be better to offer other financial services such as savings accounts and insurance instead of, or in conjunction with, loans. For more on this see David Roodman's Blog, GiveWell's series on microfinance, and the Good Practice Guidelines for Funders of Microfinance

My brother, a regular donor to local and international charities, is like so many other donors. He wants to ensure that his donation does the good he intends. As we left the restaurant he stopped me and asked, "What does work?". This question, or some variation of it, has been asked to me hundred of times by donors over the past five years. Unfortunately, the answer is both simple and complicated.

More bad donor advice

Tales from the Hood takes on Nicholas Kristof, author of Half The Sky, for his recent article in Outside magazine titled "Nicholas Kristof's Advice for Saving the World".

I am also critical of this article. Given his audience Kristof could have provided practical advice to donors on how to see past aid agency advertising to make wise funding decisions. Instead his only advice to donors is in the final paragraph (added on later?) where he encourages them to develop their own sponsorship programs:

"...if you're trekking in the Himalayas, come back not with stories of impoverished villages but rather ones about a particular 12-year-old girl who, if she received just $10 a month, could stay in school. Come back with photos of her—or, better, video that you put on a blog or Web site. Make people feel lucky that they have the opportunity to assist her, so that they'll find helping her every bit as refreshing as, say, drinking a Pepsi."

"Philanthropy is important and serious work. It does require time and thought."

Laura Freschi from AidWatch sent me a great article over the weekend, Why Measure: Nonprofits use metrics to show that they Are efficient. But what if donors don’t care? from Stanford Social Innovation. This report discusses the findings a research project to determine which performance measurement data would be most meaningful to donors.

No Rewards Yet for High-Performing Nonprofits

They were surprised to find that not only were high-performing nonprofits not especially attractive to funders, but in fact:

"Only four of the 22 interviewees were strongly interested in getting better data on the performance of nonprofit organizations. Much to our surprise, the rest expressed skepticism – or even outright disapproval of the concept."

Step 2: Get to know industry standards/best practices

Step 2 in the series How to make a difference

Good aid takes more than just good intentions, it also takes an understanding of good aid practices. Without this donors or aid workers may invest time and money in projects that are not in the best interest of the aid recipient. While not enforceable by law, these standards encourage professional practices and help avoid common mistakes.

Six general principles found in effectiveness initiatives

One World Trust has a database of civil society self-regulatory initiatives which includes many of the standards and principles I rely on. One World Trust recently analyzed these initiatives found six general principles that are integral to each of the initiatives, described in their article "Responding to NGO Development Effectiveness Initiatives". I've provided a description of each principle below but recommend the chart on page three of the report for more information. Use these principles to determine if the aid agency you are supporting understands and follows good practices.

Cost efficient aid is not necessarily effective aid

There is a false belief on the part of donors that cost effective charities are the best charities. I've written about this problem in previous posts. This week a joint statement from five charity rating organizations highlighted the problems caused by judging an aid agency primarily on it's cost effectiveness. Unfortunately, it will take continued effort to change these assumptions as cost effectiveness is the focus of much that is written about aid, as can be seen in a recent Forbes feature America's Most Efficient Charities.

Just because an aid project is efficient doesn't mean it's effective or even a good idea

Rating an aid agency on efficiency means that it must minimize how much it spends on staffing, rent, mortgage, office equipment, supplies, etc... So lets apply the idea of efficiency to your own life.

To be more cost effective, build your house without a kitchen

One obvious way to decrease your own administration cost is to build your house without a kitchen. Kitchens are extremely expensive, amounting to approximately 10% of the total cost of house construction. In addition to the actual construction costs you would also save money that would otherwise be wasted on repairing or replacing broken appliances and there would be no need to throw away money purchasing dishes, silverware, or pots and pans.

The Allure of the Quick Fix

This is an edited version of an earlier post.

"Hit the ground running"

As a Crisis Corps Volunteer (part of the US Peace Corps) I was sent back to Thailand to help with the tsunami recovery efforts. In six months time I was to; determine needs, develop a program, find funding and resources, implement the program, and ensure that it was sustainable. All of this had to be completed on time - there would be no extensions. 

Here is the press release:

"The three resource development volunteers will be working with local governments to determine where the greatest need lies and identifying resources to help the local communities. They will also put together a local staff to insure progress will continue after the Crisis Corps team departs.

How long would it take to develop a program that solves a problem in your own community?

Imagine if a stranger were sent to your community from an aid agency boasting that they were going to solve a community problem. How would your community react and how long would it take for that stranger to be successful?

If they don't provide information in writing - don't give

The phone solicitation

I received a phone solicitation today from an organization informing me that they will be in my neighborhood next week collecting used clothes and household goods for their organization. I'm always wary of phone solicitations because often when you give to them a percentage of what you give goes to the company contracted to do the phone solicitations. If you like the organization it's always best to go directly to their website to give so that your entire donation goes to that organization.

Kiva, Heifer International, the American Red Cross, and donor trust

In the debate over Kiva's misrepresentation of how their funding system works much of the discussion has focused around how honest aid agencies can and should be with donors. My argument has always been that we have to be honest and ethical about what we are doing and that it is the responsibility of aid agencies to educate donors on good aid practices. If you want to tie this to a fundraising campaign that creates a personal connection that's fine, but you have to be honest about the extent of that connection. Informal feedback from donors these last few days says much the same thing.

Thoughts on Kiva's information sharing practicies

One of my followers on twitter who both gives to Kiva and tweeted my post deceptive advertising had this response to the controversy:

"I knew that's how Kiva works. I also sponsor children via Children International and that monthly payment also goes into the big pot." "I hope nobody stops lending via Kiva, but they might want to be more up front about their practice."

Thoughts on Heifer International's information sharing practices

As Heifer International has also been brought up in this debate, most notably on Sasha Dichter's Blog, I contacted my brother for his thoughts. He's a  regular donor to Heifer and a few years back for Christmas he made donations of animals in all of our names. I asked him if he understood at the time that his money went into a communal pot and might not have been used to buy those exact animals. His response was similar to the previous response.

"I have always been well aware of Heifer’s disclaimer.  I always figured that the money would go into to a pool to be best used by the NGO, as individual donors probably don’t have the scope or necessary knowledge to know where to best donate the funds.  However, by being able to pick out something like a flock of ducks, two lambs, and a pig, you get a more tangible feel for what your donation is purchasing.  I guess it helps you feel more connected."

Deceptive advertising hurts the entire aid industry

The aid blogosphere is alight with the controversy surrounding Kiva. According to Kiva's website:

"Kiva is the world's first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs around the globe."

The gist of the controversy is that Kiva is not clearly portraying exactly what they do. Three posts to learn more are Is Kiva misleading the public?, Kiva is not quite what it seems, and Even more questions about Kiva. According to these posts, Kiva gives the impression that the donor's money goes directly from them to a specific person that they choose, when in reality it doesn't.

The number of natural disasters is on the rise

With the Samoan tsunami, the Indonesia earthquake and the Philippine typhoon all occurring within a few weeks of each other, it seems more apparent than ever that there has been a steady increase in the rate and severity of natural disasters. According to the Center for Research on the Epidemiology of Disasters Thirty years of natural disasters 1974-2003: The numbers

"Over the past 30 years, the number of reported natural disasters has increased steadily, from slightly fewer than 100 in 1975 to a little more than 300 in 2003, an almost four-fold increase."

In general there are three primary factors causing this trend.